Every leader should know the surprising research and strange conclusions of behavioral economics--for fairness, teamwork and productivity
You and your colleagues don’t always make rational decisions. Sometimes that's a problem that leaders must address, and and sometimes that can be a good thing--when employees put their colleagues interests ahead of their own. Dr. Matthias Sutter, a leading economist from Germany's world-renowned Max Planck Institute explains the latest surprising insights based on behavioral economics research. The book explains how people tick, how they react to incentives (monetary or non-monetary in nature) and what that means for working together - or against each other - at work.
Dr. Sutter summarizes new and classic behavorial science research that applies the everyday business world, so leaders can improve teams and organizations, the research-based way. Find out which factors are important for professional success, from career entry to senior management.
- Start your career on the right footing, advance quicker, and strategize how to meet your goals
- Understand what’s holding your colleagues back from productivity and implement evidence-based changes
- Identify hidden biases in yourself and others to overcome inequalities and inefficiencies
- Become a better leader and decision-maker by learning to interpret people’s actions
Individuals, organizations, and teams will benefit from the often-counterintuitive wisdom in this book. Based on the author’s 20 years of research - plus the findings of the world’s top behavioral economists - Behavioral Economics for Leaders can help you get your team and your organization where you want to lead it.
Table of Contents
Acknowledgments xi
Introduction: Why Do Smart People Behave Strangely? xiii
Part I Behavioral Economics for Your Career 1
1 The Taller You Are, The Higher Your Salary? 3
2 The Job Interview - It’s Tougher for Women 7
3 Working from Home Is Great - But It May Hurt Your Career 11
4 Social Skills Are Worth More Now Than 10 Years Ago - Much More 15
5 Fifty Percent of People Find a New Job Through Their Social Networks - Weak Connections Matter More Than Strong Ones 19
6 When Finding a New Job, Rigidly Structuring Your Day Is a Power Move 23
7 Better “Zappa” Than “Adams” - Why Coming Later Alphabetically Gives You an Unfair Advantage 27
8 Job Hunting and Patience 31
Part II Behavioral Economics for Hiring and Retaining Talent 35
9 Startups with a Larger Share of Women Last Longer 37
10 The Unintended Positive Side Effects of Employee Referral Programs 41
11 Managers Make Systematic Hiring Mistakes - Machines Can Help 45
12 Why Employers Prefer Employees Who Don’t Job Hop 49
13 Look for Candidates Who Demonstrate Patience and Long- Term Thinking 53
14 Unintended Negative Consequences of Salary Transparency 57
Part III Behavioral Economics for Managers: Teamwork, Motivation, and Productivity 61
15 Prejudiced Managers Hurt Employee Productivity - More by Neglect and Lack of Engagement Than Active Discrimination 63
16 When It’s Hot Outside, People Are More Risk Averse and Make Worse Decisions 67
17 Managers with Good People Management Skills Increase Employee Satisfaction and Reduce Turnover 71
18 Can You Trust Your Bankers? The Finance Industry Attracts Less- Trustworthy People 75
19 Peer Pressure Productivity: Employees Are Influenced by the Productivity of Others Around Them 79
20 Employees Who Don’t Support the Company Mission Are 50% Less Productive Employees 83
21 The More Collaborative Your Team Members, the More Fish You Will Catch 87
22 Empowering Employees Saves Lives: The Co- Determination Bonus 91
23 Good Leaders Model the Behavior They Want to See in Others - and Employees Imitate It 95
24 Selfish Leaders End Up with Selfish Followers 99
Part IV Behavioral Economic Research on Gender Differences and Unequal Pay: Women Are More Risk Averse (and Men Overestimate Themselves) 103
25 An Argument for Gender Quotas in Employment: They Can Help Attract Highly Qualified Women 105
26 The More Competitive Your Attitude, the Higher Your Lifetime Earnings 109
27 Willingness to Compete Starts by Early Childhood: The Pivotal Role of the Family 113
28 Cultural Conditioning Helps Explain Differing Male and Female Attitudes Toward Competition 117
29 A “Nudge” for Reducing the Male/Female Wage Gap 121
30 Women Leaders Earn More and Revenue per Employee Goes Up When Women Are on the Board 125
Part V the Economic Benefits of Fairness and Trust 129
31 Trust Is an Economic Asset; Lack of Trust Is Expensive 131
32 A Little Accountability Goes a Long Way: Trust Works Best When Monitoring Is Possible but Not Used 135
33 Why It’s Important to Explain Difficult Employee Decisions: Treating One Employee Unfairly Hurts Everyone’s Productivity 139
34 Communicating Good Intentions Gets You a Better Outcome 143
Part VI Salary and Bonuses 147
35 Paying People More Doesn’t Mean They’ll Make Better Decisions 149
36 Team Bonuses Motivate Employees to Work Harder - and to Help Each Other More 153
37 Nobody Wants to Be Below Average; How Performance Bonuses Can Hurt Productivity and Job Satisfaction 157
38 The Limits of Homo Economicus: Employees Underperform If Their Performance- Based Bonus Hurts Their Colleagues’ Bonus 161
39 Wall Street Bonuses Incentivize Unhealthy Risk Taking - and Increase Systemic Risk 165
40 Don’t Incentivize Employees to Sabotage Colleagues: The Problems with Relative Performance Bonuses 169
Part VII Ethics in Companies and on the Markets 173
41 Markets Hurt Morality: Government Intervention Can Help 175
42 Unethical Behavior Rises and Falls with Incentives - Make It Hard for People to Get Rich Doing the Wrong Thing 179
43 Small- Scale Cheating Can Lead to Major Corruption: Leaders Should Not Tolerate Minor Ethical Violations 183
44 People Care More About the Environment When They Know Their Organization Cares Too 187
45 The Stunted Career Path of Whistleblowers: Employees View Them As Disloyal 191
46 A Bad Corporate Culture Can Turn Honest People into Liars 195
Part VIII Leadership and the C- Suite 199
47 Visionary Leaders Outperform Operations- Oriented Leaders Over the Long Term 201
48 The Four Traits That Set CEOs Apart from Other Managers: Strategic Thinking, Charisma, Intellectual/Social Skills, and Focus on Results 205
49 Leaders Who Focus on Short- Term Results Innovate Less and Lower Company ROI 209
50 Charismatic Leaders Inspire Their People to Deliver Better Results 213
Appendix: All Takeaways - for Impatient Readers 217
Source Materials 227
About the Author 233
Index 235
