Behaviour drives performance | Wijnand Nuijts | TEDxFrankfurt

Summary

This script recounts the 1977 Tenerife airport disaster, highlighting how human factors and organizational hierarchy contributed to the tragedy. It then pivots to financial supervision, emphasizing the importance of understanding and influencing behavior within organizations to enhance performance and prevent crises. The speaker discusses tools like 'Board effectiveness' and 'Change effectiveness' to assess leadership, decision-making, and cultural impacts on risk management. The narrative underscores the significance of a non-normative approach, focusing on the contribution of behavior to prudent management and ethical conduct, and the role of trust in effective supervision.

Takeaways

• 🛫 The 1977 Tenerife airport disaster highlighted the dangers of human factors in aviation, emphasizing the need for clear communication and hierarchical respect within the cockpit.
• 🌫 Poor visibility and communication led to a catastrophic collision, showing the critical role of environmental conditions and air traffic control in flight safety.
• 📉 The 2008 financial crisis underscored the importance of integrating behavioral perspectives in economic analysis to enhance financial firm stability.
• 🔍 Behavioral patterns at the top of organizations can significantly influence performance and must be examined to prevent issues like the financial crisis.
• 🔧 The development of methodologies like 'Board effectiveness' and 'Change effectiveness' aims to identify and understand the impact of leadership and organizational behavior.
• 🤝 A non-normative approach to behavior encourages individuals to reflect on their actions and adjust patterns to contribute positively to management and ethical behavior.
• 🏦 Supervisory findings often reveal boards not challenging proposals or discussing risks, leading to decisions without proper scrutiny and potential damage.
• 🔄 Ineffective change management can result from superficial efforts or a lack of credibility, hindering true transformation within an organization.
• 👥 Dominant leadership styles can stifle board-level challenge, creating an environment where decisions may be postponed or conflict arises.
• 👥 Followers' conformity to groupthink can suppress dissenting opinions, even when they recognize the majority view as incorrect.
• 💡 Trust is a fundamental element in the supervision of behavior and culture, allowing for open reflection and improvement without fear of punishment.

Q & A

What was the situation in the cockpit of the KLM Jumbo Jet in 1977 at Tenerife Airport?

In 1977, the KLM Jumbo Jet was on the runway at Tenerife Airport with mounting pressure in the cockpit due to fatigue and impatience. The crew had been waiting for a long time in bad weather with poor visibility and malfunctioning air traffic control systems. They were unaware of another plane on the same runway, which led to a major aviation disaster.

Why were the junior flight engineer's warnings about the presence of another plane on the runway dismissed?

The junior flight engineer's warnings were dismissed by the Captain due to the Captain's higher rank and the hierarchical structure within the KLM organization. The junior engineer's influence was easily overlooked, which contributed to the accident.

What were the main findings of the analysis after the Tenerife airport disaster?

The analysis revealed that the accident was caused by a combination of structural and human factors, highlighting the need to address these issues to improve aviation safety.

How did the financial crisis of 2008 influence the approach to economic analysis?

The financial crisis of 2008 led to a dominant focus on economic analysis, with the understanding that human factors, behavior, and culture could significantly contribute to organizational objectives, particularly in enhancing the financial strength of financial firms.

What are the three simple ideas that the methodology for behavioral perspective in supervision is based on?

The methodology is based on three ideas: 1) Behavior drives performance, 2) Understanding the behavior of individuals in organizations is crucial, and 3) Integrating a behavioral perspective in supervision can help prevent and solve problems.

What is the purpose of the 'Board effectiveness' instrument used in supervision?

The 'Board effectiveness' instrument is used to examine boards and understand their behavioral patterns. It looks at leadership styles, the participation in discussions, and the ability to bring perspectives forward, which are crucial for prudent management and decision-making.

How does the 'Change effectiveness' instrument contribute to organizational performance?

The 'Change effectiveness' instrument assesses an organization's ability to successfully transform its business model, organization, or culture to adapt to new circumstances, which is vital for sustained performance.

What is the approach of the supervisory body when examining the relationship between reward and risk?

The supervisory body examines how traders deal with the relationship between reward and risk, looking at their personal values and mindset, as well as how the group culture might impact their personal decision-making.

Why is trust an essential element in the supervision of behavior and culture?

Trust is crucial because without it, individuals may not feel comfortable reflecting on their own behavior or engaging in constructive dialogue. Building trust involves explaining the supervisory process, ensuring objectivity, and demonstrating openness to feedback.

How do supervisory findings relate to the way institutions deal with change?

Supervisory findings often reveal obstacles to effective change, such as superficial implementation of new behaviors or a lack of credibility in change efforts, which can result in incomplete transformation and potential organizational risks.

What is the role of a multidisciplinary team in the supervision of behavior and culture?

A multidisciplinary team, including governance specialists, change management specialists, and organizational psychologists, brings diverse expertise to the supervision process. This team is open to challenge and willing to learn from others, enhancing the effectiveness of the supervision.

What is the significance of the supervision of behavior and culture in financial institutions?

The supervision of behavior and culture in financial institutions is not a magic pill but a crucial component in financial supervision. It contributes to better decision-making, respect, cooperation, and mutual trust, and is most effective when combined with other forms of supervision.

Outlines

00:00

🛫 Aviation Disaster and Organizational Behavior

The first paragraph discusses the 1977 Tenerife airport disaster involving a KLM Jumbo Jet, highlighting the impact of fatigue, impatience, and poor visibility on the crew's decision-making. It emphasizes the dismissal of the junior flight engineer's warnings due to hierarchy, leading to a catastrophic collision with another plane. The analysis of the incident revealed a combination of structural and human factors, prompting measures to improve cockpit interactions and enhance aviation safety. The paragraph also touches on the 2008 financial crisis, suggesting that a behavioral perspective could have contributed to better organizational outcomes and financial strength.

05:08

🔍 Supervision of Behavior and Culture in Organizations

The second paragraph delves into the supervision of behavior and culture within organizations, particularly in the financial sector. It outlines the development of methodologies to examine leadership styles, decision-making processes, and the ability to adapt to change. The paragraph highlights the importance of challenging dominant behaviors and the risks associated with a lack of scrutiny in decision-making. It also discusses the role of trust in supervision, the use of multidisciplinary teams, and the necessity of building trust to encourage self-reflection and authentic behavior among individuals under supervision.

10:09

🤝 The Impact of Behavior on Performance and Cooperation

The final paragraph emphasizes the role of behavior in driving performance and the influence of organizational culture on decision-making. It discusses the supervisory approach to behavior and culture, including the use of traditional instruments and direct observations to identify behavioral patterns. The paragraph stresses the importance of trust in building cooperative relationships with financial institutions and the contribution of human factors to constructive decision-making processes. It concludes by stating that supervision of behavior and culture is not a standalone solution but should be combined with other aspects of financial supervision for maximum effectiveness.

Keywords

💡KLM Jumbo Jet

The KLM Jumbo Jet refers to a Boeing 747 aircraft operated by KLM Royal Dutch Airlines. In the context of the video, it was involved in the Tenerife airport disaster in 1977, which was one of the deadliest aviation accidents in history. The script mentions the incident to illustrate the catastrophic consequences of poor communication and decision-making within a hierarchical structure.

💡Air Traffic Control

Air Traffic Control (ATC) is a service that coordinates the movement of aircraft to maintain separation between them, both in the air and on the ground. The script describes how ATC systems were not working well during the Tenerife disaster, contributing to the poor visibility and confusion that led to the accident.

💡Behavioral Impediments

Behavioral impediments refer to the psychological or social barriers that can hinder effective decision-making and communication. In the video, these impediments are discussed as factors that contributed to the aviation disaster, such as the dismissal of the junior flight engineer's warnings due to hierarchy.

💡Organizational Culture

Organizational culture encompasses the values, behaviors, and norms that shape the work environment within an organization. The script suggests that examining and improving an organization's culture is vital for adapting to new circumstances and enhancing performance.

💡Board Effectiveness

Board effectiveness pertains to the efficiency and effectiveness of a governing body, such as a corporate board of directors, in making decisions and overseeing an organization. The script mentions an instrument designed to assess board effectiveness, focusing on leadership styles and the participation of board members in discussions.

💡Change Effectiveness

Change effectiveness is the measure of how well an organization adapts to and implements changes. The video discusses the importance of successful transformation in business models, organizations, or cultures to adapt to new circumstances and the role of an instrument designed to evaluate this.

💡Risk Management

Risk management is the process of identifying, assessing, and controlling risks. In the context of the video, it involves understanding how personal values and mindsets impact decision-making, especially in relation to the balance between reward and risk.

💡Dominant Leadership

Dominant leadership refers to a leadership style where one individual exerts significant control over decision-making, potentially suppressing the input of others. The script uses this concept to discuss how such a style can hinder effective challenge and discussion within boards, leading to poor decision-making.

💡Groupthink

Groupthink is a phenomenon where conformity within a group results in poor decision-making due to the avoidance of dissenting opinions. The video script cites groupthink as a reason why individuals might not voice their concerns or challenge the majority view, even when they believe it to be incorrect.

💡Supervision of Behavior and Culture

The supervision of behavior and culture involves monitoring and guiding the behaviors and cultural aspects within an organization to ensure they contribute to prudent management and ethical behavior. The script explains how this supervision is conducted through various instruments and observations, aiming to identify and address behavioral patterns that could impact the organization's performance.

💡Trust

Trust is a crucial element in the supervision of behavior and culture, as it enables individuals to openly reflect on their behavior and engage in constructive dialogue. The script emphasizes building trust by explaining the supervisory process and assuring individuals that the goal is not to punish but to foster improvement and cooperation.

Highlights

In 1977, a KLM Jumbo Jet crash at Tenerife airport was a result of a combination of structural and human factors.

The crash was influenced by fatigue, impatience, bad weather, and poor visibility.

The junior flight engineer's warnings were dismissed due to hierarchy and seniority.

Behavioral impediments can significantly impact aviation safety.

The 2008 financial crisis led to the exploration of how human factors could contribute to organizational objectives.

Behavior drives performance, and integrating behavioral perspectives in supervision can prevent and solve problems.

Examinations are performed to identify behavioral patterns, particularly in top organizational levels.

Board effectiveness and change effectiveness are instruments used to analyze leadership styles and organizational adaptability.

The relationship between reward and risk, along with personal values and mindset, is crucial for decision-making.

A non-normative approach is taken, encouraging self-reflection on behavior and its impact.

No single superior culture is assumed; each culture has its virtues and risks.

Behavior must always contribute to prudent management and ethical behavior.

Supervision of behavior and culture involves identifying risks and promoting cooperation with financial institutions.

Boards often do not challenge proposals or discuss risks, leading to decisions without proper scrutiny.

Dominant leadership styles can hinder open discussion and create conflict within organizations.

Followers may conform to the majority even when they know the position is wrong due to fear of group scorn.

Change efforts are often superficial and not completed, leading to ineffective transformation.

Supervision of behavior and culture includes traditional instruments, behavioral observations, and multidisciplinary expertise.

Building trust is essential in the supervision process, ensuring objective and verifiable judgments.

The supervision of behavior and culture aims to contribute to better decision-making and mutual trust.

Behavioral supervision is not a magic pill but should be combined with other methods for effective financial supervision.

Transcripts

[Applaus]

in

1977 a KLM Jumbo Jet was Standing on a

Runway on tener airport in the cockpit

The Pressure was mounting The Crew had

been Waiting For quite a while and

fatigue and impatience was Kicking in

the airport was extremely busy There Was

bad weather Air Traffic Control Systems

work well and the visibility Was very

Poor and as a result The Crew did not

know that was other plane Standing on

the same Runway from Which The KLM Jet

Wanted to take

off Only The Junior flight engineer was

aware of that yet his warnings were

dismissed by the Captain due to

seniority and

hierarchy not Only was the Captain In

The Upper Ranks of the KLM organization

he also

Jer as Wars Junior flight engineer Dis

Easily and did not really influence The

Decision of the Captain to take

off and Just Before The Wheels Of The

KLM plane lifted from the Runway It

crashed into Another plane that Same

plane that was Still

Standing and it caused one of the major

Aviation disaster in history causing

enormous amount of

casualties exposed analysis revealed

that this terrible accident was caused

by a Combination of structural and human

factors and Following this

analysis

interaction measures were taken to

influence the interactions Within The

cockpit thereby trying to diminish the

influence of behavioral impediments such

as High

of Aviation

Safety The financial crisis Hit The

World In 2008 economic analysis was ini

dominant two of my colleagues wonder The

Human fact demst

absent

perspective Behavior and Culture could

contribute Our organizational objectives

Being enhancing The financial Strength

Of financial

firms and a couple of Years later and

Still after continuous development of

our methodology It is still based on

three very Simple ideas The First One is

is that Behavior drives

Performance the second

isan

Of

behi The Third was If are able

to integrate this behavioral perspective

in in supervision we Might be able to

better prevent and Maybe also solve

problems The Question Is How do We Get

More grip on behavioral patterns through

supervision the answer is we perform a

lot of examinations we try to identify

behavioral patterns mostly in the top of

the organization and we try to Figure

out what the Effects of these patterns

are And To do this we have designed

several Instruments one of them is the

instrument called Board effectiveness we

Look at boards and we try to get a grip

on Their behavioral patterns so we Look

for example at leadership

Styles dominant CEO negle The input of

others leadership

facs participate in discussions and

Bring perspectives

forward but we also Look at whether Or

Not institutions are capable of

successfully transforming Their business

model Their organization or Their

Culture for adapting To New

circumstances is Vital for sustained

Performance And For This we use Our

instrument Which We Call Change

effectiveness In Our R Culture ass we

How traders

deal relationship between reward and

Risk we want to know Their personal

values we want to know Their personal

mindset and we also Look at how the

Culture of the Group Might impact Their

personal Decision

making n Let Me emphasize That We Are

Not normative In Our approach We Do Not

pres How to behave Under All

circumstances

Nor do we work with checklists with

prefin criteria for good and bad

Behavior

to reflect on Their Own Behavior to see

what the impact of that Behavior is and

to adjust that patterns If

necessary and we do not work on this

assumption either that There is Only One

Superior Culture each Culture May have

Its virtues yet also Own risks and as a

supervisor we to identify Ris

them and SP of this all we do not have a

tot Neutral View on

Culture in our opinion Behavior must

Always contribute to prudent management

or ethical Behavior When we see that

institutions Take excessive risks or

display une ethical Behavior We will use

Our Powers to Fight against

that Let Me Some examples of what we

encountered in the supervision of

Behavior and

Culture what we Often see is that boards

do not really Challenge proposals that

they do not really discuss risks or

alternative

options as a results decisions are Often

taken Without proper scrutiny causing

damage to the institution and Its

customers Now this May have various

Reasons There May be structural Reasons

for example that the rules roles and

responsibility Between The Decision

Makers Are diffused

behavioral Reasons this insufficient

Challenge Board

level First of ambitious growth

strategy this create Minds

in aim

profit

man level entire organizations May

suffer From The Pressure of overly

ambitious

strategies dominant leadership Might be

Another Reason insufficient Challenge at

Board level because It frighten others

to speak up and to

share dom leadership

sty

leip ex Fair leadership

sty Fair leadership Styles CA urgent

decisions to be postponed and creates

room for interpersonal conflict and this

May result in

indecis or even distorted

cooperation in Challenge May Not Only be

the Cause Of Those Who lead also Those

Who

follows followers May be subject

ex

cons They assume very Easily The

position that is the Majority of the

Group even even when they know that that

position Is Wrong yet The Fear of Being

scorned by the Group prevents Them from

bringing Their Own

opinion other supervisory findings That

We have relate to the way institutions

Are dealing With Change And firms

encounter many

one of them

isu

What man employees in a new situation in

terms of New

Behavior as a result change is Often

superficial and is not really completed

Until The End and Another obstacle For

effective Change

Isard

lelan that mayed as Sign that This is

All In The End the result Might be that

the change effort is not really credible

and not really

finished how do we perform The

supervision of Behavior and Culture

These w The findings how do

weing we use Combination traditional

Instruments

level as levels immediately Below see

behavioral patterns levels

Are we also perard observations is new

appro we sit inard meetings to observe

the Dynamics with the

Group

Experience that meetings res

Natural Another very element in the

supervision of Behavior Culture is Trust

If is no Trust

Bet her experiences his personal

experiences with supervisor reflect on

Their Own Behavior and wey to start

building Trust by extens explaining What

We Will Be Doing That We will not put

Them on a Sofa to dig into Their past

but that We will Look at behavioral

patterns at the level of the Group so

not the individual level but the Group

level and furthermore we try to build

Trust by explaining That We will not

punish Them If goes wrong It's

rendering objective and verifi Judgement

this wef

expertise we multidisciplinary Team not

Only including govern specialist change

management specialist also Train

organizational

psychic

That We also Willing to challeng

ourselves That We Are open to the com of

others That We Are Willing to

Len We Started The supervision of

Behavior and Culture a couple of Years

AG I Had no

ide

People Under Pressure when they Feel

threatened They Often Lose Their

authentic Way of doing things They do

not see others as equal Partners Often

Only as obstacles to realizing Their

goals through the supervision of

Behavior and culture I to contribute to

cooperation with financial institution

introduce

Human financial

Organ

thats constructive Decision making

processes not Only contributes to better

decisions but also contributes to

respect cooperation and mutual

Trust summing up in four points Behavior

drives

Performance Organ

ofi

idavi influence institutions do

about Final com the f Point it's not

that this Type Of supervision is a magic

Pill that cures automatically cures

alls

isci structural pers that is of in

financial

supervision It is effective not in

Isolation but Only in Combination and

the reason for that is Simple because

two Is Always stronger than One thank

[Applaus]

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