Tag Archives: testosterone

Executives’ Financial Risk Tolerance Related to Marital Status

 

Nickolai Roussanov

Nickolai Roussanov

Unmarried executives tend to advocate more aggressive investments in corporate capital expenditures, innovation activity, research and development, and acquisitions, resulting in significantly higher stock return volatility, according to Wharton’s Nikolai Roussanov and Pavel G. Savor of Temple University.

Pavel G. Savor

Pavel G. Savor

Marital status is a changeable characteristic rather than a personal inherent trait, previously considered as unrelated to risk-taking decisions.

However, Roussanov and Savor found that marital status can both reflect and affect individual risk preferences based on their analysis of financial risk-taking decisions of CEOs of the U.S.’s 1,500 largest public companies and variations in divorce laws across U.S. states.

Although unmarried CEOs tend lead smaller, early-stage, high-growth firms that benefit from greater investing, Roussanov and Savor controlled for various differences between firms and found that unmarried CEOs make about 10% more risky investments than married CEOs.
Managers are “rational maximizers,” and the target of maximization can change based on personal circumstances, they concluded.

Terence Burnham

Terence Burnham

Unmarried men are more aggressive and willing to take risks, due to higher testosterone levels, according to Chapman University’s Terence Burnham, with colleagues Judith Flynn Chapman and Peter Ellison of Harvard, University of Nevada’s Peter Gray, Matthew McIntyre of 23and Me, and University of Rochester’s Susan Lipson.

Judith Flynn Chapman

Judith Flynn Chapman

In addition, they note that married men may become more cautious as responsibilities for family members increase and testosterone levels decrease.

CEOs, they found, are more likely to be unmarried in U.S. community property states because it is much costlier for a wealthy individual to be divorced.
As a result, it  may be potentially costlier to marry, given the significant chance of divorce.

Peter Ellison

Peter Ellison

A person’s individual characteristics and … individual life cycle matter for the decisions that they make…on behalf of the firms that they lead… Managerial decisions are affected by what is happening in those individual’s personal lives.,” said Roussanov.

Peter Gray

Peter Gray

Boards of Directors may consider a leader’s or candidate’s personal situation, although in the U.S., this is not a legitimate selection criterion.
However, Boards may design CEO incentive compensation tailored to the executive’s risk tolerance, informed by marital status.

Paola Sapienza

Paola Sapienza

For example, a married male or a female CEO leading a fast-growing firm may need financial incentives to increase risk tolerance, since both groups tend to have lower average testosterone levels and lower risk appetite than unmarried men, according to researchers including Northwestern’ s Paola Sapienza, with Luigi Zingales and Dario Maestripieri of University of Chicago

Likewise, a younger unmarried male or CEO of a less dynamic business may need compensation that rewards slower but consistent long term growth.

-*To what extent have you seen organizational leader’s changeable characteristics affect business performance?

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Leadership Roles Reduce – Rather than Increase – Perceived Stress

Animal studies suggest that high status roles are associated with lower stress levels, but fewer human studies that show a causal connection between status and health.

Hannah Kuper

Hannah Kuper

Geoffrey Rose

Geoffrey Rose

The longitudinal Whitehall Studies of British Civil servants suggest that lower status individuals had higher stress and poorer health outcomes that higher status workers, according to Geoffrey Rose of London School of Hygiene and Tropical Medicine and University College London’s  Hannah Kuper and Michael Marmot.

Columbia University’s Modupe Akinola collaborated with Wendy Berry Mendes of the University of California, San Francisco, to re-examine the relationship between organizational status and health outcomes.

Michael Marmot

Michael Marmot

Akinola and Mendes asked police officers to rate their status relative to their colleagues and to other people in the United States.
Then, each volunteer participated in a stressful role-play used by many police departments to help decide which officers should get a promotion.

In this scenario, the officer was asked to placate a disgruntled citizen, played by an actor, who claimed that another officer had verbally and physically abused him.

Modupe Akinola

Modupe Akinola

Researchers measured each heart rates, blood circulation, and testosterone levels as measures of “thriving” stress response or “adaptive” stress response to the role-play.

Officers’ perceptions of their social status were significantly associated with their style of stress response.
Those with higher self-perceived status were more likely to have an adaptive stress response.

Wendy Berry Mendes

Wendy Berry Mendes

In a related study, Akinola and Mendes placed civilian volunteers in high-status or low-status roles to play a complicated, fast-paced video game with a partner.
The researchers again measured participants’ cardiovascular responses and testosterone levels during the task.
Findings with civilians mirrored those with police officers:  Participants placed in the higher-status leader role had more adaptive hormonal and cardiovascular reactions during the high-pressure task.

Those assigned higher status leader roles:

  • Performed more quickly and accurately than supporters
  • Allocated more resources to their partners
  • Expressed more positive perceptions of partners.

Opposite trends prevails for those in lower-status supporter roles:   They had less adaptive responses to the stressful task, did not perform as well on the task, and evaluated the leader more negatively.

Akinola and Mendes suggest that managers may be able to mitigate these negative effects of followership by suggesting paths to workplace advancement.

However, some individual contributors may be more interested in flexible work practices, salary, and time off, than career advancement.
Managers may foster greater employee engagement by tailoring rewards and recognitions to individual priorities.

-*How are role status and stress levels related in your work environment?

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Oxytocin Increases Empathic Work Relationships, Workplace Trust, Generosity

Paul Zak

Paul Zak

Paul Zak, director of the Center for Neuroeconomic Studies at Claremont Graduate Center, and author of The Moral Molecule: The Source of Love and Prosperity, suggests that the hormone oxytocin empathic understanding, generosity (donating to charities, giving money to others in experimental situations), happiness, and trust/trustworthiness.The Moral Molecule

He verified these laboratory-based findings in real-world situations, like a wedding he attended in southern England, prior to which he drew blood samples from the wedding party.

Zak says that oxytocin can be increased by massage, dance, story-telling, prayer, engaging in social media with a loved one, and hugs.
As a result, he “prescribes 8 hugs a day” for better mood and improved “relationships of all types.”

He says that oxytocin can be inhibited by improper nurturing in childhood, stress, abuse, and by oxytocin’s antagonist, testosterone.
Known as the “selfish hormone,” testosterone is also correlated with expressions of power and leadership in the workplace.

One reason women may have challenges expressing these traits in work situations is that their average testosterone levels are ten times lower than men’s.
Zak’s TED Talk

Amy Cuddy

Amy Cuddy

Related Post:

Thoughts change bodies, bodies change minds, roles shapes hormones: Amy Cuddy on “Faking Until It’s Real”

-*To what extent have you seen “eight hugs a day improve mood and relationships”?

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Thoughts Change Bodies, Bodies Change Minds, Roles Shape Hormones: “Faking Until It’s Real”

Amy Cuddy, Harvard Business School social psychologist, like Deborah Gruenfeld at Stanford Graduate School of Business, studies the impact of non-verbal behavior on perceptions of power.

Deborah Gruenfeld

Deborah Gruenfeld

She, like Gruenfeld, found that people who “occupy space” are viewed as more dominant and powerful by others.

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Cuddy takes the research further by demonstrating that non-verbal behavior like erect, “space-occupying” postures and selective smiling affect the way the person executing these behavior feels about his or her personal power, competence, and mood.

She also demonstrated that “power postures” affect secretion of hormones associated with dominance (testosterone) and stress (cortisol).

Cuddy noted that effective leaders, as well as those recently promoted into positions of authority and leadership show a hormone profile of high testosterone and low cortisol, indicating high dominance and low stress.

Individuals in low power role, not surprisingly, tend to have low testosterone and high cortisol, and this is more common among women.

She suggested that small changes in behaviors like posture can make a large difference in how people view themselves, how others see them, and their opportunities and outcomes.

Cuddy recommends that before a job interview or stressful interaction, assume a “big power posture” in private for several minutes.

-*What is your reaction to people who assume a “big power posture” at work?
-*How do you feel when you occupy more space in professional settings?

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