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Dr. Matt Grawitch: November 2009 Archives

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The Psychologically Healthy Workplace Program emphasizes the need to utilize systematic processes to develop and implement workplace initiatives. In fact, the program specifically addresses the need to rely on effective communication methods so that initiatives meet employee and organizational needs.

However, even after a systematic process for developing and implementing initiatives, sometimes they don’t work as they were intended. Believe it or not, economic decision-making theories may play a role in understanding why. The underlying disconnect may be the result of bounded rationality.

Bounded rationality argues that people are inherently limited in their ability to make rational decisions. People lack the time and cognitive ability that is required to make fully informed, rational choices. An organization may ask employees about their desired level of autonomy, but asking such a question actually assumes employees can fully comprehend all of the implications of their response.

When providing input into new initiatives, then, employees’ input is based on their best guess, rather than on a complete assessment of the situation. Sometimes, that best guess sounds better in theory than it does in practice.

Take for example a new initiative that would provide employees with the ability to telecommute two days each week. Employees are asked how willing they would be to take advantage of such a practice. Most employees would respond in the affirmative, thinking that it would save them commuting time costs, along with the ability to have more flexibility. However, these same employees may not think about the technological requirements, the difficulty connecting with others also working from home, the need to learn how to shut out distractions, and the need to self-manage. As these unconsidered consequences begin to surface, fewer and fewer employees may be willing to participate in the telecommuting option.

Even if a lot of these issues were addressed prior to the implementation of the program, the theory of bounded rationality argues that people are incapable of fully processing all of the relevant information. We rely on selective perception, filtering information that we find to be “most relevant” and relying on heuristics, intuition, and biases to “fill in” the remaining information. An article in a recent issue of Personality and Individual Differences even suggests that spending too much time and energy in decision making all but guarantees dissatisfaction with the final decision.

So, what can organizations do to limit the potential negative consequences of bounded rationality? Well, for starters, the more information that can be provided up front about the possible benefits and disadvantages, the more likely employees will be to make more informed (though not perfectly informed) decisions. Remember, though, that organizational decision makers and survey designers also suffer from bounded rationality.

Perhaps the best suggestion is to remember that for large-scale initiatives, such as the introduction of a telecommuting initiative, survey input is not the place to stop. Rather, survey input should be used in more qualitative forums, such as formal, small-group feedback sessions or focus groups, so that a variety of perspectives can be leveraged to identify as many issues and implications as possible. Then, managers can integrate as many of these perspectives as possible into the program development and implementation phases, and employees can have a greater selection of issues to choose from when deciding whether telecommuting is a viable option for them.

Lastly, organizations need to rely on continuous evaluation and refinement of initiatives and programs to ensure that they remain viable. This continuous, on-going process can identify and address unintended negative consequences that detract from the utility and effectiveness of the initiative.

The bottom line is that organizational decision makers should not be surprised that a program does not automatically produce the expected results. From a bounded rationality perspective, managers and employees are flawed in their ability to make fully rational decisions, so our best guess, even when it is based on the available evidence, does not guarantee success.

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