As board or senior chief executive,
making the right recruitment decision over critical senior executive appointment can be very difficult. The wrong decision in today’s dynamic market can very quickly lead to drop in business performance through unwise capital investment, misdirected marketing strategies, and/or loss of productivity, customers and staff motivation. The result, decreased profitability and return on investment, falling shareholder returns, negative cultural factors, and very likely loss of key executives to competitors. So, what differentiators will predispose success, mediocrity or failure in tomorrow’s business environment, and therefore reduce your risk in making the right appointment.
Without exception, leadership skills and critical decision making ability are arguably the two core competencies which distinguish the truly successful business leaders.
Some may state that this potent nexus of innate attributes, one of which is intellectual and the other emotional, have always been present in the make-up of great business leaders. While this may be so, what is unique today is the rapidly changing business environment driven by the increasing speed at which information and business decisions pass across global markets. What is the right decision to capitalise on an opportunity today may not be the right decision tomorrow, and the ability to recognise this and “make the right decision” is vital to stay ahead of the competition.
From human capital perspective, the modern workforce is also polarising towards either end of the ?knowledge spectrum’, resulting in high demand for talented and learning-agile people who can embrace the increasing momentum of change and exploit it to drive business performance.
Today’s talented and high performing executives at the second tier of management are energetic, self-directed, knowledge hungry, and want to make difference and see results. They welcome competition, and are confident in their ability to transport their skills between businesses and market sectors.
This has led to the redefinition of the term ?loyalty’, in that achieving results comes from the executive’s internal drive and less from commitment to sacrificing personal development for long-term organisational progression. Business leaders must therefore provide the vision and empowerment to create challenging and progressive culture that influences and coaches high performers to ask the right questions (the Socratic method of teaching).
A leader’s own strength in critical thinking and decision making is the central platform on which their influence transcends through other managers in the business. Yesterday’s chief executive officers and general managers had the luxury of being able to reserve the right to make all the strategic calls themselves, with their managerial teams and external consultants acting primarily as the suppliers of specialist information. With the increasing speed and complexity of decision making now demanded at all levels within an organisation, CEOs and GMs no longer have the time or specialist knowledge to be able to analyse issues and respond effectively within the now brief windows of opportunity.
What differentiates future leaders from those of the past is the ability to not only empower and influence their management teams, but also create culture of ?empowerment reciprocity’ where staff at all levels possess strong critical decision making skills to drive the organisation. Jay Honeycutt, director of the Kennedy Space Centre in 1997 is quoted as saying: “The key to great teams are leaders who spend their time assuring that the right decisions are getting made.” While the premise of this quote is correct, it needs to go further in today’s management environment and say “Great leaders spend their time ensuring that their team is supported and equipped to make the right decisions first time.”
Not surprisingly, previous research reinforces the fact that most business managers see critical decision making skills as essential to company’s success. 1995 combined study by research company Yankelovich and management consultancy Kepner-Tregoe, surveyed 300 senior executives and found 99 percent felt that critical thinking skills should be core competency for their companies. The question for business leaders in New Zealand should therefore be: “Do we have the skills and influence as leaders to upskill managers in their decision making, and what resources internally are channelled to grow our organisation’s critical thinking capability?” While some CEOs are addressing these issues, I suspect that in most cases the answers to both questions are “we aren’t sure” and “very little if any” respectively.
“Great leaders spend their time ensuring that their team is supported and equipped to make the right decisions first time.”
What mental processes underpin strong critical decision making to get the ?right decision’, and how do effective leaders employ this process to maximum potential? The mind is complex decision making tool, continuously processing thousands of pieces of information simultaneously. Many decisions are made automatically, while others are consciously considered.
While no explanation can be definitive, Model 1 is seminal outline of the cognitive influences and mental processes employed in the critical decision making process. As human beings our internal core values are not normally separated from our logical thought processes. They are often the humanistic influences which contribute to decision, and together with commercial intuition, are the key differentiators between the human mind and the micro-chip.
Exceptions can however include times of stress, mental illness, chronic fatigue and other physical illness, which business leaders should always be aware of when assessing the context in which pressured decisions are made. The other significant cognitive influence is intellectual capacity.
Model 1: The Critical
Decision Making Process
A research study completed by Hunter and Hunter in the 1980s (still considered important) used meta-analysis to determine the predictive validity of intellect on successful job performance. The study found that intellectual ability as measured by cognitive tasks accounted for approximately 53 percent of the variance in job performance. Indeed, intellect was the single largest predictor of on-the-job success.
This explains why as managers, much to our chagrin, we are often asked to complete intellectual assessments when involved in executive recruitment processes. Intellect is invariably measured by problem solving questionnaires which require us to analyse information (normally under time pressure), and make decisions on the correct response.
The correlation then between intellect, cognitive speed and critical thinking ability is therefore very obvious. Managers who can rapidly process multi-sourced information from the market, from people, and from systems, and make the right decisions, will have distinct advantage in 2000’s fast paced business world.
Flexibility is also critical, requiring leaders to possess even greater levels of intellectual capacity. It is not our intention in describing the mental decision making process outlined in Model 1 to predicate it as all encompassing. However, there are four fundamental steps that occur in the decision cycle.
? Analysing the problem or opportunity to understand the need for decision.
? Integrating and weighting the importance of all sources of information.
? Applying commercial intuition to the logic of the decision as it takes shape. Often referred to as “gut instinct”, the value of commercial intuition should not be down played.
? Analysing the potential positive and negative impacts of the decision.
In summary, business success in the modern knowledge economy will stem from an organisation’s ability to select a