As human beings, we are naturally programmed with an existing set of emotions, habits, perspectives, and opinions. We are sometimes drawn to making decisions for reasons we do not fully understand. You might hire a new employee because it feels right, or promote those on your team because you feel they deserve it.
Every day we make thousands of decisions, some consciously and others subconsciously. The key is figuring out how to make more good decisions than bad ones, but how can we do this? Today we turn to psychology and behavioral economists to learn how to avoid common traps that leaders fall into and ultimately make better decisions for our organizations.
Fairness
Forbes once posed this scenario: A rich woman sits between two strangers named Robert and Juliette on a plane. The rich woman offers Robert $10,000, but only if he agrees to split a certain amount with Juliette. If Juliette accepts Robert’s proposed split whether it be 60/40, 50/50, or some other amount, they can keep the money. However, if Juliette disagrees with how Robert wants to split the $10,000 dollars then neither of them will get the money.
In theory, Robert could offer Juliette only $10. One person might accept $10 dollars because it’s free money, but some might also say it would be “unfair” for Robert to have so much more than Juliette and decline the offer. According to Forbes’ research, most people in the Juliette role will turn down offers they deem “unfair.” What’s more important to most people is that the decision-maker is fair, rather than choosing the outcome that is in their self-interest.
When trying to make a decision, think about what is the most “fair.” Also, consider how your decision will be perceived by others in your company.
Pattern Recognition
In their book, Think Again: Why Good Leaders Make Bad Decisions, Sydney Finkelstein, Jo Whitehead, and Andrew Campbell explore the concept of pattern recognition. Pattern recognition is a complex process that integrates information from as many as thirty different parts of the brain. When faced with a new situation our brain makes assumptions based on our prior experiences. This is why masters of chess can choose a high-quality move in as little as six seconds.
At the same time, pattern recognition can also hinder us! When we’re dealing with seemingly familiar situations our brains think we understand them when we don’t.
This miscalculation in pattern recognition is a big reason why some leaders struggle to transfer their prior success to a new company. A previous track record is never a full-proof guarantee of future achievement. Leaders must be mindful of the workplace conditions, co-workers, resources, and how to create momentum in your environment for new hires.
The Psychology of Good Decisions
So what can you do? Well, first begin by identifying the true decision to be made in front of you and why you need a solution. Get all the facts you can and understand their causes. Make your thinking process visible to your peers and explain your assumptions and interpretations of the situation at hand. Invite one or two others in to gain a new perspective.
After taking it all in, a decision based on all information should be made and implemented. This seems obvious but a decision only counts when it is executed. Former IBM CEO Lou Gerstner said, “There are no more prizes for predicting rain. There are only prizes for building arks.” The final examination of any decision is whether or not the problem was solved. Did it go away? Did it evolve? Is the situation better, worse, or the same? What new problems did the solution create?
If things change, you can then evolve and start the process over at the top until you have a satisfactory conclusion. Now go out there and make some decisions!
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– Michael Monson
President and CEO
Top Talent LLC
Email: mike@toptalentllc.net