22 October 2008
A Monash University workplace psychology expert has warned Australian businesses are under threat from the poor psychological state of their own stressed managers during the world financial crisis.
Dr Simon Moss, a psychology lecturer in Monash's Faculty of Medicine, said that during times of economic hardship business executives and managers were inclined to make decisions that damaged their business's productivity and progress.
"It is simple human nature than we can make the wrong decisions under stress," Dr Moss said. "The mechanisms in the brain that provide insight and a broader perspective simply shut off. This can lead to executives making decisions that are driven by survival in the short term, not the company's strategic direction.
"The solution is for executives to trust their intuition and make decisions based on what is meaningful and important for their operations over a longer time-frame of several years.
"It is important we flag these issues now. Raising awareness of the risk of poor practice is timely because managers who are conscious of the psychological processes affecting them will be less likely to fall into the trap of making wrong decisions."
Dr Moss said stressed managers often erred during times of hardship by:
-- Wasting money by persisting with big strategic changes that were no longer viable due to the economic downturn. Managers often responded to having their goals obstructed by persisting even harder to achieve them, rather than re-evaluating;
-- Becoming overly pessimistic and forecasting excessively poor prospects for their own business, while underestimating the difficulties competitors faced. This led to managers making poor decisions about their own business and about potential new opportunities;
-- Disregarding perspectives of innovative experts who highlighted new opportunities stemming from economic upheaval, instead seeking opinions that align with their own perspectives. Managers did this because they felt vulnerable and insecure; and
-- Employing marketing campaigns that emphasised a sense of escape their product or service offered, or problems people could experience if they did not purchase their product or service. Research indicated economic instability does not enhance receptivity to such campaigns. Customers preferred predictable, plausible, safe and secure products or services during unstable times.
Dr Moss said company directors were also inclined to adversely affect their organisation during times of hardship by favouring the wrong types of managers.
"Directors will often choose managers whose strength is co-coordinating activities and resources to ensure targets are reached, but research shows employees respond best in uncertain times to leaders who promulgate an inspiring vision, thereby tempering staff anxiety," Dr Moss said.
Dr Simon Moss can be contacted for interviews on +61 3 9903 4043. Monash media officer Ryan Pedler can be contacted for assistance on +61 3 9903 4842. | 
