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Posted: August 22, 2013
Matt Palmquist

Matt Palmquist is a freelance business journalist based in Oakland, Calif.

 


 
 

Greed Is Good for Some, but Not for Everyone

When Gordon Gekko, Michael Douglas’s seminal villain in the 1987 film Wall Street, tells an audience of shareholders that “greed is good,” the message is less about persuasion than projection. That’s the implication of a new Psychological Science study from authors at the University of Utah and University of Southern California, which finds that powerful people tend to project their own traits—especially their faults—onto the groups or teams they represent.

This phenomenon, called self-anchoring, can have pernicious effects in business, the authors write. CEOs and other top executives are expected to ably run their companies, but when leaders automatically transfer their own attitudes, characteristics, and emotions to those around them, it can cloud their judgment and limit constructive criticism. What’s more, the authors were surprised to find that self-anchoring manifests itself most often in a negative fashion: those in power were particularly inclined to project their pessimistic or destructive ideas onto others. This might be an attempt to excuse their actions, according to the authors, or to frame their bad behavior in an acceptable context. If leaders believe that those they lead act or feel the same way they do, they can fool themselves into thinking negative behavior is appropriate.

The authors conducted three psychological experiments with college students and professionals culled from Amazon’s Mechanical Turk crowdsourcing website, and they consistently found that a sense of power fosters self-anchoring. Compared to low-power followers, high-power leaders used their own traits to judge others, and based their opinions of subordinates on their own feelings about how teams should operate. Even when analyzing photographs of emotional facial features, people primed to feel powerful misread the expressions as being in-line with their own attitudes far more often than did low-power or neutral participants.

“Of course, no one likes to think that he or she is a callous, self-centered decision maker—it is more palatable to think that one’s views are shared by the group,” the researchers write. “That is, rather than simply say, ‘I want this, so I will do this,’ power holders may think, ‘I want this, and it clearly reflects what the rest of the group wants, and therefore, I will do it.’”

Hence, the very features that make powerful people efficient also create the potential for abuse. Leaders’ tendency toward self-anchoring enables them to make decisions quickly but can leave them complacent or blind to others’ opinions, the authors note. And worse, self-anchoring power brokers—like Gordon Gekko—can view their personal aims as synonymous with those of the group.

To ward off self-anchoring, business owners and managers should continually question whether decisions were taken by consensus, and put in place systematic processes to receive and act on feedback from employees at all levels. And because of the negativity associated with self-anchoring, managers with more astringent or cynical attitudes should be reminded that their subordinates often hold more positive viewpoints. In other words, greed isn’t always good.

 

 
 
 
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