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New Research on How Leaders Make Decisions Differently Than Everyone Else

Not everyone is comfortable making decisions that affect a group rather than only themselves.

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BY Leigh Buchanan - 25 Sep 2018

New Research on How Leaders Make Decisions Differently Than Everyone Else

PHOTO CREDIT: Getty Images

Entrepreneurs just getting started take personal risks: quitting their jobs, investing their savings, taking a second mortgage on the house.

Entrepreneurial leaders--those whose companies have sufficient scale to employ people--take risks that affect others. Most people find that kind of risk more daunting. In an Inc. survey, 37 percent of founders of fast-growth companies said that their worry about responsibility for employees' livelihoods weighed against their decision to start a business. Only fear of failure ranked higher.

Yet all those surveyed resolved to go ahead and launch. New research suggests that their comfort with assuming that larger responsibility is among the traits that make them leaders.

Unlike most people, leaders approach decisions that affect others in the same way they approach decisions that affect only themselves, according to a study from the University of Zurich. In an experiment, researchers asked participants to decide whether to take certain risky actions that might produce rewards. They could either make the decisions alone or defer them to a vote by the group. Sometimes a participant's own winnings were at stake. Sometimes everyone's winnings were.

In general, deferral rates were higher when others' welfare was a consideration. But participants who were leaders in the real world and performed well on leadership questionnaires completed before the test were more likely to make decisions affecting only themselves and decisions affecting the group in the same way. Those people display a low level of "responsibility aversion," says Micah Edelson, a researcher in the university's department of economics.

"It's not about the choices you make," Edelson says. "It's about how choices are influenced by the fact that you have responsibility for other people." Specifically it is about the degree of certainty people require to make those choices. In the study "the people that had higher leadership scores didn't shift the degree of certainty that they needed" based on whether decisions affected just themselves or others, says Edelson. "Their threshold for certainty stayed about the same." (Brain scanning also suggests differences in how leaders and non-leaders process this kind of calculus.)

Whether leaders choose to control or defer most decisions speaks to their leadership styles but is not a measure of responsibility aversion. Edelson points out that leaders may defer decisions not because they fear being responsible for them but because they believe the group has better information or insight.

"It's about consistency," he says. A decision may affect only you, or it may affect every one of the 500 people who work for you; if you're a leader, it makes no difference.

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