Good decision making doesn't happen by chance - Michelle Gibbings, Change Meridian

Good decision making is a skill that is essential at all levels of leadership. However, being tribal creatures we like to fit in and be part of the pack. On many occasions, we would rather follow the crowd than be sidelined and left out.

In my article in the GRC Compliance magazine I discuss the concept of tribe mentality and share my 10 tips on taking decision making to the next level. You can read the full article here.

Being tribal creatures we like to fit in and be part of the pack. On many occasions, we would rather follow the crowd than be sidelined and left out.

This has implications for behaviour and the actions people take in both their personal and professional life.

Pressure to conform can result in people holding off challenging the status quo or questioning things that others around them are accepting. A decision can be made or action taken with little more reason than the fact that everyone else is doing it.

In behavioural economics this is known as the herd mentality. It plays out all the time on the sharemarket. If a company’s share price goes up, people will rush to buy. While when the share price falls, people will rush to sell.

These actions often take place with little logic attached to the merits of the price fall or increase. This is because when the share price falls people lose their nerve thinking that if everyone else is selling they should too. While if the stock is going up people don’t want to miss getting their piece of the action. They think that if everyone else is doing it, it must be a good thing (or the right thing) to do.

It’s the modern day equivalent of the childhood fairy tale from Hans Christian-Anderson – The Emperor Has No Clothes.

The story centred on two conmen who pretended to be weavers and convinced the Emperor they could make him a magical suit – the finest in the land. The magic was that this suit would be invisible to those who were too stupid for their jobs. In fact, the Emperor’s new suit of clothes was his ‘birthday suit’. However, when the Emperor paraded in front of his subjects, no one wanted to call out that he had nothing on but his underwear. Why? Because they feared looking stupid. It was only a young child who felt free to speak their mind and acclaim “He isn’t wearing anything at all”.

As with all fairy tales there is a moral to the story. The weavers preyed on the Emperor’s vanity and on the fact that people around him wouldn’t have the courage to speak up for fear of looking stupid.

In a modern day context, the tale still has applicability as the choices and decisions of a larger group can influence the actions of an individual.

The ability for people to be influenced by others goes even further than that. The University of Leeds did a study and found that humans flock like sheep and birds.

The study found that it only takes around five percent of people to walk in a certain direction to influence the rest of the crowd’s direction.

What the researchers did was run a series of experiments where groups of people were asked to walk randomly around a large hall. Participants were not allowed to communicate with each other during the experiment. However, a select few people had detailed information about where to walk in the hall.

What happened may surprise you. The results found that those individuals with details on where to walk were ultimately followed by the others in the hall; forming a snake-like line of people.

So the participants followed others in the group with little thought as to why.

For organisations facing increasing complexity, they need people who are willing to challenge and ask questions. People who aren’t going to blindly follow what everyone else is doing.

Governance, Risk and Compliance Professionals often finds themselves playing this role.

However, it shouldn’t start and end there. Having leaders who are willing to robustly discuss and debate issues is a sign of a healthy organisational culture.

In such an environment the leaders are deliberate about how and when they make decisions.

They understand that bias pervades decision making because decisions aren’t made on facts alone. Instead, the brain often takes short-cuts and discards information that doesn’t fit with its world view.

Daniel Kahneman in his brilliant book ‘Thinking Fast and Slow’ shared his years of research into this field. He explained how the automatic and instinctual part of brain can lead to cognitive bias and overconfidence in one’s opinion.

To mitigate and overcome such bias it’s essential for leaders to encourage debate and discussion from a diverse range of people – not just the people that will agree with them. This is about seeking the optimal agreement, which may not necessarily be the quickly reached agreement.

It also involves being curious about what could be, rather than merely accepting what they are being told. By doing this the leaders welcome all types of news – even news that is difficult to hear – as they know it will help ensure more effective decision making.

Decision making is a skill that is essential at all levels of leadership.

If you want to take your decision making to the next level here are ten tips to get you started:

  1. Take time to determine the specific problem that is being resolved. Too often people don’t spend enough time gaining clarity on the issue they are confronting and ensuring there is agreement on what the problem actually is.
  2. Recognise there is a spectrum of decision making – from instinct based to adaptive challenges. Different problems require different processes and tools. It’s about taking a ‘fit for purpose’ approach.
  3. Be conscious of the mindset that needs to be applied to the situation. For advanced decision making you need to be highly conscious of the bias that may impede your progress.
  4. Take a deliberate approach to decision making and apply techniques to structure and minimise the likelihood of bias.
  5. Make sure you are solving the right problem in the right way, based on the level of complexity and potential impacts.
  6. Look at what alternative options exist, including outlier perspectives. Sometimes the best solutions will come from unlikely sources. Don’t immediately discount something just because it doesn’t immediately resonate with you. Be curious and open-minded.
  7. Consider what trade-offs you will need to make. Making a decision typically means that you will be giving something else up. Be clear on what you won’t be doing because of this decision.
  8. A good decision is able to be implemented. There’s no point making a decision if you don’t have the capacity or capability to see it through.
  9. Be open to different ideas and to having your assumptions challenged. Reflect on how you are reacting to these ideas – from both a head, heart and gut perspective.
  10. Crucially, make sure you are having the right stakeholders involved at the right time, and that they are helping you examine the problem from multiple perspectives.

Alfred Sloan, the former CEO of General Motors is quoted as saying:

“Gentlemen, I take it we are all in complete agreement on the decision here…Then I propose we postpone further discussion on this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about”.