Why Good Employees Make Bad Decisions

Gregory Ciotti  |  August 20, 2014

Character is the culmination of personality and experiences. Though character is generally stable, psychologists understand that all of us are susceptible to being "nudged" by our environments.

Listen to any well-respected CEO and she or he will place great emphasis on the company's working environment. A plethora of research shows that the people you work with and the culture you work around will affect your behavior, for better or worse.

In his book Behavioral Ethics in Organizations, Dr. Muel Kaptein gives an astute summation of the scientific literature that evaluates how different surroundings can affect decision making, a topic he first explored in a paper published by the Rotterdam School of Management.

His findings show that the leadership of the company, the values employees share, and the interaction among teams, if handled poorly, can all cause otherwise good people to make bad decisions.

Here are five of the most common, most concerning reasons that good judgment among teams can falter.

1. Employees Feel Like a "Cog in the Machine"

Brigadier General Stanley McChrystal is fond of saying that leadership starts with a shared purpose—when talented masons, carpenters, and glassworkers can all see the vision past their individual craft and know that they're part of the team “building the cathedral.”

Detachment from the goals at large leads to detached interest. Employees feel left behind or that they aren't heading in the same direction as the organization. This is where destructive self-interest begins to interfere.

To be clear, every employee is responsible for his or her own success and advancement in the company, so this is not an argument deterring individuals from pursuing the best in their careers. Destructive self-interest happens when the individual begins suppressing the contribution of others.

For instance, many who believe in a performance culture advocate for the individual to "Share praise, but not blame." In an ideal world, success should acknowledge the roles that others had to play, but a misstep should be owned by the individual. A self-interested employee may blame others when problems arise in order to save face, and also might not acknowledge others’ contributions to a big win.

Balance is found in having interest in your personal career and in the success of your team, or as C.S Lewis would put it:

“Humility is not thinking less of yourself, but thinking of yourself less.”

2. Time Pressure Puts Their Back Against a Wall

It's an established principle in psychology that ideal work/life balance tends to be achieved when the individual feels busy but not rushed. The startup life, or any job in a high-performing company, is going to require a fast pace, but Dr. Kaptein argues that when leadership loses sight of an employee's available time, they can pressure the employee to take shortcuts.

Kaptein cites a study that first had theology students preach the story of the Good Samaritan, then walk from one building to another. Along the way, they would encounter a man in distress (in actuality, this person was planted by the researchers). They found that when the students were given ample time, nearly all of them chose to help the man, but when they were told to “move as fast as possible," 90% of participants ignored the man entirely.

Leadership should strive for an active environment staffed by "progress people," but they need to be aware that some employees may attempt to shoulder additional responsibility even when they can't handle it. This pressure may cause employees to make questionable decisions in order to keep up appearances.

There is a sincere need for leadership to recognize that more hours at your desk doesn't necessarily increase the output of your work, and it certainly won't increase the quality. Focus on developing great work, not done work. Let employees know that it's okay to say no. Fires only burn when they have room to breathe, after all.

3. Employees Mirror Leadership and "Unwritten Rules"

Let me share a story with you.

I work out at a gym that's run by the Fraternal Order of Police. I mention this to note that there are no employees at this gym.

When I first started going, I noticed that the weights were always on their appropriate racks. The organization was pretty impressive. Over time, however, some key people (the "regulars") started leaving the gym in favor of Planet Fitness because the gym really needed new equipment. Bad habits started to set in, and I even found myself being affected—as someone who otherwise prides himself on being organized and a team player, I would leave weights out on the floor. Disappointing, to be sure.

Then a funny thing happened: the gym added new, updated equipment, and the regulars started coming back. It was fascinating to see the transformation that occurred afterward—once the “leadership” returned, their behavior affected everyone else. You would never find a single free weight out of place.

Beyond my personal story is a common principle in leadership: behavior of leaders cascades down to the rest of the group. A psychological phenomenon known as "negative social proof" would argue that the "right thing" to do becomes questionable when people see the right people doing the wrong things.

This sort of influence can also seep into your employees’ behavior through subtle nudges in language. Statements like, "We do things by the book around here" have been shown to actively discourage creative thinking. Be careful about what sort of behavior that leadership, unwritten rules, and key team members project; people are very sharp in picking up on these subtleties, and it may affect their judgment.

4. In Winner vs. Loser Situations, Competition Gets Ugly

Encouraging inter-departmental competition may or may not be a good thing, but one thing is for sure: when a company has a competitive environment that has clear "winners" and "losers," those same employees are more likely to engage in unethical behavior.

The reason is that winning and losing are directly tied to ego. Dr. Kaptein argues that a culture that rewards egotism invites jealousy and vindictive behavior among employees who seek to maintain status and the lauding of praise.

Conversely, a culture of "no-ego doers," or a culture that focuses more on the craft than on the glory, tends to be one that invites candor, collaboration, and a sincere sense of pride for other team members.

The competitive playfulness of a "shirts vs. skins" environment can start to get ugly before anyone realizes it’s happening. It is up to leadership to decide where to draw the line.

Look at the landscape in which many teams operate today. At young companies, most folks interact between the ranks, and even in larger companies, formerly separate departments now collaborate closely, such as the newly prioritized intersection of marketing and IT.

This was thoroughly explored in a psychological study called Getting the most out of multidisciplinary teams, wherein lead researcher Doris Fay found that multidisciplinary teams produced better quality innovations than more uniform teams, but that this boost in performance was only consistent if there wasn’t a problem of teams fracturing into smaller subgroups.

When excessively competitive "micro cultures" start cropping up in teams with overlapping responsibilities, things can degenerate to the high school days of old where cliques are formed and judgment is handed out via who sits with whom at lunch.

Robert McDonald, former CEO of Proctor & Gamble and nominee for the US Secretary of Veteran Affairs, describes this ability to connect multidisciplinary teams as a necessary part of effective leadership:

Diversity is a necessity at P&G to reflect the consumers we serve and to drive innovation, one of our five core strengths. Innovation is the result of connections and collaboration. James Burke, science historian and author/producer of Connections, documented that innovation often comes from connecting two seemingly disconnected ideas.

A diverse group is better able to make these connections since they have a greater diversity of nodes to connect. The role of the leader is to create the environment in which connections and collaboration can best occur.

5. There's Too Much Gray Area in the Company's Culture

When people know what the company holds dear, they find it easier to engage, develop, and hone those skills and behaviors.

How easy it is for "It's-not-my-job syndrome” to rear its ugly head when nobody in the culture knows what the company values. When a team is unified on concepts like Whole Company Support, it's easy for a developer to step in and contribute to the support inbox even though it isn't his or her job to do so.

“Every company has a culture.
The only question is whether or not you decide what it is.”Jason Cohen

The values you reward are the values you get. Leaving values to develop as they may creates a culture clouded by the haze of uncertainty. In many ways, these values will lay the foundation for how your company operates.

37Signals/Basecamp is a company that crafted a narrative that abhors the startup grind —they value strategic breaks and reward this value with 4-day workweeks in the summer. Do you think their employees struggle with the weight of "time crunches" like other companies? That was the second section of this article, but the source of such problems may all come back to an opaque company culture where workers don't know what the company cares about.

Do you value finished work or great work? Do you value and reward candor in the workplace? Do you "default to transparency" and cultivate honest communication? Don't be above creating an internal company culture manifesto, because if you don't know what your company values, the members of your team certainly won't.

On Coaching and the Performance Culture

I've argued before that no entrepreneur or manager has the obligation to be a therapist—people can change, but your responsibility is in teaching and developing your best employees, not in coddling your worst.

I would be loathe to find out if anyone took the analysis in this essay to mean that employees aren't responsible for their own actions or that someone can justify misconduct by redirecting blame to someone else. As a fan of psychology, I also despise "My brain made me do it!" drudge.

Rather, Dr. Kaptein's book and research is simply here to remind us that companies can and do play a role in the nature/nurture balance of influencing an individual’s behavior and the culture within the organization at large.

Leadership cannot be a passive observer in the intersection between a company's working environment and how it nudges employee behavior; the conditions you create will play a pivotal role in deciding “the person they’ll become” and the decisions that they will make.