Together, these findings suggest that organizations where CEOs deny negative facts will have a culture of denying reality throughout the hierarchy. Of course, even when the boss lives in the real world, others in the organization may hold false beliefs.
Professionals at all levels can suffer from the tendency to deny uncomfortable facts in business settings. Scholars term this thinking error the ostrich effect, named after the (mythical) notion that ostriches stick their heads into the sand when they see threats.
Forget facts and logic
Our intuition is to confront colleagues suffering from the ostrich effect with the facts.
But research – and common sense, if the colleague is your supervisor – suggests that’s usually the wrong thing to do. That’s because when someone believes something we know to be false, some kind of emotional block is probably at play. A number of factors explain why this happens.
For example, research on confirmation bias shows that we tend to look for and interpret information in ways that conforms to our beliefs. So even if sales are far below expectations, a CEO might reject that information in projecting good financial forecasts on the belief that his actions should lead the company to do well.
In another example at a company where I consulted, a manager refused to acknowledge that a person hired directly by her was a bad fit, despite everyone else in the department telling me that the employee was holding back the team. The manager’s behavior likely resulted from what scholars term the sunk cost fallacy, a tendency to double down on past decisions even when an objective assessment shows the decision to be problematic.
In both cases, facing facts would cause the CEO or the manager to feel bad. We often prefer to stick our heads into the sand rather than acknowledge our fault because of our reluctance to experience negative emotions.
Research on a phenomenon called the backfire effect shows we tend to dig in our heels when we are presented with facts that cause us to feel bad about our identity, self-worth, worldview or group belonging. In some cases, presenting the facts actually backfires, causing people to develop a stronger attachment to incorrect beliefs. Moreover, we express anger at the person bringing us the message, a phenomenon researchers term “shoot the messenger.”
There are many other mental errors that inhibit business professionals from seeing reality clearly and making good decisions.