Justifying Actions by Reducing Dissonance at Enron

I wanted to use this as an opportunity to expand on the reference to “cognitive dissonance” I made in class. This is a psychological theory that explains the behavior of individuals who experience an uncomfortable feeling caused by recognizing two contradicting ideas simultaneously. These ideas can either refer to beliefs held by the individual, or actual the individual’s actual behavior. The theory of cognitive dissonance suggests that people strive to reduce this feeling of dissonance by either changing their beliefs or attitudes, or by somehow justify these beliefs and attitudes to themselves and others.

Two scientists, Festinger and Carlsmith, conducted an experiment that can help explain this theory in the late 1950’s. The “Boring Task Experiment” involved a group of students who were told to turn a wooden peg a quarter turn over and over for about an hour. Some students were then told that they had to convince others that the task they had just performed was fun and thoroughly enjoyable. One group was offered $20 to do so, another $1, and another group was not asked. He group that was offered $20 was less convincing in their description, while the group that was only offered $1 was extremely motivated to convince others that the task had been fun. The cognitive dissonance theory would suggest that the $20 had less of a motivation to reduce the dissonance because they were being offered a sufficient external reward. The $1 group, however, needed to somehow rationalize to themselves and other why they had just spent an hour performing the task, so it was very important to them to be convincing (as $1 wasn’t enough of a justification).

This concept is also relevant to chapter 8 in Scott and Davis’s “Organizations and Organizing.” Chapter 8 talks about rational systems and the cognitive functions of goals. They believe that “goals provide criteria for generating and selecting among alternative courses of action,” and “provide direction for and constraints on decision making and action” (Scott and Davis, pg. 184). Weick, in response to this, believes that goals are often used to “provide justification for actions that are already taken.” Weick’s argument stems from Festinger’s development of the dissonance theory, which again, “accounts for our tendency to selectively focus on evidence that confirms the correctness of our judgments.”

I find this extremely applicable to the situation at Enron. The 15% consistent increase idea is one example where this would apply. Having stated this as a goal, the executives at Enron were able to justify otherwise irrational and irresponsible actions that were taken to achieve the goal. There is evidence that some of the executives at Enron were skeptical of Fastow’s behavior and even nervous about what he was doing, but they had already hired him and publicly recognized his brilliance, so they suppressed their attitudes and continued to support him. The analysts also seem to express this theory. When everything looked peachy at Enron, they all glorified the company and slapped buy ratings all over it. However, even when some noticed that things were starting to look fishy, they kept their buy ratings. This can either be explained by their desire to keep getting paid well by Enron, or by their unwillingness to admit that their previous assessment had been wrong. So, although their internal beliefs towards the company had changed, they suppressed these feelings and acted in ways that would support their previously stated beliefs.

I think our desire to reduce cognitive dissonance is something that we see so frequently that we often don’t even realize it. This is also probably because it’s not something we like to admit that we are doing. If we admit that we’re doing it, however, does that automatically mean that we’ve failed in our attempt to really “change” our behaviors, and instead have we just succeeded in temporarily lying to ourselves and others?

One Response

  1. I saw this link yesterday about the “Ten Most Revealing Psychology Experiments” and the one you mention is on the list. Also a few of the other experiments we’ve talked about in this class and in 312 made the list.

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