Leadership Barometer 15 Quality of Decisions

September 10, 2019

Here is a good indicator of the quality of a leader.

Make Good Decisions

This measure sounds so trivial and axiomatic that you probably wonder why I list it at all. Unfortunately, many would-be great leaders make rather stupid decisions for one reason or another. I often puzzle at how it is possible for a leader to do something that takes him in exactly the opposite direction he is trying to go. That sounds illogical, I know, so let’s examine some of the forces that could allow this to happen.

1. Stupidity – This is a simple situation of making a bonehead decision. It is like the leader who intellectually knows it is better to admit a mistake than to hide it because that actually increases respect, but chooses to hide it anyway. Sad to say there are many stupid leaders out there who make wrong decisions rather consistently.

2. Time pressure – I had a teacher once tell me “You can write a term paper in 3 months or 3 hours, the only difference is the quality.” So it goes with decisions. Quality goes up with more thought, at least up to a point. After a while the old syndrome of analysis paralysis takes over, and the decision process becomes entirely too cumbersome.

3. Poor information – often decisions are based on input from others. If a leader blindly takes bad information and makes big decisions based on it, they will turn out bad. That was the problem when George Bush decided to invade Iraq to get rid of the weapons of mass destruction. After sifting the sand of that entire country for years, we never did find the problem we allegedly went in to eliminate.

4. Going along with bad advice from above – there are times when your boss will toss out a half-baked idea and say “Why don’t you try it.” Be careful to get good reasoned advice before taking the plunge. If you find yourself on a wild goose chase, don’t forget to ask who let the goose out of the cage to begin with.

5. Not accounting for risk – Every decision has an element of risk. If you make a decision based on optimism and faith but do not consider the potential downsides of it, you will eventually get caught in a nasty situation. Get the facts and consider what could go wrong as part of your planning process.

6. Sub-optimizing on only part of the story – it is really easy to please one constituency while alienating another one. You can please the shareholders by eliminating salary increases for a year, but the employees will suffer. There are numerous situations where there are tradeoffs. Go in with your eyes wide open on the holistic impact of your decisions on all stakeholders.

7. Not thinking of the customer – for every action or decision, there is a customer. Make sure you know who the customer is and that the customer is well served by your decision.

8. Repeat of something that did not work before –Making the same bonehead move you have made in the past hoping for a better result should qualify you for a white jacket with very long sleeves. It is the classic definition of insanity.

9. Distracted by a bigger issue – often there are numerous decision processes going on simultaneously. You need to consider each one carefully and not put so much energy into one decision that you starve another. There is no forgiveness if you make a bad decision on the cart because you were focused on the horse.

10. Hubris – Decisions made to feed the ego can often lead to disastrous consequences. Try to not get married to your ideas too early. Listen to all sides and think carefully about the full consequences before becoming an advocate of one approach.

11. Lack of communication – If you make a brilliant decision, but everyone else thinks it is stupid because you failed to explain your rationale, you are in trouble. You need to bring others into the process as early and completely as you can.

So, on first blush, the notion of making good decisions sounded trivial, but after considering some of the ways leaders get tripped up, the above checklist ought to be a good starter kit for a master list in your organization of how to make better decisions. I am sure there are several things I missed on my list that you can think of.

Bob Whipple is CEO of Leadergrow Inc., a company dedicated to growing leaders. He speaks and conducts seminars on building trust in organizations. He can be reached at bwhipple@leadergrow.com or 585-392-7763.


Trading Off Long and Short Term

August 25, 2013

360 DegreeA conundrum for most leaders is the issue of long term versus short term results. Most western cultures reward executives based on the short term result. Eastern cultures tend to have a longer view of performance, but even there, patience for short term problems wears thin.

It is easy to say, “Well, you need to do both,” which is a kind of cop out statement. Of course both are needed. If you fail to do right by the long term there is no future for the entity, but if you fail in the short term, there may be no future for you.

Compensation plans for most senior leaders have tended to favor the short term focus. Ethical or legal problems crop up when the pressure for quarterly numbers becomes too great. There are hundreds of stories where companies have pulled material from inventory and called them “sales.” This is an example of an unethical behavior that ultimately causes a crash. Reason: When accounts are juggled in an effort to maximize the short term, the organization is already on a slippery slope. The difference has to be made up sometime, so the long term is in jeopardy.

When you recognize the temptation to “shade” earnings to look most favorable is like a drug, it is easy to see how large corporations get caught in a whirlpool that eventually pulls them under. The Sarbanes Oxley Act was one attempt to make it more difficult to cheat on short term results. In fact, SOX worked! It is more difficult to cheat, but it is also much more expensive to operate, and cheating is still possible. It simply requires more creativity. We should not depend on legislative band-aids to save our corporations.

There is ample evidence that doing business in an ethical manner with a balance of emphasis between long and short term goals is not only more comfortable, it is much more profitable. The Conscious Capitalism Movement is one example of how organizations are finding ways to become more secure, more profitable, and more ethical at the same time. By working to satisfy the needs of all stakeholders rather than just the shareholders, a kind of self-balancing situation arises that is clearly good for business both short term and long term.

John Mackey and Raj Sisodia wrote a book entitled Conscious Capitalism that has started an entire movement. They stress the balance of having all decisions work to satisfy all six stakeholders: 1) Stockholders, 2) Customers, 3) Employees, 4) Suppliers, 5) Community, and 6) Environment. Balancing the needs of all stakeholders gives a better chance at making rational decisions that balance the short and long term benefits to not only the corporation but to society as a whole.

The entire Conscious Capitalism model includes much more than just considering the six stakeholders in decision making. The full model includes:

1. Developing core values and a higher purpose
2. Instilling higher leadership
3. Integrating the needs of all stakeholders
4. Developing a conscious culture of management

The Conscious Capitalism Model is a great way to view business, and I recommend the book to any leader who feels habitually caught between the long term and short term decisions that drive them crazy. It is a very good read that makes a convincing case that doing things the right way from the start is not only less stressful, but far more profitable and sustainable.