Virtually any job involves some level of decision-making; from simple, routine decisions that are easily trained and quickly learned (such as sorting or filing), to complex decisions with huge impact for which there may be no clearly correct answer (such as a major strategic shift at a multi-billion dollar global organization). The key to effective decision-making is exercising good judgment when assessing the situation, evaluating options, and choosing a course of action. This sounds obvious, but judgment is difficult to define and hard to develop. So how do you improve the exercise of good judgment in your organization?
First and foremost, it’s important to recognize that judgment is more than an individual attribute. Organizations can create a climate that promotes good judgment and decision-making. In a poor quality environment, even individuals with great personal judgment can make consistently poor decisions. Here are a few tips to help get things right on both fronts.
Practice Informed Skepticism
Informed Skeptics are critical consumers of information. They seek out data and listen to those close to the issue to build up their understanding of the subject. They question the assumptions underlying the data, and don’t take conventional wisdom for granted. They evaluate and consider information thoroughly in order to arrive at sound conclusions. They are informed by the data, but not beholden to them.
In Hogan terms, these people may score low-to-moderate Adjustment (detecting problems), low-to-moderate Interpersonal Sensitivity (challenging behaviors), and high Learning Approach (informed and analytical). They may also have an elevated HDS Skeptical score, a high MVPI Science score, or both.
In contrast, intuitive decision-makers rush to judgment based on their own experience. They rarely seek out new information, and tend to make decisions themselves without input from others. These people are often confident and charismatic, but may lack substance. On the other end of the spectrum, empiricists rely exclusively on the data, rarely questioning the underlying assumptions. They may fail to recognize when the external environment has changed, rendering previous assumptions invalid.
Identify relevant data points to inform decisions
Big data is a buzzword these days, and deservedly so. The amount of information available and the potential implications for virtually all business functions is enormous. But there are two things to consider in the big data movement. The first is that, although more data than ever are being collected, there are also more irrelevant data than ever. It’s critically important to identify relevant and meaningful data and metrics to help drive good judgment.
The second consideration is what I’ll call ‘smart’ data. Smart data allow you to link data points from one application or activity to related data points somewhere else, making new connections across functions to uncover new patterns. Smart data help link your recruitment activity to your candidate pool, your selection tools, your training and onboarding programs, your performance management system, your high potential identification program, and your leadership development program. New patterns for the entire employment life cycle can be explored. If the data you have all sit in separate silos and cannot be combined without colossal effort, then you have piles of ‘dumb’ data, and they can’t deliver the same value.
The generation of relevant, informative data is therefore a structural aspect of an organization. It takes deliberate effort and purposeful design to create databases that link meaningful data to one another. Poor quality information produces a ‘garbage in, garbage out’ result.
Make data widely available throughout the organization
Organizations often restrict access to information in varying degrees, but good judgment is required at virtually all levels of an organization. To improve the quality of decisions on a widespread level, data have to be available to inform these decisions. Absent that information, the ability to exercise judgment is constrained, and a culture of poor decision-making can develop.
A new trend emerging in startups is the transparent organization. In the most extreme cases, all data – from company financials to individual performance reviews – are freely available to everyone. Is that too much? Almost certainly (see the point about relevant data). But the spirit of providing information to those who need it is on target.
On the other hand, providing too little information leads decision-makers to rely on the information available, which may be outdated, irrelevant, or misleading. Consider the allegory of Plato’s Cave, in which captives grew up immobilized and could only see shadows of objects out of view, and hear sounds of those objects reflected and distorted off of a wall. The captives perceived the shadows and sounds to be reality, unaware of the reality of the objects casting the shadows and making the sounds. In the absence of information, decision-makers will act based on shadows and distorted sounds, all but ensuring that decision-making will suffer.