Those who have reading my posts for a while know that I have a special interest in the intersection of economics and business, as well as the intersection of neuroscience and business. Recently, I corresponded with Eyal Winter, a professor of economics at the Hebrew University of Jerusalam. In his excellent book, Feeling Smart: Why Emotions Are More Rational than We Think, Eyal asks this question:
“If our emotions are so destructive and unreliable, why has evolution left us with them? The answer is that, even though they may not behave in a purely logical manner, our emotions frequently lead us to better, safer, more optimal outcomes. There is emotion logic in emotion, and emotion in logic.”
A part of this phenomenon that’s relevant to managers is what Eyal calls “peer effects.” Apparently, employees will avoid putting much effort into their work if they know or believe that their co-workers are shirking their responsibilities or otherwise not living up to their full potential. On the flip side, when employees witness co-workers putting in extra effort, they will be motivated to do the same. So the answer to the central question in this post is yes, one lazy employee can and will destroy your team’s productivity, and that’s why you must engage in strategic teambuilding. Here are two examples from the economic literature to prove Eyal’s case.
Work Ethic is Contagious in Italy
Italy, more than any other European Union country, is characterized by extreme cultural gaps between different geographical areas, especially the north of the country versus the south.
Two Italian researchers, Ichino and Maggi, studied a database containing information on the behaviors of thousands of employees at one of Italy’s largest banks. The collected data on each employee included detailed information on the number of times the employee came to work late or failed to show up entirely, promotions to higher ranks in the bank hierarchy, and transfers from one branch to another. Using this information it was possible to identify bank employees who had moved from bank branches in the north to branches in the south and vice versa.
Ichino and Maggi discovered that bank employees who moved, for example, from Milan in the north to Naples in the south, exhibited extreme changes in their work behavior. Once in Naples, they were frequently late to the office and missed a lot more days of work. Since only sick days are considered acceptable reasons for missing days of work at the bank, one might surmise that the move from one city to another led to deteriorations in the health of transferred employees, but the researchers found that employees transferred from Naples to Milan also exhibited different patterns of behavior, which in this case was expressed in lower rates of tardiness at work and fewer missed work days.
Further analysis of the database proved that the only reasonable explanation for these changes in behavior patterns was the phenomenon of peer effects. Employees transferred from Milan to Naples quickly learned that their colleagues in Naples had a weaker work ethic than the one they had been used to in Milan. This reduced their internal incentives to maintain high standards of work ethic.
In contrast, employees transferred from Naples to Milan learned (although apparently not as quickly as those moving in the opposite direction) that their new environment was one in which colleagues invested more time and energy at their jobs. This, of course, was an uncomfortable position for them, but it still created an incentive for them to adopt the work ethic of those around them.
For the second example, take a look at the full post on Intuit's Fast Track blog.