The Financial Services Royal Commission (FSRC) has exposed appalling behaviour from once respected leaders. And while we're right to be outraged, it's important to understand that it's not entirely their fault.
Pinning all the blame for poor behaviour on deliberate individual choice is a fundamental attribution error. This occurs when we overestimate the importance of others' attitudes and underestimate the effect of context on behaviour. Media narrative that focuses on personalities rather than the effect of context on behaviour is symptomatic. We need to rise above the salacious gossip and the spectacle of corporate beheadings to understand what drives behaviour in powerful people, take a more reasoned approach and achieve sustainable change.
Getting to the top of one of the organisations currently exposed by the FSRC is quite an achievement. Those at the top are on average brighter, better qualified, more capable and much harder working than the rest of us. But eventually that leads to their undoing, according to Dacher Keltner, a professor of psychology at the University of California, Berkeley.
Keltner argues that as power corrupts, leaders exhibit four telltale behaviours. They display empathy deficits, self-serving impulsivity, incivility and disrespect, and are susceptible to narratives of exceptionalism. For example, in one study, when asked to draw the letter E on their foreheads for someone sitting across from them to see, people feeling powerful were nearly three times more likely to fail at taking another’s perspective. In other words, those feeling powerful wrote the letter E from their own perspective so that it appeared backward to others.
In another study, those feeling powerful were nearly twice as likely to display self-serving impulsivity, in this case by taking the remaining extra chocolate biscuit ahead of their less powerful colleagues. And in another, nearly half the drivers of expensive cars ignored pedestrians at a crosswalk, whereas none of those in cheaper cars did. One only need listen to a random selection of interviews from the FSRC to find echoes of some or all of these behaviours.
And those bad behaviours form a cocktail with the kinds of biases that we all suffer from, particularly optimism bias, overconfidence, and the illusion of control. To explain these terms briefly; optimism bias, as the name suggests, is the tendency to assume that things will work out in one's favour despite indications to the contrary. Confirmation bias is the tendency to select information that supports a belief, ignoring or discarding evidence that contradicts that belief.
And the illusion of control reinforces the other two biases by leading us to think that we have greater control over outcomes than we do, when we are more likely to just have control over inputs and part of the process. Luck or favourable circumstances are discounted in the assessment of success, leading to an overblown sense of personal control.
"Keltner went as far as to liken having significant power to a form of brain damage."
It's hardly surprising then that people in power act apparently 'irrationally'. To a large degree they are unaware of their bad behaviour as it can be automatic and unnoticed. In fact, Keltner went as far as to liken having significant power to a form of brain damage.
So, if people at the top are to some extent their own worst enemies, how can we stop this happening again? Based on this understanding here are some suggestions for what can be done.
The sackings, resignations and takeovers are not good enough, as sackings for instance will likely just suppress the problem in the short-term, not fix it. From a behavioural perspective, what's likely to happen is that we see a fresh crop of leaders rise to a position of power, who will no doubt be more socially aware, more capable and hard working than the rest of us, just like their predecessors. And that's the problem. The fresh crop of leaders, even those anointed by identity politics, are just as likely to be subject to the same biases as those that brought down their predecessors. And de-biasing training has a very patchy track-record.
So, what's the alternative? The key is to remember that context influences behaviour. Change the context and you change behaviours. In short, limit their power. Don't give too much power to the few for too long. Practical examples of this are: robust and more engaged non-executive boards that seriously challenge management proposals; more diverse boards (and not just token identity politics) that think differently from their management teams; greater emphasis on long-term outcomes for executive remuneration; and a critical review of the nature of relationships between the top end of town and their corporate advisers.
If we can rise above reveling in revenge and take a measured approached based on understanding of behaviour, then we might achieve sustainable behaviour change.
Conor Wynn is a part-time researcher interested in behaviour change and decision-making. His PhD at BehaviourWorks is multi-disciplinary, combining social psychology, sociology and philosophy, and focuses on how power influences behaviour and decision-making in organisations.