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Why Getting in Touch with Your Feelings Makes Good Business Sense

Jan 01, 2008

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Research by Myeong-Gu Seo

The professional workplace doesn’t exactly encourage navel-gazing. And workers are often encouraged to ignore their feelings in favor of more logical and analytical behavior. But strong feelings—and an awareness of those feelings—actually cause people to make better decisions, according to recent research by Myeong-Gu Seo, assistant professor of management and organization. Seo, with co-author Lisa Feldman Barrett, Boston College, examined the relationship between emotion and decision-making in their paper “Being Emotional During Decision Making—Good or Bad? An Empirical Investigation.”

Seo invited members of six investment clubs to participate in the study. Each of the 118 participants were given $10,000 in play money and allowed to invest the whole or a part of their cash on any of 12 anonymous stocks selected from the national stock market. About 80 percent of the participants in the study were male, which is consistent with the population of most investment clubs.

Seo ran a stock investment simulation for 20 business days, and had participants describe their emotional states multiple times (once per day and just before they made their investment decisions) during the course of the simulation. He tracked both the types of emotions participants experienced and the intensity of those emotions.

He then looked at the degree to which participants’ risk-taking behavior and their stock investment performance varied depending on their emotional state. Seo found that the more intense a participant’s feelings were, the better their decision-making performance, whether those feelings were negative or positive.

Seo also found that people who were able to more accurately describe their feelings performed better in stock investing regardless of the emotions they were experiencing at the time. This is because participants who understood their feelings seemed better able to keep those feelings from having a direct impact on their decision-making strategy (the level of risk-taking), and as a result got higher investment returns.

“As soon as you are aware of your emotions, suddenly that corrects many emotional biases,” says Seo. “The starting point of regulating the influence of your emotions is to be aware of what is going on. It is important to have a clear understanding of what is going on with you emotionally.”

These results will come as a surprise to those who believe that emotions have no place in the workplace, as it contradicts both past studies and the common wisdom. But Seo thinks that understanding the importance of emotions in decision-making is going to be increasingly important in an economy that is not just high-tech but also increasingly high-touch. Interpersonal relationships play a large role in many organizations, where most employees spend at least part of their time on team-based work.

In focusing on the negative effects of emotion in the workplace, managers are missing out on all the positive effects of people’s feelings, including better decision efficiency, engagement and creativity. Rather than suppressing or constraining emotions, managers need to find ways to use the positive effects of emotion in their employees while mitigating the negative effects, says Seo. But it is just as important that leaders stay in touch with their own emotions in order to avoid making decisions driven by emotional biases that they may not realize are affecting their judgment. Training managers to better use their emotional intelligence could also help them better manage the interpersonal relationships and group dynamics that play such an important part in today’s knowledge-based economy.

Seo’s research has been published in the Academy of Management and the December 2007 Harvard Business Review.  For more information, contact mseo@rhsmith.umd.edu.

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