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Growth Mind-Set Vs. Fixed Mind-Set Managers

By Margaret Abernethy, Ph.D., Shannon Anderson, Ph.D., Sujay Nair, Ph.D.; and Yile Anson Jiang
August 1, 2021

How managers think about capabilities is related to how they manage resources in their organizations.

 

More than 30 years ago, Stanford psychologist Carol Dweck and her associates became interested in how students’ attitudes about failure influenced long-term academic success. They noticed that some students rebounded, while others seemed devastated by even the smallest of setbacks. After studying the behavior of thousands of students, Dweck identified mind-set—the way people think about the mutability of intelligence and ability—as an explanatory factor for different responses to failure.

 

The two extremes of mind-set are a fixed mind-set, in which individuals believe that their capabilities are relatively fixed by initial talent endowments, and a growth mind-set, in which individuals believe their capabilities change with learning and experiences that promote skills development. Where each of us falls on the mind-set continuum shapes how we approach challenges both on and off the job.

 

Although early mind-set research focused on impacts on student outcomes, we found compelling arguments to hypothesize that mind-set also affects how managers respond to the challenges of managing resource constraints to achieve performance goals. For instance, growth mind-set individuals have been found to be more likely to set learning goals (e.g., learn or master a new skill), engage in mastery-oriented strategies to improve performance (e.g., increase effort, seek help from others, and try new strategies), welcome feedback on performance against goals, capitalize on setbacks, and view feedback as a learning opportunity.

 

Fixed mind-set individuals focus on performance goals (e.g., achieving 90% on the test or coming first amongst peers) but often adopt “helpless-oriented” strategies, for example, being defensive about setbacks, avoiding challenges, and giving up and losing motivation or having negative emotions when setbacks occur.

 

Prior research has shown that the personality traits of top managers (e.g., narcissism, integrity, overconfidence, ability, and cultural origin) influence choices they make when running their organizations.

 

OUR STUDY

 

We reasoned that mind-set would also influence managerial work and, in particular, the management of constrained resources. This could increasingly be the case as there has been a push to develop the growth mind-set of students around the world because of its demonstrated benefits for educational outcomes.

 

Moving out of the classroom that Dweck studied, but retaining the education sector as our research setting, we examined whether the mind-set of school principals (i.e., top managers of their organization) is associated with their budgeting practices, their entrepreneurial efforts to raise revenues, their use of financial and nonfinancial rewards to motivate employees, and their recruiting practices. We found that mind-set is associated with how managers manage resources in challenging, financially constrained settings. (See “Man­ager ‘growth mindset’ and resource manage­ment practices,” Accounting, Organizations and Society, May 2021.)

 

To conduct our study, we surveyed K-12 school principals in the Australian state of Victoria to measure their mind-set using Dweck’s measurement scales and to assess their resource management practices. We combined our survey data with data from teacher surveys and standardized student test scores that the state education authority made available to us.

 

RESOURCE MANAGEMENT

 

Our analysis reveals that growth mind-set managers show more of the following behaviors compared to their fixed mind-set counterparts.

 

First, growth mind-set managers are more likely to use budgets to help them be better managers. Specifically, they use budgets to enable them to be more innovative and flexible, better communicate their strategic goals, and shape the culture of their organization.

 

Second, they’re more willing to undertake entrepreneurial efforts to raise revenues and less likely to accept externally imposed financial constraints on them. (In our setting, this involves undertaking community-based fundraising—something that a school principal isn’t formally trained to do—to supplement funds sourced from the government.)

 

Third, growth mind-set managers make greater use of nonfinancial rewards (e.g., verbal and written recognition or tokens of appreciation) for their high-performing subordinates. These behaviors are consistent with growth mind-set managers’ core beliefs that they (and their employees) have the innate capability to change and grow.

 

Yet we don’t find differences between growth mind-set and fixed mind-set managers in their use of financial rewards and the amount of resources they commit to recruiting efforts. While we think there may be differences in the criteria used by a growth mind-set manager and a fixed mind-set manager in selecting a potential recruit, we aren’t able to extract this in our study.

 

We also compare the differences in resource management practices between growth mind-set and fixed mind-set managers in high- vs. low-performing organizations. We find that growth mind-set managers in low-performing organizations are more likely to engage in entrepreneurial fundraising efforts compared to fixed mind-set managers (but this isn’t the case in high-performing schools).

 

Similarly, in low-performing schools, growth mind-set managers are more willing than fixed mind-set managers to use financial rewards to reward their employees, something that isn’t the norm in the school sector. These results, though preliminary, seem to indicate that when faced with underperformance, there’s a greater difference between growth mind-set and fixed mind-set managers in their willingness to adopt innovative management practices.

 

WHAT’S YOUR MIND-SET?

 

Our research shows that managers’ mind-set influences how they manage key financial and human resources. If the practices we find being used by growth mind-set managers are crucial to an organization’s success, then organizations may screen employees to hire those with a growth mind-set. Alternatively, an organization that embodies a growth mind-set in its own culture may take steps to help employees and managers identify the limitations of a fixed mind-set and shift to policies and procedures that reinforce and leverage a growth mind-set.

 

Although individual traits are relatively immutable, Dweck found that cognitive therapy could help fixed mindset people make more growth-oriented judgments (see her book Mindset: How You Can Fulfil Your Potential, 2012). With self-awareness, coaching, and guidance, managers and employees may gradually shift to a growth mind-set, which we predict would lead to a more resilient organization that learns and adapts to resource constraints.

 

Margaret Abernethy, Ph.D., is the Sir Douglas Copland Chair of Commerce, Chair of Managerial Accounting, and a professor at the University of Melbourne. She can be reached at m.abernethy@unimelb.edu.au.
Shannon Anderson, Ph.D., is the Michael and Joelle Hurlston Presidential Chair and professor of management at the UC Davis Graduate School of Management. Shannon can be reached at swanderson@ucdavis.edu.
Sujay Nair, Ph.D., is a senior lecturer in management accounting at the University of Melbourne. Sujay can be reached at sujay.nair@unimelb.edu.au.
Yile Anson Jiang is a Ph.D. student in accounting at the University of Melbourne. Yile can be reached at yilej@student.unimelb.edu.au.
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