Behavioral Economics for Leaders: Research-Based Insights on the Weird, Irrational, and Wonderful Ways Humans Navigate the Workplace (Hardcover)

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