Balanced professional networks lead to better high-risk decisions

Work performance improves when the enemy of an enemy is a friend.

Work performance improves when the enemy of an enemy is a friend
Work performance improves when the enemy of an enemy is a friend

Polarization – division into two sharply contrasting groups or sets of opinions or beliefs, affects many forms of social organizations. Affective relationship and even a small change into that relationship can change the work performance.

Now, a team of researchers from Northwestern University‘s Kellogg School of Management has found that balanced professional networks are more important than individual talent when it comes to high-risk decision making.

According to the team, it was the first longitudinal study to prove several key tenets of SBT (structural balance theory) which provide an analytical framework for describing how relationships change over time.

SBT consist of four primary rules for relationships among individuals: a friend of a friend is a friend; a friend of an enemy is an enemy; an enemy of an enemy is a friend; an enemy of a friend is an enemy. And when all these conditions are met, the network is said to be balanced.

For the study, the team analyzed a financial institutional over a two-year period (from 2007 to 2009) that employed 66-day traders. Traders’ instant messages were analyzed to determine the relationship among traders.

The researchers, then compared those relationships to performance data for individual traders, controlling for factors including market volatility and work days. They found that regardless of the actual level of talent of any individual trader, the traders with the highest level of balance in their networks also made the best trades.

Brian Uzzi, the Richard L. Thomas Professor of Leadership and Organizational Change and corresponding author of the study, said, “This data shows that companies reap the benefits when conflict among employees is reduced. There are certain types of conflict that can’t resolve themselves.”

This work can help managers identify those conflicts and actively step in to resolve them, ultimately leading to better performance.

In short, the study suggests that the performance of workers improves when there is a high level of balance in their relationships.

We suspect that conflict in networks monopolizes some portion of workers’ mental energy,” Uzzi added. “Resolving that conflict frees up mental energy to make better decisions and perform at a higher level.”

The results of this study apply to individuals who often engage in extensive high-risk decision making, especially in situations where polarization is typical, such as politics or army.

Some more research is needed to determine whether the same rules hold in other work situations, such as creative and innovative endeavors.

The research is published in the journal Nature Communications.