Decisions, Decisions, Decisions


On my way to the Human Resources Professional Association conference in Toronto last week, I was reading the popular book, The Signal and the Noise, by statistician Nate Silver. If you are not familiar with this book or the author, Mr. Silver is interested in applying probability and statistics to understand predictions and decision making using real-world examples. I’m probably a little late to the party, but for a self-professed nerd like myself, the book is a fascinating read and something I would recommend to others.

As I was reading the book, there was a line that resonated with me – “Wherever there is human judgment there is the potential for bias.” As an Industrial/Organizational psychologist, I couldn’t help but connect this to the workplace. It was somewhere around 35,000 feet above Lake Erie that it dawned on me; the quality of the decisions we make is directly related to how well we perform our jobs. In fact, it is probably the biggest determinant of organizational performance. The most successful people and businesses are those that made the right decisions at the right time.

It doesn’t matter what job we are talking about or what level within an organization we are considering, the ability for people to make good decisions is directly related to their success. Bartenders have to decide when to stop serving a drunk patron. Engineers need to make decisions on where to reinforce and support structure of buildings. CEOs need to make decisions about the vision of the company for the future. It all comes down to decisions.

While it is true that all human judgment is subject to bias, we also know that humans are predictable. By understanding our own biases, we should be able to make better decisions, have better judgment. There are three core components that relate to decision making. The first is understanding how people process information. Some people are good at working with numbers, some are better at working with words. If we know how people process information, we can understand the knowledge base used to arrive at a decision. The second factor is understanding what biases our decisions. Some people are biased to maximize rewards whereas others are biased to minimize threat. Some prefer to think long term and others think in the here-and-now. The third factor is understanding how people respond after a decision is made. Some people tend to be more cool-headed and accepting of feedback, whereas others tend to be more defensive and will deny there are problems with the decisions they’ve made. Since decisions are always made with limitations and constraints, those with good judgment set themselves apart by being open to feedback and willing to incorporate in future decisions. In other words, they learn from their mistakes.

Mr. Silver is on to something when he says that many predictions (decisions) fail. In order to have a chance at making better decisions, improving our judgment, and having less of our predictions fail, we need an objective perspective of what influences our decisions and how we react to feedback about our decisions.

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