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We expect the powerful, those in positions of leadership, to make decisions, but how well equipped are they to make them?
Academics from both sides of the Atlantic have looked closely at leadership decision-making and have come to the conclusion that the ability to make a good decision can be undermined by power. Unconstrained power say the academics can hinder decision making.
The academics ran a series of experiments to test their premise. In one individuals were assigned either high-power or low-power roles and subsequently asked a series of leadership questions. Random scores were assigned to these questions and the participants were told that their score reflected either a good or a poor aptitude for leadership. Participants were then asked to bet money on how well they could answer six trivia questions.
The so-called powerful participants lost money, whereas those who did not have powerful roles were less risky with their bets and as a consequence did not lose money.
“The psychological experience of power it appears corrupts our ability to make sound decisions,” says Niro Sivanathan of London Business School a co-author of the report
“Specifically it leads to a sense of over-precision - the tendency to over-estimate the accuracy of one’s personal knowledge,” he adds.
Nathanael Fast, an assistant professor of management and organisation at the University of Southern California Marshall School of Business and another of the co-authors suggests that one way for powerful leaders to avoid this tendency is to surround themselves by people who criticise their actions.
“As a power holder, the smartest thing you might ever do is bring people together who will inspect your thinking and who aren’t afraid to challenge your ideas,” says Prof Fast. But according to the research “the more powerful leaders become, the less of this help they think they will need.”
The paper “Power and overconfident decision making”, was also co-authored by Nicole Mayer of the University of Illinois and Adam Galinsky of the Kellogg School of Management at Northwestern University. It will be published in the journal of Organizational Behaviour and Human Decision Processes.
● Tall and good looking are often the adjectives that accompany a description of a chief executive. Numerous studies have examined how handsome, tall men are more likely to be senior executives and good-looking workers tend to earm more than their average-looking peers.
Now a trio of academics has taken this a stage further and looked at the performance of chief executives to try to discover whether physical attributes such as attractiveness have any bearing on the way individuals perform in the workplace.
Their conclusion? If you are a chief executive your face really is your company’s fortune. There does indeed appear to be a correlation between a company’s financial performance and the physical appearance of its chief executive say the researchers.
The academics - Margaret Ormiston, an assistant professor of organisational behaviour at London Business School, Elaine Wong an assistant professor and Michael Haselhuhn an assistant professor of organisations and strategic management both at the University of Wisconsin-Milwaukee, analysed the male chief executives of 55 Fortune 500 companies across a range of sectors, using a measurement based on facial bone structure (width to height ratio). Wider faces are considered to be more attractive than longer faces. Armed with these measurements they then analysed the financial performance of the chief executives and the companies they headed.
Previous studies have used this facial measurement as a means of identifying traits such as aggression and untrustworthiness and the academics hypothesised that aggressive behaviour can be linked to feelings of power. In their paper they suggest that this is important because “Powerful people tend to view their external environment optimistically, to note opportunities and to focus on the big picture rather than the details.” The writers add that powerful people pay more attention to “task relevant information” . As a result say the writers these attributes are associated with ”effective executive leadership and often increased organisational success”.
After analysing the data the academics suggest that that those chief executives with wider faces tended to achieve a superior financial performance for their companies. However they add that their findings do not hold true when there is a more collegiate approach to decision making.
The article “A face only an investor could love: CEOs facial structure predicts their firm’s financial performance appeared in the December issue of Psychological Science.
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