Good decision making is a critical skill for governance, risk and compliance professionals. Michelle wrote this article for GRC Magazine.
It’s not hard these days to see the evidence of ineffective decision-making—from Facebook’s privacy data disasters with Cambridge Analytica, to the stories emerging from the Banking Royal Commission.
Good decision-making isn’t just about the process used to make decisions. It’s about the environment in which decisions are made and the mindset of the people involved.
Governance, risk and compliance professionals play a crucial role in challenging and examining the decision-making techniques that leaders are applying.
It starts with recognising and accepting that humans are often not rational decision-makers.
Our brain loves certainty. It likes to know what to do and often seeks the easiest path to get to the answer.
It also doesn’t make decisions based on facts alone. Our brain filters information, discarding that which doesn’t fit with our world view. It takes ‘mental short-cuts’ while trying to conserve energy and reach a decision about what to do in the shortest possible time.
As the world gets more (and not less) complex, however, we need to become more comfortable with uncertainty and more deliberate with certain decisions.
This is hard, because often, leaders feel as though they should have the answers—that’s is not OK to say, “I don’t know”. At the same time, leaders are frequently asked to make decisions quickly and with imperfect information. In these scenarios, it’s easy to fall into the trap of letting pre-conceived ideas and assumptions drive the decision-making process.
This is dangerous, because our brain prefers the well-trodden route, taking comfort in what is familiar. And yet, in times of change and uncertainty, it can be the decision or idea that causes you the most discomfort that can end up being the best course of action.
As Voltaire said, “Doubt is an uncomfortable condition, but certainty is a ridiculous one”.
When you are ‘certain’, you can close yourself off to different ideas and unique opinions, discounting the outlier or silent voice and silencing the dissenter.
To mitigate these challenges, leaders must be encouraged to embrace the uncertainty that arises during times of change and to constantly seek out new ideas and input from different people. This involves encouraging one’s natural curiosity and approaching the uncertainty as a challenge to solve, not as a barrier to avoid.
It is also precisely during times of challenge and change that diverse views need to be brought to the table.
Humans are tribal creatures; we like to fit in and be part of the pack. This can create a pressure to conform that stifles questioning and challenges the status quo. It can also lead to people making decisions and taking action with little more rationale than ‘everyone else is doing it’.
This is more likely to happen in groups that are homogeneous, which is why involving a diverse range of people is an essential element of a collaborative decision-making process.
Research by Associate Professor of Management and Organisations at the Kellogg School of Management, Katherine Phillips, and colleagues, found that diverse teams often make better decisions as they ensure different views are considered.
The research showed that the better decisions were not the result of new ideas, but rather as a result of the group’s diversity causing more careful information-processing than in the homogeneous groups.
Key to this is being sceptical.
It’s easy to paint the sceptic in a negative light—that is, to portray the person who is being cynical as one who ought therefore to be dismissed.
In fact, being sceptical simply means you are curious. It means you recognise you don’t have all the answers. A person who is sceptical embraces a growth mindset, rather than a fixed idea or opinion. They question. They think critically and ponder ideas. They reflect upon what is really happening.
They take the time to ensure they are:
Considering: what’s happening around them, reflecting on what they are seeing and hearing, and on what action they should take.
Challenging: assumptions they and others may have to ensure they are making a good decision and are open to dissenting views and outlier opinions.
Checking: their facts and interpretations of those facts, as they are on the lookout for bias, which may adversely impact their thought-processes and decisions.
It was the French anthropologist, Claude Levi-Strauss, who said: “The wise man doesn’t give the right answers, he poses the right questions”.
Diversity of thought is generated not just from the information that is shared, but by the questions that are asked.
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. People who are willing to stand out from the pack.
Often Governance, Risk and Compliance professionals are called upon to play this role.
And there’s no doubt that it can be hard to be the one who puts on what Edward de Bono called the ‘black hat’. If no one else is questioning or voicing a concern, you might worry that perhaps you’ve missed something or misinterpreted the issue. Silence becomes an easier option, particularly as you seek to balance stakeholder expectations and needs.
Remaining silent, however, may result in poorer decisions being made. Consequently, there are times when it’s necessary to speak up, to challenge the status quo and dominant thought-patterns to ensure all sides of an issue are considered.
By doing this, the GRC professional helps leaders and their teams see debate and discussion as an essential ingredient for successful decision-making, encouraging their curiosity about what could be, rather than simply accepting the easiest answer or solution.
Debate early and often
Leaders often think the sign of a healthy culture is that agreements are reached easily, with collegiality, and with little dissent or difference of opinions. It’s the fallacy of ‘consensus rules’.
In fact, too much consensus can be unhealthy. When team members are unwilling to challenge or disagree with each other, it’s a warning sign for leaders that something is wrong. Teams must be able to discuss and disagree—even robustly—as part of a healthy decision-making process. Otherwise, they can be prone to bias, error and group-thinking.
ANU Professor, Andrew Hopkins, has written extensively on risk failures and the dangers of consensus decision-making. As an expert in this field, he has found that groups are often more inclined to make riskier decisions than individuals are under the same circumstances. This is due to the process of de-individualisation.
When many people are responsible for a decision, individuals feel as though they are not personally responsible. They are therefore more likely to take risks and can be persuaded by the group to go against their own values.
Hopkins says: “Everyone is responsible for the decision, which means, in turn, that no one person feels personally responsible. The end result is non-responsible decision-making”.
This is even harder to avoid in an environment where debate is curtailed or silenced, or where leaders fall into the trap of taking the path of least resistance and making decisions that are easy and popular, rather than difficult.
For leaders facing unchartered territory, relying on what they have always done before and using default thinking patterns is fraught with danger.
Complex and adaptive problems are not solved by the ‘quick fix’, nor are they solved by relying on patterns of learned behaviour.
GRC Professionals can work with leaders and teams to encourage them to engage in spirited conversations, as opposed to silent, shallow or stunted conversations that don’t advance the decision-making process. Spirited conversations create energy, spark new ideas, help people think more clearly about the position they hold, and open the room to different solutions.
Central to this process is establishing a trust-based culture where there is ‘good will’ amongst stakeholders and genuine intent to find the best outcome.
In this type of environment, it becomes not so much about winning the argument but about finding the best solution for all concerned.
Remove the hierarchy
This only happens when the right people are involved at the right time.
Organisational hierarchy can interfere with the information senior leaders receive and can also prevent the right people from being involved in sharing ideas and information.
It can help to ask:
- What’s the level of buy-in needed for the decision?
- Who has the knowledge needed to help make this decision?
- How will the information or data gathered be clarified to discern the relevant points?
- What steps will be taken to remove bias from the decision-making process?
- Who hasn’t been involved in this issue before that may be able to approach it from a different perspective?
- How will the organisation’s decision-making hierarchy interfere or impact the decision made?
- Have we agreed to quickly and should we be debating this further?
The question for the GRC professional is what will you do next to advance your decision-making?