Ethnic Diversity Reduces “Groupthink,” Economic “Bubbles”

Despite progress in raising awareness about implicit bias and stereotypes, most people are less likely to trust recommendations and evaluations from people of different ethnic groups.

Sheen Levine

Sheen Levine

However, this bias may reduce the “herd mentality” that characterized recent price “bubbles” in U.S. housing and global financial markets, reported Columbia’s Sheen S. Levine, Evan P. Apfelbaum of MIT, Goethe University’s Mark Bernard, Texas A&M’s Valerie L. Bartelt, Edward J. Zajac of Northwestern, and University of Warwick’s David Stark.
They concluded that, “Diversity facilitates friction that enhances deliberation and upends conformity.”

Economic “bubbles” occur when the majority of traders, probably influenced by a type of “groupthink,” set inaccurate prices, leading to a mismatch between market prices and true asset values.

Irving Janis

Irving Janis

Groupthink can occur when three conditions interact, according to Yale’s Irving Janis:

  • Group Cohesiveness
    • Deindividuation,” when group cohesiveness becomes more important than individual dissenting views,
  • Group Structure
  • Context
    • Stressful external threats,
    • Recent failures,
    • Decision-making difficulties,
    • Moral dilemmas.
Scott E. Page

Scott E. Page

A mathematical model, developed by University of Michigan’s Scott E. Page and Lu Hong of Loyola University, demonstrated that a wider range of viewpoints leads to less groupthink and more balanced decisions.

Diverse groups ran into fewer “dead ends” in developing solutions than homogenous groups full of smart individuals, who tended to think similarly.

David A. Thomas

David A. Thomas

Likewise, additional experimental evidence by Georgetown’s David A Thomas and Robin J. Ely of Harvard confirmed that identity-diverse groups can outperform homogeneous groups.
Group errors depended on group member ability and member diversity, expressed in the formula:

Collective Accuracy = Average Accuracy + Diversity.

To test the impact of group diversity on market “bubbles,” Levine’s group constructed experimental markets in Singapore and Texas, USA, in which participants traded stocks to earn money.

Evan Apfelbaum

Evan Apfelbaum

More than 175 volunteers with backgrounds in business or finance were randomly-assigned to groups of six ethnically-homogeneous or ethnically- diverse participants.

Traders knew the ethnic composition of their groups, but they couldn’t communicate with each other.
In addition, their “trades” of dividend-paying stock during 10 rounds were anonymous.

Homogeneous groups set inflated selling prices, yet traders in those groups still bought the stock, resulting in increasing stock prices.

Mark Bernard

Mark Bernard

In contrast, traders in diverse groups refused inflated selling prices, so the stock price fell to approximately the price in an “ideal” market with “rational” traders.

When traders and other decision-makers come from similar ethnic, social, and attitudinal backgrounds, they tend to place undue confidence in others’ opinions and decisions, and tend not to subject them to rigorous analysis and scrutiny.

Valerie Bartelt

Valerie Bartelt

As a result, they may be more likely to accept prices and deals that deviate from actual underlying values.
Levine’s group concluded that “homogeneity…imbues people with false confidence in the judgment of coethnics, discouraging them from scrutinizing behavior.”

  • How do you mitigate “groupthink” in organizational decision-making?

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Motherhood Pay Penalty, Fatherhood Bonus

Michelle Budig

Michelle Budig

Having children increases men’s salaries by more than 6% and decreases women’s earnings by more than 4%, according to University of Massachusetts’ Michelle Budig.

Low-income women were most affected by the “motherhood pay penalty,” whereas low-income men were least affected.
In the U.S., this trend has massive impact because more than 70% of mothers are employed, according to the U.S. Bureau of Labor Statistics, and more than 40% of these mothers are the primary wage earner, reported the Pew Research Center.

Marital status and parenting situation significantly affect average salaries:  Married mothers in the U.S. earn 76 cents – 82 cents for every $1.00 earned by men.
In contrast, unmarried women with no children earn salaries more similar to men:  96 cents for every dollar a man earns,  according to the U.S. Bureau of Labor Statistics’ 1979 – 2006 National Longitudinal Surveys of Youth.
Low-income women fared worse: They lost 6 percent in wages per child, significantly higher penalty than average-income women experience.

Melissa J. Hodges

Melissa J. Hodges

Highly educated white and Latino men in professional jobs benefitted most from having children whereas less educated, unmarried African-American men working in manual labor jobs received less salary advantage, noted Boston University’s Melissa Hodges and Budig of UMASS.

Sara Harkness

Sara Harkness

In the U.S., the average gender pay gap has been decreasing, but the parenthood pay gap is increasing, reported University of Connecticut’s Sara Harkness and Jane Waldfogel of Columbia University.

Jane Waldfogel

Jane Waldfogel

They found that confirmed the impact of marital status on parents’ salaries:  Single mothers earned just over 83 cents compared to a single father’s US salary dollar.
Married mothers with at least one child under age 18 fared worse:  They earned 76 cents for each dollar earned by a married father.

One source of this wage difference may be hiring discrimination against mothers, argued Stanford’s Shelley J. Correll and Stephen Benard of Indiana University based on their study sending identical fictitious résumés to hundreds of employers.

Shelley Correll

Shelley Correll

Half the male and female “candidates” indicated membership in a parent-teacher association, whereas the remaining male and female credentials indicated no community involvement with a school.

Female résumés that included PTA membership were half as likely to be contacted for an interview, compared with female qualifications without this involvement.
In contrast, male résumés with this volunteer activity were contacted for interviews slightly more frequently than those that did not.

Stephen Benard

Stephen Benard

Correll and Benard also asked volunteers to act as “employers” and determine the salary for “job applicants.”
On average, participants offered mothers an average of $11,000 less than childless women and $13,000 less than fathers.

However, socioeconomic strata can buffer the motherhood penalty: Women in the top 10 percent of earners lost no income when they had children, and those in the top 5 percent received bonuses, similar to men.

Kate Krause

Kate Krause

Women who least can afford salary decreases experience the largest pay penalty for motherhood.
This inequity can be minimized by implementing measures suggested  Deborah J. Anderson, then of University of Arizona with Melissa Binder and Kate Krause of University of New Mexico:

-Flexible work arrangements (ROWE), although some research indicates that this type of flexibility can result in lower salaries,

-Widely-available, affordable, high-quality childcare.

These recommendations remain aspirational goals in many organizations, and until these structures are available to most employees, this pay differential may persist.

    • To what extent have you seen men’s careers benefit from becoming a parent?

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Confident Cluelessness = The Dunning-Kruger Effect + Ignorant Bliss

Stav Atir

Stav Atir

Most people overestimate their own expertise, and do not recognize their own incompetence.
previous blog post highlighted this metacognition phenomenon known as the Dunning-Kruger effect.

This effect has been demonstrated for people’s overestimates of their skills in grammar, emotional intelligence, logical reasoning, firearm care and safety, debating, and financial acumen.

Emily Rosenzweig

Emily Rosenzweig

More recently, the effect was demonstrated by Cornell’s Stav Atir and  Emily Rosenzweig of Tulane,  who asked volunteers if they were familiar with concepts like centripetal force and photon as well as fictitious terms including plates of parallax, ultra-lipid, and cholarine.

About 90% of participants claimed some knowledge of at least one of the nine fake concepts, and people who thought they were most knowledgeable also said they recognized more of the meaningless terms.

David Dunning

David Dunning

Atir and Rosenzweig concluded that poor performers lack insight about their lack of skill because they ”don’t know what they don’t know.”

Another verification of the Dunning-Kruger effect was replicated among volunteers who completed a logical reasoning task, an intuitive physics problem, a financial acumen challenge, and others presented by University of California San Diego’s Elanor Williams, Justin Kruger of NYU, and Cornell’s David Dunning.

Elanor Williams

Elanor Williams

Some people achieved perfect scores, and expressed confidence in their answers, yet those who achieved no correct answers expressed the same degree of confidence as the most able performers.

Both high and low achievers made judgments based on intuitive “rules,” so they felt confident based on having a clear, if inaccurate, rationale.
Williams’ team concluded, “Rule-based confidence is no guarantee of self-insight into performance.”

Justin Kruger

Justin Kruger

Another “cringe-worthy” example is financial illiteracy accompanied by high confidence in financial acumen among people who filed for bankruptcy.

More than 25,000 people rated their financial knowledge, then tested actual financial literacy in the 2012 National Financial Capability Study, conducted by the Financial Industry Regulatory Authority with the U.S. Treasury.
Of these, 800 respondents said they filed bankruptcy within the previous two years.

Not surprisingly, bankruptcy filers achieved financial knowledge scores in the lowest third of respondents, but they rated their knowledge more positively than financially-solvent respondents.
Nearly a quarter of the recently bankrupted respondents gave themselves the highest possible rating whereas only 13 percent of other respondents were equally confident.

Deborah Keleman

Deborah Keleman

Even 80 physical scientists at top universities provided a number of inaccurate purpose-driven (“teleological”) explanations about “why things happen” in the natural world, including:

  • “Moss forms around rocks in order to stop soil erosion,”
  • “The Earth has an ozone layer in order to protect it from UV light.”
Joshua Rottman

Joshua Rottman

Participants provided these explanations at their own speed or with ambitious time constraints.
When these professional scientists provided rushed explanations, they were twice as likely to endorse inaccurate purpose-driven rationales, reported Boston University’s Deborah Kelemen, Joshua Rottman, and Rebecca Seston.

Rebecca Seston

Rebecca Seston

In addition, scientists were equally likely as humanities scholars to endorse teleological arguments despite most physical scientists’ rejection of purpose-driven explanations for natural phenomena.

However, these results suggest that teleological propositions are a default explanatory preference among humans, and could explain their presence in myth and religion across cultures.

These results suggest that most people hold a positive view of their capabilities even when faced with contrary evidence.
However, some groups, such as women, may hold an unrealistically modest view of capabilities despite affirming feedback.
These biases in self assessment point to the importance of realistic recalibration of confidence, aligned with consensual feedback.

-*How do you minimize the risks of “Clueless Confidence”?
-*How can systematic underestimates of competence be reduced to increase “Realistic Confidence”?

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Comparative Rankings May Reduce Gender Bias in Career Advancement

Iris Bohnet

Iris Bohnet

An “evaluation nudge” is a decision framing aid that may reduce biased judgments in hiring, promotion, and job assignments, according to Harvard’s Iris Bohnet, Alexandra van Geen, and Max H. Bazerman.

Alexandra van Geen

Alexandra van Geen

Based on their research, they recommended that organizations evaluate multiple employees  simultaneously rather than each person independently.
This approach contrasts widespread practices like “Stack Ranking” (“Rank and Yank”), advocated by GE’s Jack Welch and critiqued in a previous blog post .

This approach is frequently used for hiring decisions, but less frequently when considering employee candidates for developmental job assignments and promotions.

Max Bazerman

Max Bazerman

Bazerman and Sally B. White, then of Northwestern with George F. Loewenstein of Carnegie Mellon, provided the original demonstration of preference reversals between joint and separate evaluation.

George F. Loewenstein

George F. Loewenstein

Lack of comparison information in separate evaluation typically leads people to rely on internal referents as decision norms, though these may be biased or stereotyped preferences, according to Princeton’s Nobel laureate Daniel Kahneman and Dale T. Miller of Stanford.

Dale T. Miller

Dale T. Miller

Additionally, lack of comparative referents can lead evaluators to rely on easily calibrated attributes, found University of Chicago’s Christopher K. Hsee.
Both of these shortcuts can lead to biased decisions, which may systematically exclude members of under-represented groups.

Christopher K. Hsee

Christopher K. Hsee

Still another problem is the “want/should” battle of emotions and preferences, outlined by Bazerman and Ann E. Tenbrunsel of Notre Dame, with Duke’s Kimberly A. Wade-Benzoni itheir provocatively titled article, “Negotiating with Yourself and Losing.”

Ann E. Tenbrunsel

Ann E. Tenbrunsel

They argue that the want self” tends to dominate when deciding on a single option because there’s less information and less need to justify the decision.
In contrast, the more analytic “should self” is activated by the need to explain decision rationales.

Kimberly Wade-Benzoni

Kimberly Wade-Benzoni

Bohnet’s team asked more than 175 volunteer “employees” to perform a math task or a verbal task, then 554 “employer” evaluators (44% male, 56% female) received information on “employees’” past performance, gender, and the average past performance for all “employees.”

“Employers” were paid based on their “employees’’” performance in future tasks, similar to managerial incentives in many organizations.
Consequently, “employers” were rewarded for selecting people they considered effective performers.
Based on information about “employee” performance, evaluators decided to:

  • “Hire” the “employees,” or
  • Recommend them to perform the task in future, or
  • Return to “employees” to the pool for random assignment to an employer.
Keith E. Stanovich

Keith E. Stanovich

The Harvard team found that “employers” who evaluated “employees” in relation to each other’s performance were more likely to select employees based on past performance, rather than relying on irrelevant criteria like gender.

Richard F. West

Richard F. West

In contrast, more than 50% of “employers” evaluated each candidate separately without reference to other “employees,” selected under-performing people for advancement.
Only 8% of employers selected under-performers when comparing “employees” to each other, and multiple raters for multiple candidates also tended to select the higher performing “employees.”

Team Bohnet suggested that people have two distinct and situation-specific modes of thinking, “System 1” and “System 2,” illustrated by University of Toronto’s Keith E. Stanovich and Richard F. West of James Mason University.

Keith Stanovich-Richard West System 1- System 2 ThinkingThese varied cognitive patterns can lead evaluators to select incorrect decision norms, leading to biased outcomes.

As a result, decision tools like the “evaluative nudge” decision-framing can reduce bias in hiring and promotion decisions, leading to a more equitable workplace opportunity across demographic groups.

-*What other evaluation procedures can reduce unconscious bias in performance appraisal and career advancement selection processes?

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Intrinsic Motives, not Positive Consequences Linked to Achieving Goals, Career Performance

Amy Wrzesniewski

Amy Wrzesniewski

Sustained effort toward a goal may be intrinsically motivated by personal commitment to a larger “mission.”
At the same time, goal-seeking activity may be extrinsically motivated by external rewards, counteracting intrinsic motivation’s positive impact on effective career performance.

Xiangyu Cong

Xiangyu Cong

This complex interaction of internal and external motives was investigated among more than 10,000 people admitted to the United States Military Academy (“West Point”) by Yale’s Amy Wrzesniewski, Xiangyu Cong, Michael Kane, Audrey Omar, and Thomas Kolditz, with Barry Schwartz of Swarthmore.

Michael John Kane

Michael John Kane

Wrzesniewski’s team considered the long-term impact of holding both intrinsic motives (desire to serve and protect citizens) and extrinsic motives (have a respected career) for attending West Point cadets on:

  • Promotion to commissioned officer rank,
  • Extending officer service beyond the minimum required period of 5 years,
  • Selection for early career promotions.
Audrey Omar

Audrey Omar

Cadets who were intrinsically motivated were more likely to accomplish these goals.
However, those who also reported extrinsic motivation were less likely to achieve these career distinctions.

Richard Koestner

Richard Koestner

A meta-analytic review of nearly 130 experiments by University of Rochester’s Edward Deci and Richard Ryan with Richard Koestner of McGill confirmed the undermining effects of extrinsic rewards on intrinsic motivation from childhood through adulthood.

Mark Lepper

Mark Lepper

People may report less intrinsic motivation when extrinsic rewards are available, a phenomenon called the “overjustification hypothesis”  by Stanford’s Mark Lepper, David Greene, and Richard Nisbett of University of Michigan.

Clark McCauley

Clark McCauley

People typically view their work as being intrinsically or extrinsically motivated:

  • Job, mostly extrinsically motivated
  • Career, some intrinsic and extrinsic motivation
  • Calling, intrinsically motivated by fulfillment from the work itself, resulting in greater satisfaction and better performance than the other two orientations, according to Wrzesniewski’s previous work with Schwartz, collaborating with Bryn Mawr’s Clark McCauley and Paul Rozin of Penn.
Paul Rozin

Paul Rozin

These results  empirically support long-standing philosophical guidance to find meaning in work rather than primarily focusing on positive consequences of goal achievement.

Thomas Kolditz

Thomas Kolditz

This is especially relevant because the U.S. Military employs extrinsic motive appeals in marketing messages to recruit cadets, suggesting that military services provides “money for college,” “career training,” and enables members to “see the world.”

However, extrinsic motives tend to be associated with less career recognition and tenure than those who find meaning in the organization’s mission.

-*How do you increase intrinsic motivation when extrinsic motivation may seem more appealing?

-*What elements make your work “a calling”?

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Defining Elusive Elements of “Executive Presence”

Fewer researchers have empirically investigated behaviors and characteristics associated with “Executive Presence” than the number of consultants offering recommendations on how to develop this quality and its potential association with career advancement.

Sylvia Ann Hewlett

Sylvia Ann Hewlett

A previous blog post identified three characteristics associated with “executive presence” by Sylvia Ann Hewlett of the Center for Talent Innovation:  Communication, “Gravitas”, and Appearance.

Gavin Dagley

Interviews with 34 professionals, conducted by Perspex Consulting’s Gavin Dagley and Cadeyrn J. Gaskin, formerly of Deakin University, uncovered more elements than Hewitt’s proposed triad of qualities.

Caderyn Gaskin

They found that most executives described as having “presence” were men, reinforcing Hewitt’s assertion that women interested in career advancement should focus on conveying executive presence attributes to observers.

Dagley and Gaskin identified ten characteristics including those mentioned by Hewitt.
The first five characteristics are based on first impressions during initial contact:

  • Status and reputation, similar to “gravitas” discussed by Hewitt,
  • Physical appearance, also mentioned by Hewitt,
  • Confidence,
  • Communication ability, included in Hewitt’s “presence” triad,
  • Interpersonal engagement skills.

The final five attributes derive from evaluations over time during repeated contacts:

  • Interpersonal integrity,
  • Values-in-action,
  • Intellect and expertise,
  • Outcome delivery,
  • Coercive power.

These qualities combine in different ways to form four presence “archetypes”:

  • Positive presence, based on favorable impressions of confidence, communication, appearance, and engagement skills plus favorable evaluations of values, intellect, and expertise,
  • Unexpected presence, linked to unfavorable impressions of confidence plus favorable evaluations of intellect, expertise, and values,
  • Unsustainable presence combines favorable impressions of confidence, status, reputation, communication, and engagement skills plus unfavorable evaluations of values and integrity,
  • “Dark presence” is associated with unfavorable perceptions of engagement skills plus unfavorable evaluations of values, integrity, and coercive use of power.
Philippe De Backer

Philippe De Backer

Another typology of executive presence characteristics was identified by Sharon V. Voros and Bain’s Philippe de Backer.
They prioritized elements in order of importance to purportedly related life outcomes:

  • Focus on long term, strategic drivers,
  • Intellect,
  • Charisma, combining confidence, intensity, commitment, plus demeanor of care, concern and interest in others,
  • Communication skills,
  • Passion,
  • Cultural fit,
  • Poise,
  • Appearance.

Most people assume a relationship between “executive presence” and career “success,” even if the causal connection has not been demonstrated.

Fred Luthans

Fred Luthans

However, University of Nebraska’s Fred Luthans and Stuart Rosenkrantz with Richard M. Hodgetts of Florida International University investigated this relationship by observing nearly 300 managers from various levels at large and small mainstream organizations as they:

  • Communicated,
  • Engaged in “traditional management” activities, including planning, decision making, controlling,
  • Managed human resource issues.
Richard Hodgetts

Richard Hodgetts

Communication and interpersonal skills elements of “presence,” coupled with intentional “networking” and political acumen enabled managers to rapidly advance in their organizations.

Luthans and team identified these managers as “successful” leaders because they advanced more rapidly than “effective” managers, measured by participants’ organizational level compare with their organizational tenure.
In contrast, “effective” managers demonstrated greater managerial skill than “successful” managers, but were not promoted as quickly.

“Effective” managers spent most time managing human resource activities including:

  • Motivating/reinforcing,
  • Managing conflict,
  • Hiring/staffing,
  • Training/developing team members,
  • Communicating by exchanging information,
  • Processing paperwork.
Stuart Rosenkrantz

Stuart Rosenkrantz

Their subordinates reported more positive attitudes and behaviors than subordinates of “successful” managers for:

  • Job satisfaction,
  • Organizational commitment,
  • High team performance quality,
  • High team performance quantity.

Differences in advancement and subordinate reactions to “successful” and “effective” managers appear related to differing managerial behaviors.

Fred Luthans-Effective Managers“Successful” managers spent little time in managerial activities, but invested more effort in networking, socializing, politicking, and interacting with outsiders.
Their networking activities were most strongly related to career advancement but weakly associated with “effectiveness.”

Few managers were both “successful” and “effective”:  Only about 10% of volunteers were among the top third of both successful managers and effective managers.
These findings can lead to discouragement and cynicism, noting that effective managers who support employee performance may not be rewarded with advancement as rapidly as managers who prioritize their career over that of their employees.

These studies suggest that gravitas, communication, and political acumen may explain the gender difference for perceived “executive presence.”
Women who aspire to organizational advancement seem to benefit from cultivating both gravitas and proactive networking to complement communication and interpersonal skills.

-*Which behaviors and characteristics are essential to “Executive Presence”?

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Acknowledge Potential Employer “Concerns” about Gender, Attractiveness to Get Job Offer

Although attractive people enjoy many advantagesattractive women applying for jobs in traditionally male jobs, such as firefighting or engineering, face a double disadvantage: gender and appearance.

Madeline Heilman

Madeline Heilman

The “beauty is beastly effect” is a hiring bias favoring men or less attractive women for “masculine” jobs, first described by Yale University’s Madeline E. Heilman and Lois R. Saruwatari.

Lois Suruwatari

Lois Suruwatari

They found that attractiveness was an advantage for men seeking both managerial and non-managerial role, but attractive women had an advantage only when seeking lower-level, non-managerial roles.

Michelle Hebl

Michelle Hebl

Attractiveness and gender can be considered a “stigma,” just as disability, obesity, and race.
Rice University’s Michelle R. Hebl and Robert E. Kleck of Dartmouth College reported that people in these categories can reduce hiring biases by acknowledging their “stigmatizing” characteristic during the interview.

Robert Kleck

Robert Kleck

In addition, women who proactively addressed the employers potential concern about gender or appearance in a traditionally male role were rated higher in employment suitability, according to University or Colorado’s Stefanie K. Johnson and Traci Sitzmann, with Anh Thuy Nguyen of Illinois Institute of Technology.

Stefanie Johnson

Stefanie Johnson

These candidates were assumed to possess more positive “masculine” traits than other female candidates and evaluators were less likely to penalize these women for displaying “counter-communal” traits, like behaving in contrast to traditional gender role norms.

Traci Sitzmann

Traci Sitzmann

Attractive women’s pre-emptive communication appears to have favorably shaped the rater’s evaluations of employment suitability and buffered the impact “hostile sexism” while increasing “benevolent sexism’s” link to employment suitability ratings.

-*How effective you found “pre-emptive objection-handling” in workplace negotiations?

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