Judgment is the ability to consistently make the right decision at the right time. Good judgment looks like magic to those who don’t have it. When a leader takes an unusual action that is wildly successful, people wonder where the decision came from. More often though, good judgment goes unnoticed because it seems routine – even strategically important decisions that are risky, complex, and require judgment. How do executives make great decisions? The answer is that they spend years developing their judgment gene – and you should too.
Judgment Is a Process, Not an Event
Many people believe good judgment occurs in the instant a decision is made, but actually it is a process that unfolds over time. Good judgment is developed in four steps: (1) preparing to make decisions, (2) making decisions, (3) implementing decisions, and (4) assessing results. In using these steps, hold preparation conversations that prime your people to future decisions – it’s more important to discuss possibilities than to forge a perfect plan. Assessments are really part of preparing to make future decisions – which establishes a closed-loop process for decisions. High performing organizations use a process like this to develop high potentials who will make smart decisions and implement them effectively – even in a crisis.
Great leaders evaluate scenarios and prepare strategies long before it is time to make a decision. Your business plan probably considers events you expect in the future and describes what you will do to exploit them. But when reality throws curve balls at you, as it often does, will you and your people freeze or will you regain alignment quickly? The judgments you and your people make in crisis situations turn out better when they are supported by planning. Leaders who plan thoroughly are consistent winners, while those who do not often limp from crisis to crisis.
The effectiveness of decisions that executives make depends as much on the issues they judge to be important as on their skill in addressing them. Operating in a management mindset, executives sometimes jump into action to solve a problem or exploit an opportunity; whereas, experienced leaders consider five keystone judgments before making a decision and taking action:
• Is a Decision Necessary? What would happen if you did nothing and let your people deal with the situation? Effective leaders understand the tradeoff between inaction and action, and the probable impact of doing nothing – and make decisions accordingly.
• Is a Decision Required Now? Decisions rarely are as urgent as they seem. Great leaders use timing as a secret sauce. By delaying a decision until the time is right, they reduce the chances of missing a vital step in the rush to take action.
• What Problem Are You Solving? Executives make serious judgment errors when they solve the wrong problem. “Let’s use technology,” “Let’s downsize,” or “Let’s expand,” are solutions based on assumptions about the issue. The assumptions may be correct, but effective leaders rigorously define the real problem before attempting to solve it.
• What is Your Organization’s Capacity? Most organizations have more opportunities and issues than resources. Nonetheless, executives try to do everything at once and often end up achieving nothing. Ask your people which issues they feel are urgent as a way to assess their willingness and capacity to handle them on top of their current workload.
• Are Resources Applied to Top Priorities? Most organizations increase spending across the board in good times and cut it in bad times. Sadly, that approach limits growth and locks in mediocre results. Instead, start with a baseline that covers essential operations and then allocate resources to future-looking projects even if you must eliminate some on-going operations in order to free-up the resources.
Growing the Judgment Gene in Others
When we meet with senior executives, they often ask how to grow the judgment gene in their people. We’ve found that the best way is to have conversations about recognizing new trends from small changes. Leaders who have that skill usually are ahead of everyone else in exploiting opportunities. Their decisions meet with uncanny success because their judgment is rooted in a curious mind, thorough planning, and past experiences – both good and bad).
The failure to recognize trends – or refusal to acknowledge on them – can undermine any organization. For example, high-risk judgments in the financial industry were blamed for the near-collapse of the global financial system in 2008-10. Respected leaders like Lehman Brothers’ CEO slid down the slippery slope of bad judgment and destroyed organization and careers. He told Congress that he had exhibited good judgment under the circumstances – results say otherwise.
Many employees don’t speak up because they assume their boss has better judgment than anyone else – which is not necessarily true. You may have better judgment than your boss in a particular matter or one of your people may exhibit better judgment than you. If so, exercise the superiority of your judgment by having a conversation with your boss or by endorsing your people’s view. It’s not a matter of ego – it’s about producing superior results.
ABOUT THE AUTHOR:
Dick Stieglitz is a business consultant and keynote speaker who founded, grew and later sold a company that specialized in change management for federal agencies. The Judgment Gene article is based on his new book “LEADERSHIP CONVERSATIONS – Challenging High-Potential Managers to Become Great Leaders” (co-authored with Alan S. Berson) which will be published January 28, 2013 by Jossey-Bass. Additional information is available here.