Knowing biases helps leaders in making smart decisions
Leadership is about making decisions. The decisions you make build your reputation for sound judgment. Even though the process of decision-making might seem intuitive, there are systematic ways of making smart decisions, according to Dr. Pradnya Parasher who conducted a masterclass on ‘Why Smart People Make Bad Decisions Too?’ at the People Matters L&D Conference 2018.
Failing to understand one’s biases while making decisions is a major hurdle that even experienced leaders face regularly, said Parasher. Strategic self-awareness is the key to changing the decision-making game.
The success rate of making correct decisions is only 50 percent, which means there is a 50-50 chance of a person making a sound decision. Once people are aware of this fact, strategic self-awareness can help in understanding the thought process and ensuring that they approach the task of decision making with a complete understanding of how their biases impact the decisions that they make daily.
Biases in decision-making
Decisions are affected by human biases. Many a time people make decisions and then rationalize them in hindsight. Post-decision biases come into the picture when a bad decision is made and how the leaders or decision-makers react to it. Good judgment is about fixing an error in decision making and not repeating it. If leaders take a step back and understand their predictive biases, it will help them in processing information prior to finalizing on a particular decision which could even have a long-term impact on the organization.
Information processing styles
Words and images are easier for some people to process while others prefer to think via symbols and numbers. According to the Hogan Model that Parasher discussed during the masterclass at the Leadership & Development Conference, every leader or manager has her or his own way of processing the information available. Some would focus on the numbers and make data-informed decisions and others would base their judgments on verbal cues and words.
If leaders were to identify how they process information they could shape their team accordingly. For example, if a CEO is an intuitive decision maker, she could take help from the ones who process data and numbers to make a balanced decision. Similarly, if a person relies only on numerical information, she can identify the intuitive decision makers and take help from them to make a smart decision which is deliberate and intuitive at the same time.
The key is to effectively solve problems and take the organization to the next level. Decisions define an organization, said Parasher. Having an open mind toward feedback and ensuring that the communication channels are open to sharing constructive feedback among leaders and employees is crucial.
Thus knowledge of one’s biases can with practice enhance decision-making and judgment capabilities of leaders.