New Year's Resolutions, Managers and Nudge Strategy

About this time of the year, popular magazines are filled with articles about helping you make sure that your New Year’s resolutions stick this time. In their best-selling book Nudge, Professors Richard Thaler and Cass Sunstein show that an effective way to change people’s behavior is to “nudge” them, rather than say, demand big changes in attitudes or behavior. These nudges can be passive (e.g., placing your work-out clothes and bag right by your desk or bedside) or can be self-imposed (e.g., using a smaller-sized plate when having a meal). The effectiveness of this approach has been demonstrated time and again, even in the UK, where in 2010 then prime minister David Cameron created a Nudge Unit. One of its successes was dramatically increasing on-time tax payments by simply reminding taxpayers that many British citizens pay their taxes on time (an example of a nudge using social norms).

This is their description of what nudging is: “A nudge … is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not.” (p. 6)

As summarized by Ann Cuddy in her book Presence, the underlying reasons for why nudging is effective are the following. First, nudges are small and require minimal psychological and physical commitment. Rather than promising yourself that you will never again be late for meetings, for example, you might make a resolution to not be late for the next meeting you will have with your boss. Second, nudges operate via psychological shortcuts; for example, using normative influence (showing what other people would do in a situation) rather than informational influence (giving all kinds of reasons why you should do something). Third, our attitudes follow from our behavior rather than vice-versa.

One of the underlying concepts behind nudging is that of choice architecture. Choice architecture refers to the design of an environment that can influence the choices that people make without necessarily intruding on their freedom of choice. A nudge is “any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.” A nudge is not an order, nor is it forced compliance; it’s an attempt to make a better option more visible.

In their book, Thaler and Sunstein describe different types of nudges; many of these apply more to public policies than to organizational policies. However, as Thaler and Sunstein mention, employers are themselves choice architects. In implementing their policies, organizations do in fact nudge employees one way or the other towards certain choices, for example, when they opt in or out of certain benefits. I have not read many examples of how managers can apply nudging strategy in the work place, although managers do in fact nudge, whether they are conscious of this or not. My focus here is not so much on organizational or employer policies, but on what individual managers can do to become more effective choice architects.

  

In doing this, I am using as a framework Peter Drucker’s (1973) five critical responsibilities of a manager: setting objectives, organizing (e.g., analyzing activities, structuring, selecting people for jobs), motivating and communicating, measuring, and developing people. Sunstein (2014) has outlined ten types of nudges, which I list along with an example or two of what managers can do to utilize each of these types of nudges.

1.     Default rules. The common example here is when employees are automatically enrolled in retirement plans so that they don’t even have to choose actively. Per Sunstein, “…in many contexts, default rules are indispensable, because it is too burdensome and time-consuming to require people to choose.” In the work place, managers who want to set up regular interactions with their team can create schedules on their employees’ calendars so that weekly team meetings are blocked off.

2.     Simplification. Consultant William Scheimann has reported that in his surveys, only 14% of employees have a good understanding of their company’s strategy and direction. A recent HBR article found percentages in the same ballpark as Scheimann’s. There can of course be many reasons for this, but certainly one of them is that many strategies are complicated, and have not been simplified enough for employees. Managers can make these strategies understandable to employees by simplifying and explaining how the elements of the strategy align with team members’ own objectives. Jack Welch, former CEO of General Electric, once said: “The more simply your idea is defined, the better it is. You communicate, you communicate, and then you communicate some more. Consistency, simplicity, and repetition is what it’s all about.”

3.     Uses of social norms. Informing people what most others do in similar situations has a big influence on behavior, and is an effective nudge. For example, when working for a large financial services company, my team and I collaborated with several consultants and academics to identify the most effective management practices in this firm. We interviewed 60 of the managers nominated by their superiors as among the best managers in the company, and 60 so-called average managers (no one admitted to having poor managers in their divisions). We selected those practices that best differentiated the outstanding from the average managers, and used this to build a leadership development program for the company, including 360-degree surveys so managers could compare their results with the best. Google recently did something similar when they came up with eight critical management behaviors of their best managers (Garvin, 2013).

4.     Increases in ease and convenience. A nudge that makes it easy for people to choose is effective, other things being equal. To facilitate communication, for example, managers can make sure that employees’ work spaces are contiguous (much as what Apple is doing for its new corporate offices and Google did when it created “bullpens” or open spaces so that workers could interact more frequently with top managers). For virtual teams, managers can make sure that employees have access to social technology tools that make it easy for team members to communicate with one another.

5.     Disclosure. Explaining the hidden costs of some behaviors (e.g., the full cost of certain credit cards) is also an effective nudge. Leaders can encourage managers who are hiring potential employees on the importance of considering diverse candidates, and point to the benefits of diversity as well as the disadvantages (and legal implications) of not hiring diverse candidates.

6.     Warnings, graphic or otherwise. For Sunstein, such nudges should be used especially when serious risks are involved. Managers can explain clearly to employees the dangers of accepting bribes especially when doing business in countries that score relatively high in the Corruption Index, and provide examples of businesspersons from other companies who have been fired or worse, jailed, for these crimes.

7.     Precommitment strategies. This is a type of nudge where, if people precommit to engaging in certain actions, they are more likely to follow through. During project review meetings, for example managers can review action items with their team and ask specific team members to explain what they will do next about action items on project tasks for which they are responsible.

8.     Reminders. These are simple nudges to remind people to perform certain actions (e.g., the e-mail alerts we receive letting us know when to pay our credit card bills). Managers can set alerts to schedule specific times when they can check in with specific employees, either personally or through e-mail, and inquire about certain follow-up items.

9.     Eliciting implementation intentions. In this nudge, one asks a question about a future conduct to draw out their intention (e.g., do you plan to fill out the employee survey?). With an employee who might be hesitant to collaborate with others, a manager may have a conversation with an employee about finding out when and how the employee might reach out to colleagues.

10.  Informing people of the nature and consequences of their past choices. Through data about past behavior (e.g., people’s expenditures on car insurance), people can be nudged into either continuing or increasing their commitment to that behavior. Harkin et al. (2016) conducted a meta-analysis of the relationship between monitoring goal progress and goal attainment and found overwhelming evidence for such a relationship. In fact, they report that “… progress monitoring had larger effects on goal attainment when the outcomes were reported or made public, and when the information was physically recorded.” For example, during their weekly updates with direct reports, managers could review progress on specific task milestones and reinforce how making progress in these milestones can make a difference not only to the team but also to the department.

While use of these different types of nudges might not seem very unusual or unique, I have found this checklist helpful in reminding managers of the different types of nudges at their disposal, especially keeping in mind Drucker’s five managerial responsibilities. As managers think through the appropriate nudges for their direct reports, they also need to consider the following four questions. Ly et al. (2013) refer to these as bottlenecks; I’ve adapted their four questions, which I think are an excellent starting point for managers as they consider the most effective nudges to use for their direct reports:

1.     Are your direct reports aware of what they need to do but are unable to perform the behavior, or does the desired behavior need to be activated? This is the classic “skill” versus “will” question that managers inevitably need to answer.

2.     Are they motivated enough to impose a nudge on themselves?

3.     How much cognitive or information overload is there? A nudge that relies on providing more information may not work at certain times (e.g., when there are a significant number of change initiatives or there are pressing deadlines that need to be met urgently).

4.     Are there competing actions or is inertia involved? If the former, then the manager might want to focus on discouraging those other actions first.

A key takeaway here is that changing behavior and influencing others do not have to require herculean efforts; through effectively using nudges, managers (as well as individuals) can make strides in achieving their goals – and our New Year’s resolutions. Furthermore, since managers are already choice architects, they should be aware of and make use of these different types of nudges to motivate their employees and build a high-performance team.

Cuddy, A. (2015). Presence: Bringing Your Boldest Self to Your Biggest Challenges. New York: Little, Brown and Company.

Drucker, P. (1974). Management: Tasks, Responsibilities, Practices. New York: Harper & Row.

Garvin, D. (2013). How Google Sold Its Engineers on Management. Harvard Business Review, December.

Harkin, B. et al. (2016). Does Monitoring Goal Progress Promote Goal Attainment? A Meta-Analysis of the Experimental Evidence. Psychological Bulletin, 142 (2), 198-229.

Ly, K. et al. (2013). A Practitioner’s Guide to Nudging. Rotman School of Management: Research Report Series.

Sunstein, C. (2014). Nudging: A Very Short Guide. Journal of Consumer Policy, 37.

Thaler, R. and Sunstein, C. (2008). Nudge: Improving Decisions about Health, Wealth, and Happiness. New Haven, CT: Yale University Press.

Valuing Humility in Leadership

In a blog post earlier this year, I wrote about the value of productive narcissism for leaders in organizations, but also raised some questions about its dangers. In this blog, I want to focus on humility - a trait we often don’t associate with leaders, especially those larger-than-life leaders past and present. Even among CEOs, the leaders who readily come to mind for many include Jack Welch, Steve Jobs and Bill Gates – none of whom we would think of as humble. Jeffrey Pfeffer, in his book Leadership BS, in fact argues that while there are advantages to modesty (which he uses as a synonym for humility), there are several disadvantages. He claims that immodesty and narcissism actually help people attain leadership positions and help them to advance. He cites research that overconfident individuals tend to achieve higher social status, respect and influence in groups. Narcissists tend to exhibit more energy, dominance, self-confidence and charisma than non-narcissists. And he concludes that most companies have a preference for selecting leaders who are immodest, grandiose and narcissistic. Because they are more extroverted and have higher self-esteem, narcissists are more likely to be chosen as leaders and to be seen as having leadership potential.

Furthermore, it could be argued that humility might not work all that well cross-culturally. Power distance, the acceptance of inequality and status differences, is one of the major cultural dimensions differentiating cultures, with high power distance cultures such as Russia and Malaysia placing great importance on status, rank and deference to authority, and low power distance cultures such as Australia and Denmark placing less emphasis on hierarchy and titles. High power-distance cultures seem to admire authoritarian leaders who run their organizations (and countries) with an iron fist, and who display no outward signs of weakness.

Let’s first define humility, and then let me make the case for the value of humility in leadership. Owens et al. (2013), after reviewing the literature, proposes this definition: … an interpersonal characteristic that emerges in social contexts that connotes (a) a manifested willingness to view oneself accurately, (b) a displayed appreciation of others’ strengths and contributions, and (c) teachability. In my view, humility in leadership is first and foremost an orientation, a mindset, an attitude if you will, when engaging in interactions with others. The elements of this orientation are an openness to listen, a willingness to learn from others, and an awareness that one may not have all the answers.

Here are three reasons why humility is important for leaders. First, being humble tempers the excesses that extreme self-confidence can bring. The research on derailed managers shows very clearly that strengths when overused can lead to fatal flaws. Managers who derail show several traits and skills that more often than not narcissists have in abundance. They include lack of emotional stability, defensiveness, lack of integrity, insensitivity and abrasiveness. As summarized by Gary Yukl (2010):

“…the derailed managers could be charming when they wanted to, but over time it became evident that beneath the façade of charm and concern for others, the person was really selfish, inconsiderate, and manipulative … when they disagreed with someone, (they) were more likely to be outspoken and offensive.”

In my judgment, Pfeffer’s conclusions about the value of narcissistic leaders are based on two flawed arguments. The first is that while the research does show that self-confident and outgoing individuals are more likely to be selected as leaders and to advance, it does not mean that they will be effective as leaders. This is perhaps why there are so many bad bosses, and why the psychologist Robert Hogan and others have cited that the base rate of managerial failure averages around 50 percent. In fact, Pfeffer’s descriptions seem out of synch with organizational reality. Executives who rise to the top because of their narcissism seldom are able to build sustainable organizational performance. They may be able to bluff and bully their way for a short period of time, but it all catches up to them. Perhaps thirty or forty years ago, such an executive might have been able to get away with this. But with the pressures for increased transparency and standards for a certain level of behavior, such narcissistic leaders do not survive for long in many corporations. Research has shown that all sorts of negative things can happen when people are placed in positions of power; for example, they begin devaluing the contributions of others, start thinking of themselves as superior, etc. The dose of humility in self-confident leaders helps them to become less arrogant. In fact, many other studies show that while charisma may predict career success and advancement, it does not necessarily predict organizational or firm performance. As Keltner (2016) has pointed out: “In primate social life, human and nonhuman alike, groups give power to those who advance the greater good. This basic power dynamic ensures that groups are led by individuals who will not be their undoing but will instead act with enthusiasm, kindness, focus, calm, and openness, thereby benefiting the groups.” (pp. 52, 55).

The second flaw in Pfeffer’s argument is that while it might indeed be the case that narcissists do display energy, dominance, self-confidence and charisma, these are not unique to narcissists. We do tend to like our leaders to show self-confidence and energy, but we don’t view these traits in isolation but as part of an entire package when we view them. It is the toxic mix of arrogance and disdain, along with a lack of humility, that dooms many narcissists. Pfeffer may also be confusing self-confidence with cockiness, and the two are actually very different. And the meta-analysis I mentioned in my earlier blog post found a wide range of relationships between narcissism and leadership effectiveness. On average, narcissists were no more or less likely to become effective leaders. In fact, there seems to be an inverted U-shaped relationship; leaders who are weak as well as those who are very strong narcissists don’t tend to become effective leaders.

The second argument for humility in leadership is that a humility mindset helps leaders make better decisions and build better teams through a balance between advocacy and inquiry. While leaders often believe that they have to be forceful and aggressive, and act like they know the answers (the advocacy position), they also need to balance this with a spirit of inquiry that encourages others to challenge them. They ask good questions, they seek feedback, they actively listen, they admit it when they make mistakes, they praise and recognize others and give them credit, and minimize bragging about their accomplishments and about themselves. In a recent Fortune article (November, 2016) about Microsoft’s CEO Satya Nadella, a former colleague said this about the Nadella’s humility: “(He) could suspend his disbelief and opinion to listen to you thoughtfully. The slight difference between listening to argue and listening to learn is not subtle. It’s huge. Satya is soft-spoken but energetic …”.  Recent studies of teams have shown that those led by high-empathy individuals tended to perform better on a series of collective intelligence tasks. Keltner (2016) argues that those with what he calls “enduring power” have empathy, are generous and tend to express gratitude. He does not explicitly use the term humility but this can be inferred from what he writes.

The third argument is that, in my experience, humility actually helps leaders when managing cross-culturally. When we are interacting with others from different cultures or nationalities, adapting a mindset that is flexible, accepting, curious and empathetic is essential (Henson, 2016). Humility is important especially in many cultures where building relationships and establishing trust are essential in developing business ties, as well as loyalty and commitment from local staff. I have seen many expatriates fail in their assignments when they believe that they know it all, especially because they come from corporate headquarters. Ethnocentrism is antithetical to humility. Even in low power distance cultures like Australia, for example, there is a cultural norm against the so-called tall poppy syndrome, where many want to put in their place those who have achieved something or are successful. Showing a dose of humility will certainly help.

Interestingly, there is a body of literature in the counseling field around cultural humility, and the importance of this orientation for therapists in working with their patients, especially those with different cultural backgrounds from the therapist. That is, the culturally humble therapist is open, self-aware, egoless, self-reflects and engages in supportive interactions (Foronda et al., 2016). Leaders of course are not therapists but do share an important common goal: that of creating commitment from others through positive influence. Furthermore, when leaders disempower us with their arrogance and lack of humility, our bodies start producing cortisol, which is what prepares the body for defense and a fight-or-flight response – not exactly ideal conditions for productivity and high performance. Cortisol increases our heart rate and blood pressure, and releases sweat in the hands. It also activates glucose production and stimulates the immune system. Over time, high levels of cortisol among employees lead to absenteeism and various health problems.

This is not a plea for leaders to suppress their self-confidence or their energy level, both highly important traits for leaders. However, confidence should not be confused with arrogance or self-righteousness. Leaders need to be confident; they need to have a point of view and express that point of view, but it does not mean that they cannot have some humility.

Here are three tips to developing a dose of humility. One, increase your self-awareness through regular self-debriefings and self-reflections. Reconstruct meetings that you’ve just had, for example, and, before jumping off to another meeting, take a couple of minutes to think about what you did that helped the meeting and what you might have done differently. Two, solicit feedback. On a regular basis, seek out individuals you trust and ask them what you could do to improve. Three, improve your listening skills. This is especially important for higher-status leaders who might not acknowledge their dependency on others, such as a senior surgeon at a hospital who is actually dependent on his operating room team. By practicing what Edgar Schein (2013) calls humble inquiry, this surgeon, as well as other leaders, can create a climate that gives others permission to help them should they need it.

Foronda, C. et al. (2016). Cultural Humility: A Concept Analysis. Journal of Transcultural Nursing, 27 (3), 210-217.

Henson, R. (2016). Successful Global Leadership: Frameworks for Cross-Cultural Managers and Organizations. New York: Palgrave Macmillan.

Keltner, D. (2016). The Power Paradox: How We Gain and Lose Influence. New York: Penguin Press.

Owens, B. et al. (2015). Expressed Humility in Organizations: Implications for Performance, Teams, and Leadership. Organization Science, 24 (5): 1517-1538.

Pfeffer, J. (2015). Leadership BS: Fixing Workplaces and Careers One Truth at a Time. New York: HarperCollins.

Schein, E. (2013). Humble Inquiry. San Francisco: Berrett-Koehler.

Yukl, G. (2013). Leadership in Organizations. Upper Saddle River, NJ: Prentice-Hall.