Daily Archives: April 6, 2015
Tip-offs in business are surprisingly common (and, except for stock market insider trading, legal) and often make the person on the receiving end feel special-they now know something that others don’t and have an opportunity to be among the first to act on this new information. For example, your boss might reveal inside information about an upcoming organizational change, giving you a heads-up on how these changes might affect you. Or a client might mention a recent not-yet-public decision, one that has consequences for your company’s relationship with their firm. While this secret information may seem beneficial to us when we are part of the privileged minority that receives it, recent brain imaging research suggests otherwise.
In a recent paper, Rafael Huber and colleagues from the department of psychology at The University of Basel found that when people receive “private” information, their brains respond by overweighting this information when making decisions. Even when it may be optimal to follow other advice, private information will make the brain ignore it. In fact, the more we overweight private information, the more certain brain regions are turned on and others off, changing how we think, in ways that we are not even conscious of. In turn, this sets off a whole new information cascade in the brain-where we make a series of new assumptions based on the private information-without us necessarily being consciously aware that the brain is taking us on a wild goose chase. Private information turns “on” brain regions involved in the aversion to risk and the intolerance to uncertainty. It also interferes with brain regions that would ordinarily update beliefs, keeping the “mind’s eye” and brain resources on the risk instead. As a result, we lose the opportunity to integrate new information because the brain is so “taken” by the fact that it is private.
For example, someone who hears confidentially about impending changes in the company may prematurely start to look for a new job, inadvertently care less about their work, and start behaving as if they have already “checked out.” This behavior may result in their getting fired-even if the company’s original intent was to keep them. By overweighting the initial information about organizational changes and triggering unconscious thought processes, subsequent premature actions can actually have inadvertently negative consequences.
Another paper by Jennifer Louise Cook and colleagues from the Donders Institute for Brain, Cognition and Behaviour in the Netherlands found that people who have dominant personality styles might be at further risk of distorted decision-making. However, there was a difference between leaders who were socially dominant (higher up in the pecking order and rated high on task leadership by peers) versus those who were aggressively dominant (rated poorly on social relationships and rated low on socioemotional leadership). Socially dominant people take in other social information when making decisions, whereas aggressively dominant people do not. This suggests that we can be further misled if we are prone to being aggressive (e.g. when the secret information makes us angry) because we may leave out important data when making decisions.
I saw this scenario play out with a senior executive client. He recently became enraged by a colleague who confessed that he had inadvertently undermined my client by justifying his own department’s recent budget redistributions to the CEO. Although he hadn’t meant to call my client’s judgment into question with the CEO, his explanation implied that my client’s budgets were probably too big. He went on to tell my client that he had only been trying to justify his own actions, and that he thought my client’s budgets were fine.
My client’s immediate reaction was anger, and then anxiety. These feelings escalated to the point where all he could think about was his standing with the CEO. Should he speak directly to the CEO? Should he “out” this undermining colleague? Because of his obsession with this issue (which he would never have known about had his colleague not “confessed”), he lost sight of his need to socialize his ideas about where he wanted to take his department in the future. He also lost sight of asking other people’s opinions on his decisions and, as a result, locked himself into a biased corner. When we talked about this, my client realized how the private information from his colleague was obscuring his course of action. It was only by delaying a hasty decision and incorporating the opinions of others, that my client was able to readjust, refocus, and make decisions that made more sense for the company.
This research and the examples above indicate that even though we may feel like “the chosen ones” when receiving insider information, being an insider may place us in the difficult position of unconsciously biasing the quality of information -because our brains are unable to distinguish between what is important and what is simply dramatic. The drama of secret information can be mistakenly coded as “important” information, triggering the unconscious responses described above. I call this “the shhh effect,” and this is one of the major unconscious biases in decision-making. So what should you do about legal private information?
First, before you act on the information, take a look at the data supporting it to circumvent the unconscious disaster of overweighting information. Consciously ask yourself or discuss with colleagues whether this information is relevant and accurate, and if so, how it fits within the context of other information. If, for example, you learn that there are “big changes ahead” in the company, rather than hastily jumping to conclusions, remember the biasing impact of “the shhh effect” on your brain. Then, write or talk openly about other information that you know, making it conscious and using it overtly to update your beliefs.
The point is that there is no need to reject this new secret information, but there is a reason to question it, examine it, turn it over on its head and discuss it. Remember that if you are inclined to be aggressive or if the information makes you angry (e.g. if there are supposedly a second round of impending cuts coming up), you may be even less inclined to discuss it, placing yourself in even more danger of overweighting the information you receive. In my work with leaders, I have seen this effect have important ramifications when people were considering a change of job. Secret information often propels them to make premature decisions that would have been much more effective if they had weighted the information consciously.
If you leave your brain to its own devices, it will change direction and lead to a cascade of other decisions that could distract you from getting things done or take your mind in an unproductive direction. In fact, this is usually what happens when “gossip” takes hold in an organization. So the second piece of advice here is to learn how to differentiate inside information from mere gossip. Organizations are full of gossip, which is distracting and depressing, and if you don’t manage it, you become paralyzed. A recent study showed that we are in fact endowed with the brain capacity to not get carried away by gossip if we deliberately adjust our responses to it. Simply put, the next time you hear offensive gossip, don’t give it a second thought. Train your brain to let go of it immediately.
Third, encourage transparency. Model it. Leaders should be transparent in order to encourage a culture of open communication and trust. Transparency in business communities thus has a positive effect, not just on business culture, but also on the brain, because it reduces the risk of overweighting private information.
Privileged information meant to help us can actually hurt us. By becoming more conscious of the brain’s exaggerated responses to information delivered secretively, we can avoid becoming victims of our own hyper-responsive brains.