Group Risk

2016-06-04 10:02

Who calls the shots? You do! Or do you?

It’s a nice idea, that we live our lives according to our own set of unshakeable values and principles. Virtuous, square-jawed, and unflinching; we stand firm while those around us submit to impulse and temptation. Bad behaviour in others: The corrupt politician, the workplace bully or the crooked salesperson targeting the vulnerable; we’d never do that.

Not so fast…

The power of others to influence us matters much more then we care to admit. We all make sense of our world through a personal narrative bias: everything’s a scene, a story, with ourselves as the central character. All of us, tell ourselves a story about ourselves. It’s how we make sense of the world. As we develop our self-identity – the type of person we’d like to be; the type of person we want others to think we are – we reinforce it with supporting information, and avoid situations that threaten it.

For example, when we are successful, most of us tend to attribute that success internally. It’s a nice, affirming story when we achieve something significant as the result of our hard-work, our talent and our cast-iron resilience. We are our own hero. We all love tales of redemption; but tales of our own redemption? Even more. Yet we are far more likely to externalise any reasons for failure. When thing don’t quite work out, it’s usually the economy, the markets, our lousy team. You know, other people’s fault. This is an entirely predictable reaction because defending our self-concept is a very powerful psychological phenomenon.

But what is really interesting, is how we attribute success and failure in others. When others are successful, it’s usually because they’re lucky, connected, or was handed to them on a plate (external, situational); when they fail it’s because they’re lazy, incompetent, inadaptable (internal, dispositional). This is referred to as the “self-serving bias” and the “fundamental attribution error”: the tendency to attribute personal success internally, while externalising the success of others. We assume we are able to attribute their behaviour to a dispositional strength or shortcoming, based on a single observation or by the group they belong to. Like when someone cuts us off in traffic we automatically assume they are selfish and incompetent with no regard for basic civility. When we do it, it’s an honest mistake or the situation called for it.

It happens on a group and organisational level too. If our competitors do well, we attribute it to luck rather than accepting they ran their businesses better than we did. And boy does it happen in politics; especially in South Africa. We attribute all kinds of dispositional attributes to people depending on what political party they belong to, despite knowing what every reasonably intelligent person knows - that having a different political philosophy doesn’t make a person inherently evil or immoral.

What is really interesting, is that different cultures tend to attribute success differently – a point backed by numerous studies, yet missed on HR managers who insist on applying a ‘one-size-fits-all’ Individual Performance Appraisal process in cross-cultural workplace settings. Simply put, they don’t work, they are culturally inappropriate, they don’t motivate, and lets not forget the significant marginal and opportunity costs of IPAs far exceeds any marginal benefit. That’s why most smart companies are scrapping them. So why do we still do them? See GroupThink a little later on.

This is powerful stuff. We like to believe we are in control, but the truth is a little more complex. We judge other people for lying to themselves, yet when we do it, it doesn’t count. This is the power of Us vs. Them. As soon as we identify with a group, we start judging other groups.

Paul Rusesabagina observed that “when your individuality is dissolved into the will of the pack, then you become free to act in anyway the pack directs”. He knows, he witnessed first-hand how ordinary people became violent killers during the Rwandan genocide. The words “become free to act…” are particularly interesting. It implies a surrender to the group, a freedom from consequence. This, like many other wartime examples, of “deindividuation theory” explains why people tend to become more aggressive and anti-social when they are able to act anonymously. Acting anonymously frees us from consequence, but it strips us of our individuality.

One of the core flaws of Western corporate management practice is the lack of understanding of how a collection of individuals act differently than the sum of its parts. From the beginning the process is deeply problematic. People are selected on an individual basis for their apparent ability to perform a particular set of tasks. Whether the person works well with others or tends to simply ‘dissolve’ into the prevailing way things are done hardly ever factors. Corporates pay enormous sums of money on psychometric assessments, that unknowledgeable managers place great currency in; perpetuating the key shortcoming – that the selection and assessment of candidates as individuals does little to predict how a collection of those individuals will behave.

And that is the crux of understanding organisational conduct. How the group behaves. It matters little when we seek to address individual behaviour – the mainstay of the Western business school leadership model: The Individual Hero. When individuals behave badly in organisations, they are punished as individuals, with scant regard for how the culture and environment enables that kind of behaviour. And that’s the problem. As conduct morphs in to the new compliance, we need a greater understanding of how groups behave, and how groups hold individual members accountable. Yes, individuals must still be held to account, but bad culture can't be fixed by punishing individuals. Good culture comes about when the group doesn't tolerate bad behaviour in the first place. When all the individuals know what the expected and acceptable attitudes & behaviours are.

Take GroupThink as a phenomenon. As individuals we all want to make a contribution, we all want to be heard. An entire industry has responded to this need by helping organisations become more ‘inclusive’ these days. (Cue: Eye roll) But perhaps an even greater urge in each of us is the need for acceptance. And that means our contributions, what we say and do, is more about what we think the group values than about taking a principled stand. Especially when taking a stand has consequences – we all know the three words: Career. Limiting. Move?

The evolutionary advantages of belonging to a group are obvious. Being sociable served our ancestors well - you wouldn't be reading this if your forebears were the rugged individualists many of us like to think we are today. In fact, individualism is a fairly recent human construct; rooted in modern constitutional liberty and religious philosophy. Overcoming the tyranny of the majority is one of mankind’s greatest, albeit fairly recent, advances.

There is little doubt, we instinctively default to social cohesion. As part of a group, we tend to readily accept collective decisions and go with the flow, rather than dissent and object. Especially when the group represents a formal authority structure like those in the workplace; where a boss is able to dominate the decision making and punish any dissent. I work with managers that proudly state they'll never do anything unethical, but are petty and vindictive in the workplace, are constantly preoccupied with displays of power, and don't see anything uncivilised in making the workplace a living hell for their staff. It's abuse, but no one dares challenge it.

If we want to address conduct issues in the work place, we have to understand GroupThink. We must accept that no matter how talented our Talent Programme is, if the culture allows poor managers to dominate decision making, then poor outcomes are what you’ll get. Fixing that is the Holy Grail of Great Organisational Culture Change. Conduct officers and senior managers must constantly guard against GroupThink. The fix? More individual decision making and personal accountability – an almost impossible ask in today’s hyper-political blame-game that is the modern corporate unfortunately. But try we must...

In my area of speciality, banking culture, GroupThink is the single biggest risk factor. Not credit, not interest rates, not reputation or regulatory risk. GroupThink Risk! Because it’s Groupthink that shapes how banks respond to conventional risk. Most banks these days are run by a) Committees, and are b) Authoritarian. The perfect conditions for Groupthink. Management committees are dominated by individuals, who wield enormous power over managers too scared to openly challenge or dissent. On top of this, today’s modern banking decision making process requires excessive consensus; and the blame-game culture means no-one is prepared to personal responsibility. How many times have you heard a bank employee say "No one wants to take a decision around here?" Just count the number of people included in a typical email trail and it’s a triumph of the human spirit that anything gets done. Time after time, when banks fail it’s because dominant personalities have been allowed to rule unchallenged. The group management committee just exist to rubber stamp their decisions. Pick any bank you want, and inevitably you'll find a dominant, almost mythologised personality wielding enormous power.

Another common collective behaviour is Group Polarization. So common we see it happen every day. Group Polarization Theory: That the position of a group tends to be more extreme than the average position of the members. The best example of this is politics. Most members of a political party seem perfectly reasonable when you engage with them individually (I said most). Group Polarization happens because the members of a group that harbour a more extreme position, tend to dominate the discourse. Think emasculated, alpha-male who shouts the loudest in your group at work (there’s always one). The group members that are more reasonable tend not to defend their position as vociferously, simply because they tend not to be as emotionally invested in their own opinions. There is no personal upside to defending something you feel ambivalent about, so the more extreme perspective tends to shift the group’s average point of view. After a while, this position becomes the new normal, until even the previously moderate people start rationalizing this harder line. Six months ago, many Republican conservatives were appalled by Trump’s absurd rhetoric, now they’re defending him!

The big danger of GroupThink, Group Polarization and Fundamental Attribution Error is that it enables, even legitimises, extreme positions against those that are different from us. When we layer this with an economic downturn and uncertainty, we only amplify our innate bunker mentality. We find comfort in sticking with our own people; we fear and loath those that are different, often just because they are different.

As individuals, we must be cognisant of the group’s ability to influence us. For better or worse. Athletes run better with other athletes. The way we dress, how we speak, even what we eat, reflects the social circle we identify with. How we work, the standards we set for ourselves, the decisions we make, how we treat others are all contingent on the values of our chosen groups.

We should never underestimate the Power of Others!

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