Cynicism is bad for business

When someone we trust takes us for a ride, the bump back to earth is something we're unlikely to forget. But when we suspiciously reject an offer from someone else, we may never know what we've missed out on due to too little trust. Over time, such asymmetries in feedback can tip us toward an unwarranted cynical stance. It's clear that cynicism is as unhelpful a bias as naivety: it leads to guarded communication, reduced  sharing, and more self-serving biases, all of which may cause interactions to nosedive. A recent review by Chia-Jung Tsay and his team from Harvard Business School may help us understand cynicism and how it develops.

The review identifies some key triggers that enhance cynicism, including:

• Being new to negotiation - novices are more likely to believe that negotiation is always competitive;
• Thinking about the power of influence; for instance, knowledge that another party is a sales expert leads negotiators to suspect their offers more;
• Inclusion of a shady character - negotiating groups take the least trustworthy individual in the other group as the best indicator of group trustworthiness;
• Clear power asymmetries - people expect more misrepresentations from authorities with access to hidden information.

The authors point to a range of studies where participants reject offers that are in their rational best interest because of lurking cynicism that puts them off the whole venture. They warn us that the consequence is that "cynicism regarding others' motivations may become a self-fulfilling prophecy that leaves both sides worse off than would otherwise be the case." Happily, the review concludes with some advice we might take on to chart a better course:

• perspective-taking to recognise your 'opponent' is an active party in negotiations, cultivating a "healthy skepticism" that considers a full range of motives on their part;
• act with integrity - it increases the likelihood the other party will;
• encourage a level playing field that minimises hidden information;
• foster repeated exposure to specific negotiators to build a history of trust that is costly to undermine.

Try the techniques out, you won't regret it. Trust me.

Tsay, C., Shu, L., & Bazerman, M. (2011). Naïveté and Cynicism in Negotiations and Other Competitive Contexts The Academy of Management Annals, 5 (1), 495-518 DOI: 10.1080/19416520.2011.587283

How mixing work incentives put us on the horns of a dilemma

To encourage collaboration, many organisations structure incentives so that whole groups are rewarded – or not - based on their collective output. However, the groups-eye view allows for social loafing, where people shirk duties and assume team-mates will carry their load, so it's tempting to keep everyone accountable by adding incentives to individual performance too. Christopher Barnes and his colleagues set out to see just how these mixed incentives turn out in practice.

The researchers used a computer warfare simulation that examines behaviour in tight, demanding circumstances, where teams of four protect their territories by correctly identifying enemy intruders and then quickly destroying them. Team-mates used separate monitors, but shared a room and could freely converse. They recruited 304 management undergraduates, half of whom were given straightforward group incentives:  $10 each if their group outperformed a specified rival group.

The other teams were given mixed incentives: group performance could lead to $5 each , and individually outdoing a specified member of another team garnered another $5. Participants who were individually incentivised were hungrier for scores, being significantly faster at destroying intruders. However, heavily penalised illegitimate attacks ('friendly fire') were more common in these teams. This slump in quality suggests a drop-off in the flow of information typical in close teams, making it harder to detect and ward off errors as attention was turned towards delivering immediate personal objectives.

The study also examined direct helping behaviour, in terms of the efforts made to destroy intruders in team-mate territory rather than your own. This mattered, as each team had a high workload member who was constantly swarmed with as many radar blips as the others had put together. Participants with pure group-level incentives showed more helping behaviours than their mixed incentive counterparts.

Barnes and his colleagues suggest that mixed incentives  present a conflict between maximising individual interests and that of the collective, and the temptation is to focus on your own priorities, letting others hold the fort for you. Moreover, if you doubt that they will, you'd be even more of a sucker to vainly do so yourself. This amounts to a social dilemma akin to the prisoner's dilemma, which pressurises players towards self-serving behaviours.

I felt - and the authors do note - that the experimental paradigm relates best to 'task forces' whose urgent tasks necessitate trade-offs between different behaviours. I'm skeptical about generalising to workplaces which are more elastic: I may forgo reading my book over lunch in order to help you out, feel rewarded by this, and spend the afternoon contributing just as much or more to my own goals. Nevertheless, by plugging social dilemmas in to the research on incentives, this article highlights that tweaking incentives can result in tradeoffs, not simply the best of both worlds.

Barnes, C., Hollenbeck, J., Jundt, D., DeRue, D., & Harmon, S. (2010). Mixing Individual Incentives and Group Incentives: Best of Both Worlds or Social Dilemma? Journal of Management, 37 (6), 1611-1635 DOI: 10.1177/0149206309360845