Managers and leaders are only human and humans are not perfect decision-makers, so you can expect a bad decision once in a while. However, in business when an otherwise competent manager starts making bad decisions it can impact their team and the broader company.
Humans As Decision Makers
Consider the most important decision of all, who shall we marry? It turns out that the critical decision of choosing a life partner is an extremely difficult decision to get right. According to CDC’s National Center for Health Statistics 42% of all marriages in the USA result in divorce. This means that only 58% of the time we make a good choice in our most important decision. Even though we have no limit on the time to “test drive”, evaluate and assess a future life partner we still fail 42% of the time.
It can be argued that people change over time and therefore partners grow apart, meaning the outcome is unforeseeable, but the counter-argument is that the criteria upon which the decision was made were not as robust as it could be.
In either case, we humans probably get any decision correct 58% of the time.
The Top 10 Reasons Why Good Managers Make Bad Decisions
- Personal Life Pressures
- Time Pressure
- Stress & Overwork
- Senior Leadership Pressure
- Pressure from Individual Team Members
- No Clear Personal Values
- No Solid Decision-Making Process
- Ego & Power
- Overburdened with Too Many Biases
A young manager just starting on their career in management might simply not have enough business and life experience to make a high percentage of good decisions. Often a mistake of young managers is to say “Yes” to everything which can lead to an over-burdening of the team. While saying “No” to many requests may lead others to perceive the manager in a negative light. Always saying “Yes” without question and without prioritizing the requests can lead to overworking your team forcing poor decision making further down the line.
Inexperience in leading people on a personal level can also lead to bad decisions. A younger manager that manages more mature workers can run into conflict if they do not show the required levels of self-confidence to stick by their decisions and follow them through. If the young manager is not committed to their decisions, they cannot expect their older team members to follow through either.
2. Personal Life Pressures
Although it is unprofessional to let your personal life interfere with your professional life it happens all too often. Consider a manager that is going through a painful split with their partner discovers that a team member has started dating another co-worker. The manager stages an intervention with the two employees and stresses that workplace romances are not acceptable in the company.
While workplace romances are frowned upon, it is neither illegal or legislated against in any ethical code of conduct that I have read. The manager is making a poor decision getting involved in this situation and should rise above it. However, if the relationship starts to affect performance this could be a case to intervene.
3. Time Pressure
The life of a manager is often one of being under constant time pressure. For example:
- You need to deliver a sales number by the end of the month
- You need to present your status report at the senior manager’s weekly team meeting
- You need to stay late to complete your presentations for the next day
- You need to interview 10 candidates for an open position
- You need to formulate a detailed business case for investment in a new product or service
The role of a manager can be exciting and challenging but the package comes with time pressure. If your manager is overwhelmed, they may not be able to dedicate enough time to consider important decision adequately.
4. Stress & Overwork
Due to time pressure and overwhelming demands on the team, your manager may well be under stress. Often decisions made under the conditions of stress and overwork are not good decisions. Many companies now promote a work/life balance. But while they promote it, most management teams do not actually support it. You get promoted by delivering results, not having a good work/life balance. If you as a manager can achieve both you will have a better decision making track record.
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5. Senior Leadership Pressure
If you have not been a manager, you may not appreciate that managers are under constant pressure from above. If you have a great manager they will protect you from the external pressures so that you can perform.
Common Senior Leadership Pressures That Lead To Poor Decision Making
- Forcing continual cost reductions even though the business is growing
- Enforcing a “Fire the underperforming employees” policy
- Inflating targets to unachievable levels to force an over performance situation
- Pushing a policy of continual workforce downsizing. Even though your company meets its revenue, sales and profit targets, leadership is still reducing the workforce by 10% per year.
- Constantly reorganizing the company between functional hierarchy (Sales, Product Development, Operations) or business unit hierarchy (Product A, Product B, Product C).
Most senior leaders do not understand the company well enough to optimize the organizational structures, yet they will constantly reorganize to attempt to prove they are doing something of value.
These pressures exert a huge burden on managers which can lead to poor decision making.
6. Pressure from Individual Team Members
Some teams have larger than life characters that perform important roles and have undue influence within the team. This is a real-life example from my early career. I took a freelance I.T. contract with a large pharmaceutical company. I was 23 years old and the contract was more money than I could have dreamed of as someone fairly fresh out of university. There was a guy in the team, let’s call him Dave. Dave was a tough lad, physically, mentally and personally, he did not suffer fools gladly and was crushing if any “Newbie” made a mistake. Even his manager was scared of him. The team was effectively being run by Dave and it did not help the manager that Dave was also one of the most talented I.T. guys in the company.
This placed the manager in an awkward position of deference to Dave’s wishes. If you as a manager are in this position of managing a tyrant, you either need to befriend and coach them into better work practices or develop someone to take over their work and let them go.
7. No Clear Personal Values
As a manager you need to have a clearly defined set of personal values, these values will enable you to make better business and team decisions. In our article on ethical leadership we discuss the FATHER framework for developing core values.
Fairness -- The principle of fairness is core to the way we humans interact and expect to be treated. By default, we expect to be treated fairly and strive to treat others fairly. As a leader, you should always treat your team, tribe or followers fairly.
Accountability -- Being accountable for bad decisions or mistakes shows your moral fiber. We all make mistakes, but also many of us will not admit our mistakes and move on. Accepting accountability shows you are a strong well-rounded leader with a character that people will respect and follow.
Trust -- Great relationships and great teams are built on trust. Your team, your family and your friendships rely on trust to grow and develop meaning. All high performing teams, whether in the military, football teams, or teams within your company will have a strong foundation when built on trust.
Honesty -- Being able to discuss openly and honestly important issues with those around you is key to the integrity of our relationships. Honesty feeds into trust directly. If you cannot be honest with someone, it means you cannot trust them to hear the truth.
Equality -- The principle of equality is core to our global human survival and happiness. There are so many inequities in the world, based largely on the fact that people love to discriminate against others for so many reasons.
Respect -- The meaning of respect is to show regard for the wishes, feelings, and rights of others. You may not agree with the feelings or wishes of other people, but you need to respect that they have those feelings. You need to be able to appreciate that someone is the way they are for a reason. A true understanding of humanity means you will learn to respect the differences in us all. You may not agree with those differences, but you need to ability to consider why those differences exist.
A manager without a strong set of values will make poor decisions again and again.
8. No Solid Decision-Making Process
To keep it simple there are two major theories/considerations in ethics that are said to compete, duty and utilitarianism.
The duty-based approach establishes right or wrong based on a list of rules such as the biblical rule “thou shalt not kill”. If you break the rule you are in breach. Most company codes of conduct are duty-based.
The utilitarian approach judges a decision to be right or wrong based on the consequences “the greatest good or the least pain”.
This might sound overly complex, so try to use the following decision-making cheat sheet.
Decision Plan Template
|What Is My Decision?||______________________|
|Why have I made this decision?||______________________|
|Who will help me implement it?||______________________|
|Who is affected?||______________________|
|How can I minimize the impact on others?||______________________|
|What are the steps involved?||______________________|
|When will I begin the actions?||______________________|
|When will the actions be completed?||______________________|
|Post plan review. Did it work out as expected?||______________________|
9. Ego & Power
The age old phrase “power corrupts” is a true as it is timeless. While a leader might not have a lot of influence in the world they certainly wield power over thier sub-ordinates. A manager without a solid foundation of meaningful values, will start to make poor decisions when they feel they are in a position of power. When a manager exudes the aura of being able to walk on water it will coincide with poor deciion making.
10. Lack of Balance Between Emotion & Logic
We, humans, are both logical and emotional animals. Yet in some areas of our life, we let emotion control our decision making. For example, when it comes to the choice of partner or choices of friends we are often, if not entirely, driven by emotion.
A well-balanced manager should be able to make good logical choices that also sit well with them emotionally. Overly cold and calculating business decision making without consideration for the human aspects and impact of the decision, will not be balanced. Moreover, an overly emotional decision that makes no logical sense is equally destructive.
Why You Might Think A Management Decision Was Bad
As explained in scientific research into managerial decision making the “hindsight bias”
occurs when people look back on their own judgments and those of others. We typically are not very good at recalling or reconstructing the way an uncertain situation appeared to us before finding out the results of the decision.
Consider this common example.
Your manager is hiring for a new position within the team. After a long interviewing process asking the best interview questions, the manager hires the most highly qualified person with the best cultural fit for the team. A few months after the new hire starts, the team starts to realize that the new person is manipulative and politically driven sowing negative feelings throughout the group.
The problem here is that the manager’s choice was not necessarily a bad decision. Based on the interviewing, qualifications and background research on the person they were the best fit. It was the best decision based on the information at hand.
The fact that with hindsight it is judged by the team, and probably by the manager also, that it was a bad choice, should not be held against the managers otherwise solid record of decision making.
As Max Bazerman puts it: In general, individuals should be judged by the process and logic of their decisions, not just on their results. A decision-maker who makes a high-quality decision that does not work out should be rewarded, not punished. Why? Because results are affected by a variety of factors outside the direct control of the decision-maker.
When the hindsight bias leads our knowledge of the result to color our evaluation of the decision maker’s logic, we will make poorer evaluations than we would otherwise.