Investment professionals all know that they have to make investment decisions based on imperfect and incomplete information. That’s an inescapable reality in the complex adaptive system that is the financial markets. Knowing that you don’t know is a valuable attribute in this context, and it makes for higher quality investment decisions, and the sum of those decisions is your track record.

The quality of your judgments about the members of your team matters too. The cumulative effects of the interpersonal judgments made by you and your team-members form the matrix that is your team’s culture. Yet in the interpersonal domain we seem to forget how much we don’t know, and this leads to lower quality relationships, weaker culture, and ultimately poorer investment results.

When we try to make sense of others’ behaviour, which sometimes can be surprising and perplexing, we do so by telling ourselves a story about it, by constructing an explanatory narrative. An error that we frequently make is that we infer a direct relationship between the behaviour that we see and who the other person fundamentally is. In the process, we don’t take sufficient account of environmental factors that influence the behaviour. Put differently, we assign higher weightings to dispositional explanations of other’s behaviour and assign lower weightings to situational explanations.

Think of a time when you’ve behaved badly, perhaps lost your temper and shouted at a colleague. It’s likely that if you reflected on it for a moment you wouldn’t conclude that you’re by nature an arrogant bully. It’s more likely that you’d plead not guilty to that charge, claiming that there were extenuating circumstances. You’d be offering situational explanations to ameliorate the dispositional explanations. 

Perhaps around the time of your explosion you’d been under severe pressure after a period of underperformance, you’d been absorbing client anxiety and anger, and maybe you’d been considering who in your team you’d need to let go to help your business survive. All true, all very serious issues, all of them likely to affect your behaviour. But all of them situational explanations. 

Perhaps the fuller explanation of the shouting is that under certain circumstances you have the capacity to behave as if you are an arrogant bully. But that doesn’t mean that you are an arrogant bully. Under conditions of elevated noise, some of the non-constructive qualities that we all possess tend to overshadow for a limited period our baseline constructive qualities. 

My guess is that you’d find this a fuller and more accurate explanation of your episode of bad behaviour. And if others gave such an explanation of your behaviour rather than a purely negative dispositional one, it would affect your future behaviour. You’d probably be less defensive or prickly or volatile. And that would affect the quality of your relationships with the people around you, it would subtly shift the culture of your team.

And yet what we crave for ourselves we do not always easily extend to other people. We’re too quick to latch onto dispositional explanations and ignore situational explanations. Unsurprisingly, the members of your team would prefer this kind of fuller explanation of their behaviour too. But when you’re rushed and hassled and pressured, when the noise levels are elevated, you will tend to make snap judgements about the people in your team. Just like you, these people do not exist in a vacuum. They inhabit several contexts, many of which will not be visible to you. The state of their marriage, the health of their loved ones, the extent of their financial obligations – these are all factors that will affect their internal worlds, some of which may be expressed in perplexing behaviour. If you explain their behaviour in purely dispositional terms, you ignore vast amounts of data.

But we also have to accept that we can’t gather all the data that we need to generate flawless explanations of others’ behaviour. Even if we were granted full access, which we won’t, it would take forever. Perhaps all we need to do, then, is accept the magnitude of our ignorance about others’ internal worlds, accept that we know way less about others than allows us to confidently make purely dispositional assessments. Accepting this is an act of humility, which opens the door to the virtue of compassion. Knowing that you don’t know is a profoundly valuable attribute in the interpersonal domain, one that can contribute significantly to improving the health of your relationships and the culture of your team.

If this all borders too closely on the metaphysical for you, then you might approach it this way. Next time you feel the urge to make a snap judgment about someone, make a little more space in your story for the possibility that you haven’t got complete and perfect information about the situational factors. Perhaps make a little more space for the whole person, not just the small part that you can see. Wouldn’t it be great if others did the same for you?

  • What relationship, professional or private, is most troublesome for you at the moment? In what ways is it troublesome?
  • What are your dispositional explanations of that person’s behaviour? How is that explanation contributing to the difficulties in the relationship? 
  • How might you make a little more space in your story about this person for what you don’t know about them?