Why Communication from Management is Important

In HR we try to impress on managers the importance of consistent communication. The best way to avoid many problems and misunderstandings is to communicate with employees. Well here is another reason why communication from management is important.
Research by psychologist Heath Demaree, of Case Western Reserve University has shown that people who experience a surprising outcome reduce their risk-taking behavior. This is regardless if the outcome is positive or negative. According to Demaree “Surprising events are known to cause animals to stop, freeze, orient to the surprising stimulus and update their schemas of how the world works. Our recent research suggests that surprising events also cause people to temporarily reduce risk-taking.” This is akin to the “deer-in-the-headlights” syndrome. Apparently people also experience that syndrome as well.
In a business where risk-taking is critical to the success of the business the last thing you want to do is reduce this business-critical behavior by making surprise changes or announcements. The more you can communicate the business environment to employees the better off you are in a number of situations.
Obviously we cannot be open all the time, and there will be some things you just cannot communicate ahead of time. I just caution you to realize that surprise announcements do have an effect on employee behavior. That understanding may then make you think about your timing of your announcements to reduce the impact of any surprise.
You can read an abstract of the research here. (ABSTRACT)
Source: How Surprise Changes Your Appetite for Risk in Freakonomics blog.

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