Do Goals Corrupt?
Dell Inc. announced yesterday that it will restate more than four years of financial results after a yearlong internal investigation discovered "errors and irregularities" in its accounting and reporting practices. During that period, Dell's finance department manipulated its earnings in order to meet Wall Street's quarterly expectations. What, you might wonder, would compel the computer maker's accounting team to fudge the company's numbers?
"People cheat," says Wharton School of Business professor Maurice Schweitzer in an article for Knowledge@Wharton. And, he adds, people with goals that they fail to meet are more likely to cheat than those people simply instructed to try their best.
Schweitzer and colleagues Lisa Ordonez and Bambi Douma conducted an experiment to study the relationship between goals and cheating. The researchers gave three groups of college students sixty seconds to form as many words as possible out of seven jumbled letters. They told one group to "do your best to create as many words as possible." They gave another group a goal of creating at least nine words in each round and offered participants $2 for each time they met the goal. They gave a third group the same nine-word target, but without the financial incentive. Participants kept and reported their own scores, which made it easy for subjects to cheat.
Schweitzer and his partners analyzed the behavior of participants who falsely claimed to have met the goal of forming nine words. They found that participants who had a goal and failed to meet it were more likely to cheat than those without a specific target were. Schweitzer and company also noticed that people who missed their goal by one or two words were more likely to cheat than people who came up several words short. And contrary to the researchers' expectations, participants with unmet goals were just as likely to cheat whether or not there was a financial incentive at stake.
Are Dell's accountants bad people, or did the pressure to meet goals encourage their unethical behavior? I think Erica Ogg of CNET News.com answers that question best in her article "Goals led Dell to cook the books." Writes Ogg: "Dell felt so pressured to meet Wall Street expectations that its finance department bent accounting rules to make up for shortfalls in certain quarters and underreported earnings results in others, each time ensuring that Dell seemed to hit earnings targets that financial analysts were expecting."
"People cheat," says Wharton School of Business professor Maurice Schweitzer in an article for Knowledge@Wharton. And, he adds, people with goals that they fail to meet are more likely to cheat than those people simply instructed to try their best.
Schweitzer and colleagues Lisa Ordonez and Bambi Douma conducted an experiment to study the relationship between goals and cheating. The researchers gave three groups of college students sixty seconds to form as many words as possible out of seven jumbled letters. They told one group to "do your best to create as many words as possible." They gave another group a goal of creating at least nine words in each round and offered participants $2 for each time they met the goal. They gave a third group the same nine-word target, but without the financial incentive. Participants kept and reported their own scores, which made it easy for subjects to cheat.
Schweitzer and his partners analyzed the behavior of participants who falsely claimed to have met the goal of forming nine words. They found that participants who had a goal and failed to meet it were more likely to cheat than those without a specific target were. Schweitzer and company also noticed that people who missed their goal by one or two words were more likely to cheat than people who came up several words short. And contrary to the researchers' expectations, participants with unmet goals were just as likely to cheat whether or not there was a financial incentive at stake.
Are Dell's accountants bad people, or did the pressure to meet goals encourage their unethical behavior? I think Erica Ogg of CNET News.com answers that question best in her article "Goals led Dell to cook the books." Writes Ogg: "Dell felt so pressured to meet Wall Street expectations that its finance department bent accounting rules to make up for shortfalls in certain quarters and underreported earnings results in others, each time ensuring that Dell seemed to hit earnings targets that financial analysts were expecting."
Labels: credibility, integrity, trust
Bookmark this post on del.icio.usMy Heroes
My friend Matt Langdon at The Hero Workshop honored me by asking if I'd participate in his Hero Interviews series. Matt has been asking people to talk about their heroes, past and present. You can read my interview on his blog.
Matt started The Hero Workshop to encourage all of us to learn and talk about heroes. He believes that when we think of ourselves as heroes, we'll act in heroic ways. He loves taking his message to school classrooms, summer camps, and youth groups where, by teaching young people the nature of heroic responsibility, he helps them handle the challenges life throws their way. In my mind, that makes Matt a hero in his own right.
Find out more about bringing The Hero Workshop to your business, school, or church here.
Matt started The Hero Workshop to encourage all of us to learn and talk about heroes. He believes that when we think of ourselves as heroes, we'll act in heroic ways. He loves taking his message to school classrooms, summer camps, and youth groups where, by teaching young people the nature of heroic responsibility, he helps them handle the challenges life throws their way. In my mind, that makes Matt a hero in his own right.
Find out more about bringing The Hero Workshop to your business, school, or church here.
Labels: leadership
Bookmark this post on del.icio.usBarry Bonds, Paris Hilton, and Your Wondering Employees
Last week, baseball slugger Barry Bonds broke Hank Aaron's record for career homeruns. Skeptics everywhere immediately attributed Bonds' success to rumors of steroid use. Whether Bonds actually takes performance-enhancement drugs or not, his critics' outcry that there be an asterisk next to his name in the record books is a good example of fundamental attribution error. Consider the following.
We humans have an innate need to understand why things happen. In forming our explanations, we attribute credit or blame to internal or external factors. When bad things happen to us, our natural tendency is to point the finger at some external cause (for example, after hitting a bad shot during a round of golf, I'm likely to blame my lousy swing on being disturbed by another player sneezing four fairways away). On the other hand, when positive things happen to us, our inclination is to ascribe our good fortune to internal factors, such as our intelligence or hard work.
Conversely, when explaining why things happen to other people, we have the opposite attribution tendencies. Our propensity is to attribute the success of others to external factors. Hence, our acceptance that Bonds could never have broken Aaron's record without using steroids. But when bad things happen to others, we're quick to blame their character traits (is there anyone who doesn't think that Paris Hilton's spoiled rich-girl personality is what landed her in jail?). Experts call this contrast fundamental attribution error.
Now, apply this concept to the behavior of your employees. Workers hold external factors accountable for their own misfortunes (I'm late because my alarm clock didn’t go off) and the good luck of others (She only got her promotion because they needed to fill a quota). But they blame internal factors for the misbehavior of their coworkers (He failed at that project because he's an idiot) while crediting internal factors for their own success (I earned the promotion by working harder than everyone else did).
Like all humans, your employees are wonderers. Clearly, when left to develop their own explanations, their attribution biases will give rise to comfortable, if not accurate, answers. It's important that you provide the answers they seek.
What are your employees wondering?
What do you think? Post a Comment
We humans have an innate need to understand why things happen. In forming our explanations, we attribute credit or blame to internal or external factors. When bad things happen to us, our natural tendency is to point the finger at some external cause (for example, after hitting a bad shot during a round of golf, I'm likely to blame my lousy swing on being disturbed by another player sneezing four fairways away). On the other hand, when positive things happen to us, our inclination is to ascribe our good fortune to internal factors, such as our intelligence or hard work.
Conversely, when explaining why things happen to other people, we have the opposite attribution tendencies. Our propensity is to attribute the success of others to external factors. Hence, our acceptance that Bonds could never have broken Aaron's record without using steroids. But when bad things happen to others, we're quick to blame their character traits (is there anyone who doesn't think that Paris Hilton's spoiled rich-girl personality is what landed her in jail?). Experts call this contrast fundamental attribution error.
Now, apply this concept to the behavior of your employees. Workers hold external factors accountable for their own misfortunes (I'm late because my alarm clock didn’t go off) and the good luck of others (She only got her promotion because they needed to fill a quota). But they blame internal factors for the misbehavior of their coworkers (He failed at that project because he's an idiot) while crediting internal factors for their own success (I earned the promotion by working harder than everyone else did).
Like all humans, your employees are wonderers. Clearly, when left to develop their own explanations, their attribution biases will give rise to comfortable, if not accurate, answers. It's important that you provide the answers they seek.
What are your employees wondering?
Labels: employees, leadership
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That is a very eye-opening post. I've always found that employees need to be talked to as much as possible to explain the goings on at work. I also know that conversations happen between co-workers that supervisors will never be a part of and those conversations often lead to wondering aloud about those things that aren't clear.
The fundamental attribution errors are so easy and, as you say, fundamental, that only constant effort can overcome them in the workplace.
The fundamental attribution errors are so easy and, as you say, fundamental, that only constant effort can overcome them in the workplace.
What do you think? Post a Comment
The Endowment Effect
In the mid-1980s, researchers Daniel Kahneman, Jack Knetsch, and Richard Thaler conducted a series of experiments involving economic decision-making behavior. In their famous "mugs studies," the trio gave random subjects $6 coffee mugs which they could keep or sell in a mock marketplace. Mug owners wanted an average price of $7 to part with their possessions, while buyers were only willing to pay around $3 to purchase a mug. The researchers attributed the pricing disparity to the sellers' loss aversion. The resulting "Endowment Effect" theory states that people will demand more money to give up something they already own than they will pay to acquire the same object. It's why marketers willingly guarantee a full refund if you're not completely satisfied with their products after thirty days -- they know that, even if you are dissatisfied, a refund of the purchase price cannot compensate for relinquishing ownership of the item. As Kahneman explained, the Endowment Effect does not "enhance the appeal of the good one owns, only the pain of giving it up."
Although it's largely an economic concept, the Endowment Effect explains why your employees are resistant to change. Remember, employees don't fear change; they fear loss. In other words, what they might lose from the change looms larger than the perceived benefits from what you're trying to implement. Not surprisingly, as the Endowment Effect suggests, employees will spend more (time, energy, and effort) to keep what they already have (the status quo) than they'll expend to obtain what they don't have (any benefits resulting from the change).
To overcome worker resistance to change, you must factor in the Endowment Effect. Like mug sellers, your employees will forfeit the status quo only when they have extra incentive. No, I don't mean you should pay them a higher salary to accept change; but you will need to hype the benefits of the proposed change more than you might have expected. If that doesn't work, take a cue from marketers and ask employees to try the change for a limited time. As Kahneman, Knetsch, and Thaler demonstrated, once workers "own" the change, they'll be reluctant to give it up.
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Although it's largely an economic concept, the Endowment Effect explains why your employees are resistant to change. Remember, employees don't fear change; they fear loss. In other words, what they might lose from the change looms larger than the perceived benefits from what you're trying to implement. Not surprisingly, as the Endowment Effect suggests, employees will spend more (time, energy, and effort) to keep what they already have (the status quo) than they'll expend to obtain what they don't have (any benefits resulting from the change). To overcome worker resistance to change, you must factor in the Endowment Effect. Like mug sellers, your employees will forfeit the status quo only when they have extra incentive. No, I don't mean you should pay them a higher salary to accept change; but you will need to hype the benefits of the proposed change more than you might have expected. If that doesn't work, take a cue from marketers and ask employees to try the change for a limited time. As Kahneman, Knetsch, and Thaler demonstrated, once workers "own" the change, they'll be reluctant to give it up.
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Author George Brymer's comments about the leaders who get it, and those who never will.
