Socio-cognitive skills: Predicting risk propensity in the workplace

Overview

In 2011, risk research gained impetus when the Cass Business School at City University
London published its report, ‘Roads to Ruin – A Study of Major Risk Events: Their Origins,
Impact and Implications’. It analysed twenty-one corporate crises between 1999 and 2007
whose pre-crisis assets exceeded $6 trillion and consequences included significant loss of
finances, reputation and life. The report attributed their causes to ineffectual ‘hard’ and ‘soft’
skills; hard skills are technical abilities, whereas soft skills are social skills which facilitate
working relationships, for which empathy measures are widely used (Baron & Tang, 2008).

The report concluded that “A valuable question for further investigation is whether there is a
causal link [...] with respect to the so-called ‘soft’ skills and the propensity to suffer
reputational crises” (Cass Business School, 2011, p.5). The present study investigated
whether a link exists between social skills and risk propensity in the workplace. Weak
evidence was found for this link, with future research encouraged to better understand the
antecedents of occupational risk propensity.

Hypothesis

It was predicted that employees possessing strong social skills would demonstrate lower risk
propensity than less socially-skilled employees. This prediction was based in evidence that
socially-skilled behaviour improves access to support networks providing consultative
mechanisms for making low-risk decisions (Schoorman, Mayer & Davis, 2007), whereas
weaker social skills impede career progression, prompting risk-taking to avert loss (Kempf,
Ruenzi & Thiele, 2009).

Sample and measures

An opportunistic sample of 150 employees took part from 8 different occupation types:
production/manufacturing; retail; leisure; administration; financial; professional, scientific and
technical; education; and health and social care. The sample comprised 44 males (29%) and
106 females (71%) aged 18 to 61 years. Employees completed two pre-validated measures
at a single point in time: Davis’ (1983) Interpersonal Reactivity Index (IRI) for measuring
empathy – which is widely used to measure social skills using four sub-scales – and
Meertens & Lions’ (2008) Risk Propensity Scale (RPS) for measuring risk-taking tendencies.

Results

Scores on one of the IRI's four sub-scales – Empathic Concern (EC) – correlated
significantly and negatively with scores on the RPS; that is, people expressing more concern
for others’ distress reported slightly lower risk-taking behaviour. Age, gender and occupation
did not affect this relationship. More detailed results and discussion are available on request.

Implications

Significantly negative (albeit small) correlations between EC sub-scale and RPS scores
support the tenability of the proposed relationship between stronger social skills and lower
risk propensity – this is because the EC sub-scale assesses feelings of sympathy and
concern, which facilitate the kind of socially-skilled behaviour that may improve access to
support networks which help employees to make lower risk decisions (Perry & Felce, 2015).

Limitations

The results may reflect a greater inclination for employees to report EC rather than a
genuine proficiency, while non-correlations between other empathy sub-scale scores and
RPS scores may reflect employees’ reluctance to report different facets of empathy rather
than genuine differences. It is also important to consider that the lack of correlation between

Page 1 of 2 Corresponding author’s email: james@mrcribb.co.uk

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 Socio-cognitive skills: Predicting risk propensity in the workplace
other facets of empathy and risk propensity may reflect employees’ difficulties identifying
with these skills at work.

The results might also be confounded by disproportionate sampling of professional, scientific

and technical industries, where employees typically value hard over soft skills (OECD,
2016). It is also possible that employees with weaker social skills simply did not take risks to
avert loss – perhaps such employees were not aware of any possible lack of social skills, or
they may have been inclined to avoid risk-taking for other reasons (e.g., workplace norms).

Future research

Future research should sample co-workers to robustly test the theory that employees take
risks to avert the losses from having weaker social skills. The potential effect of other factors
on risk propensity should also be assessed (e.g., personality and career motivations). Larger
samples would improve statistical power to detect meaningful relationships, particularly
among the self-employed, entrepreneurs and Small and Medium Enterprises (SMEs) where
decentralised, innovative decision-making incurs greater risk-taking (Zahra, 2005).

Further reading

Baron, R. A., & Tang, J. (2008). Entrepreneurs’ social skills and new venture performance:
Mediating mechanisms and cultural generality. Journal of Management, 35(2), 282-306.

Cass Business School report on behalf of Airmic. (2011). Roads to Ruin: A study of major
risk events: Their origins, impacts and implications. [online]. Available at:
http://www.reputability.co.uk/files/press/Roads_to_Ruin_The_Analysis.pdf
[Accessed 09 Mar 2017].

Davis, M. H. (1983). Measuring individual differences in empathy: Evidence for a

multidimensional approach. Journal of Personality and Social Psychology, 44(1),
113- 126.

Kempf, A., Ruenzi, S., & Thiele, T. (2008). Employment risk, compensation incentives and
managerial risk taking: Evidence from the mutual fund industry, CFR working paper
number 07-02. [online] Available at: https://www.econstor.eu/bitstream/10419/57742/1/ ?
702965812.pdf [Accessed 23 Aug 2017].

Meertens, R. M., & Lion, R. (2008). Measuring an individual’s tendency to take risks:
The Risk Propensity Scale. Journal of Applied Social Psychology, 38(6), 1506-
1520.

Perry, J., & Felce, D. (2015). Assessing work-related social skills: Existing approaches and
instruments. [online] Available at: https://www.researchgate.net/publication/255652550
_Assessing_work-related_social_skills_Existing_approaches_and_instruments
[Accessed 25 Jan 2018].

Schoorman, F. D., Mayer, R. C., & Davis, J. H. (2007). An integrative model of

organizational trust. Academy of Management Review, 32(2), 344-354.

The Organisation for Economic Co-operation and Development (OECD). (2016). Enhancing
Employability: Report prepared for the G20 Employment Working Group. [online]
Available at: https://www.oecd.org/g20/topics/employment-and-social-policy/Enhancing-
Employability-G20-Report-2016.pdf [Accessed 06 Jan 2018].

Zahra, S. A. (2005). Entrepreneurial risk taking in family firms. Journal of the Family Firm
Institute, 18(1), 23-40.

Page 2 of 2 Corresponding author’s email: james@mrcribb.co.uk

October 2018