5 steps to developing better judgment for leaders

An executive’s success is contingent on the frequency and accuracy of their judgment

Poor judgment is often a result an individual’s style and approach, not incompetency, writes Mark Busine

A key determinant of success in business is making the right decision at the right time. However, even those that we have at times hailed as leadership gurus have suffered at the hands of poor judgment. 

In recent times, the poor judgment of leaders and executives has been publicly exposed. The current market conditions and the decisions that have contributed to this situation have left many asking, “How did this happen?” But we should not lose sight of the fact that executives across all organisations are being called upon daily to make judgments, many of which have significant positive impacts on organisations. 

The success of an executive is determined by the efficacy of their judgments about people, markets, products, processes and policies. While decision making has always been fundamental to the role of management, today’s executives are required to make more decisions to navigate a business environment characterised by increasing complexity, competition, rapid change and uncertainty. Hence, an executive’s success is contingent on the frequency and accuracy of their judgment.

Improving executive judgment involves better management of the interplay between four factors: the individual’s experience, knowledge, competence, and personal style. It also involves the profiling of leadership roles in these terms so the right leaders are selected and development can be targeted. So what is judgment? How is it different to traditional concepts of decision making, and is it possible to identify individuals with good judgment and/or develop an individual’s judgment?

“Considerable attention has been given to the role of executive ‘derailers’ – the attributes of personality that contribute to failure”

Traditional decision-making is about applying rational models that typically define a series of steps. Yet many would argue that, in practice, managers and executives are typically unable to apply the rational model because of the limitations and problems inherent in the demands of rationality. For example, a rational model recommends the clear articulation of criteria and objectives before exploring alternatives; but in reality, executives are often faced with multiple, even competing, unclear objectives.

In the pragmatic world of business, executives can only make sense of the information available to them, within the context of what they already know and have experience of. The reasoning an executive applies when faced with a decision therefore depends on their knowledge and experience, such that a different person would view the same decision differently.

In considering the anatomy of executive judgment, our experience leads us to the view that it is influenced by the interplay of the four factors – experience, knowledge, competence and personal style – with which people create “mental models”. These mental models shape how we act and the judgments we make.

There is no question that great experience, knowledge and capability contributes to better judgments. Why, then, do we still see highly experienced and capable managers making bad decisions?

“An executive’s success is contingent on the frequency and accuracy of their judgment”

In recent times, and against a backdrop of increased executive failure, considerable attention has been given to the role of executive “derailers” – the attributes of personality that contribute to failure. The link between derailers and judgment is fundamental. It is often an individual’s style and approach that contributes to poor judgment and decisions, and not incompetency.

Another aspect is that, in business, situations change. Judgment often relies on our ability to extend our known patterns to new and often unfamiliar situations. This has been referred to as “cross-indexing” – the ability to see similar patterns in disparate fields or situations.

Max Bazerman, in his book Judgment in Managerial Decision-making, describes how the interplay of the four factors in executive judgment can be seen in these three common biases that typically influence managerial judgment:

  • Availability: the tendency to make judgments based on the information immediately available.
  • Representative: using stereotypes in judgments.
  • Anchoring and adjustment: creating a starting point that becomes the anchor when you don’t have enough information.

5 steps to developing judgment
Judgment can be developed through a number of means, such as a broad and considered range of experiences (real and simulated). These include:

  1. The case method: a learning approach designed to accelerate experience through exposure to a diverse range of perspectives on real business cases.
  2. Leadership simulations: these immerse participants in business situations commonly faced by senior leaders, to help them understand the impact of their decisions and gain personal insight through self-assessment tools, journalling and peer feedback.
  3. Acquiring knowledge relevant to the organisation, industry and discipline.
  4. Developing an awareness of one’s own style and potential derailers that may influence judgments and actions.
  5. Learning about and applying traditional models of decision making, and more contemporary models of rapid decision making, and knowing when it is appropriate to apply them.

11 routes to derailing

Derailer Implications for judgment
Approval dependent Often leads to an inhibition to address the hard but necessary issues.
Argumentative Decision process is overly directed towards competition with others, catching others out or seeking vindication of one’s own view.
Arrogant Essential input from others may not be proffered and/or considered.
Attention-seeking Key variables may be ignored as favourable self-presentation is prioritised over other critical factors.
Avoidant Self-interest and detachment from others may lead to decisions that are not in the best interests of the business.
Eccentric Credibility and influencing others can be difficult as judgments appear too unconventional.
Imperceptive Ignores the people side of the equation and hence judgment is ineffective in mobilising others.
Impulsive Inadequate consideration and evidence basis for judgments.
Perfectionistic A risk to strategic judgment as a consequence of focus on day-to-day operational detail.
Risk-averse Inaction and analysis paralysis are key risks.
Volatile Judgment too influenced by dramatic fluctuations in mood and focus

Source: research by DDI, R Hogan and J Hogan, and others. Image source: iStock