Boosting Self-esteem Can Backfire in Decision-Making
Posted April 2, 2008
Smart business leaders understand that confidence affects decision-making and ultimately a company's earnings. But giving employees positive feedback in the hopes of promoting better decisions sometimes can backfire, suggests new research from the psychology department and the Kellogg School of Management at Northwestern University and the London Business School. Some types of positive feedback actually can escalate perceived threats to the ego and increase the need to prove that a questionable decision was the right one.
Across several studies, the research examines how boosting self-esteem—whether contemplating one's own accomplishments or receiving positive feedback from others—affects the face-saving impulse to justify and recommit to decisions whose outcomes seem dubious at best.
The specifics of the positive feedback or self-affirmation that occurs at a critical juncture of decision-making are key to whether a person recommits or walks away from a questionable decision, the studies suggest.
The research will be published in an article titled "The Promise and Peril of Self-affirmation in De-escalation of Commitment," currently in press at the journal Organizational Behavior and Human Decision Processes.
In 1 study, participants, acting as senior managers of a large investment bank, received positive feedback that emphasized how rational they were. Despite being positive, this feedback also closely related to a decision they made to hire someone who was not performing well. Those "senior managers" overwhelmingly recommitted themselves to the initial hiring decision and recommended spending additional time and money training that person, rather than simply acknowledging the poor decision and cutting their losses.
The esteem-boosting feedback backfired, the research suggests, because it was so closely linked to the particular skills that should have prevented the questionable decision in the first place.
"The more that people's feelings of self-worth are wrapped up in a poor decision they've made, the greater their impulse will be to justify it in some way," said Daniel C. Molden, assistant professor of psychology at Northwestern and one of the researchers.
In contrast to the outcome of decision-relevant feedback, study participants who received praise for skills unrelated to the questionable decision (e.g., creativity or innovation) or more global affirmation of positive qualities were less likely to recommit to the decision.
"Our research indicates that a supervisor could make a problem even worse when he or she tries to restore the confidence of, say, the finance division by reminding everyone that they are skilled analysts at the same time the current allocation strategy is bleeding money and is in need of reassessment," said Kellogg's Galinsky.
Source: Northwestern University