Virtually any job involves some level of decision-making; from simple, routine decisions that are easily trained and quickly learned (such as sorting or filing), to complex decisions with huge impact for which there may be no clearly correct answer (such as a major strategic shift at a multi-billion dollar global organization). The key to effective decision-making is exercising good judgment when assessing the situation, evaluating options, and choosing a course of action. This sounds obvious, but judgment is difficult to define and hard to develop. So how do you improve the exercise of good judgment in your organization?

First and foremost, it’s important to recognize that judgment is more than an individual attribute. Organizations can create a climate that promotes good judgment and decision-making. In a poor quality environment, even individuals with great personal judgment can make consistently poor decisions. Here are a few tips to help get things right on both fronts.

Practice Informed Skepticism

Informed Skeptics are critical consumers of information. They seek out data and listen to those close to the issue to build up their understanding of the subject. They question the assumptions underlying the data, and don’t take conventional wisdom for granted. They evaluate and consider information thoroughly in order to arrive at sound conclusions. They are informed by the data, but not beholden to them.

In Hogan terms, these people may score low-to-moderate Adjustment (detecting problems), low-to-moderate Interpersonal Sensitivity (challenging behaviors), and high Learning Approach (informed and analytical). They may also have an elevated HDS Skeptical score, a high MVPI Science score, or both.

In contrast, intuitive decision-makers rush to judgment based on their own experience. They rarely seek out new information, and tend to make decisions themselves without input from others. These people are often confident and charismatic, but may lack substance. On the other end of the spectrum, empiricists rely exclusively on the data, rarely questioning the underlying assumptions. They may fail to recognize when the external environment has changed, rendering previous assumptions invalid.

Identify relevant data points to inform decisions

Big data is a buzzword these days, and deservedly so. The amount of information available and the potential implications for virtually all business functions is enormous. But there are two things to consider in the big data movement. The first is that, although more data than ever are being collected, there are also more irrelevant data than ever. It’s critically important to identify relevant and meaningful data and metrics to help drive good judgment.

The second consideration is what I’ll call 'smart' data. Smart data allow you to link data points from one application or activity to related data points somewhere else, making new connections across functions to uncover new patterns. Smart data help link your recruitment activity to your candidate pool, your selection tools, your training and onboarding programs, your performance management system, your high potential identification program, and your leadership development program. New patterns for the entire employment life cycle can be explored. If the data you have all sit in separate silos and cannot be combined without colossal effort, then you have piles of 'dumb' data, and they can’t deliver the same value.

The generation of relevant, informative data is therefore a structural aspect of an organization. It takes deliberate effort and purposeful design to create databases that link meaningful data to one another. Poor quality information produces a 'garbage in, garbage out' result.

Make data widely available throughout the organization

Organizations often restrict access to information in varying degrees, but good judgment is required at virtually all levels of an organization. To improve the quality of decisions on a widespread level, data have to be available to inform these decisions. Absent that information, the ability to exercise judgment is constrained, and a culture of poor decision-making can develop.

A new trend emerging in startups is the transparent organization. In the most extreme cases, all data – from company financials to individual performance reviews – are freely available to everyone. Is that too much? Almost certainly (see the point about relevant data). But the spirit of providing information to those who need it is on target.

On the other hand, providing too little information leads decision-makers to rely on the information available, which may be outdated, irrelevant, or misleading. Consider the allegory of Plato’s Cave, in which captives grew up immobilized and could only see shadows of objects out of view, and hear sounds of those objects reflected and distorted off of a wall. The captives perceived the shadows and sounds to be reality, unaware of the reality of the objects casting the shadows and making the sounds. In the absence of information, decision-makers will act based on shadows and distorted sounds, all but ensuring that decision-making will suffer.

Yahoo recently announced the hiring of Marissa Mayer – employee number 20 at Google – as its new CEO. Her appointment is noteworthy for a few reasons; she has been appointed CEO in a notoriously male‑dominated industry, she is the youngest CEO of a Fortune 500 company, and as has been widely reported, Ms. Mayer is pregnant and expecting her first child in October. The vast majority of press concerning her appointment to date has centered on this last bit of news, inciting discussion and debates about balancing careers and personal lives, and how she will manage through late-term pregnancy and her maternity leave. While this will certainly be an adjustment, Ms. Mayer will enjoy an army of help and plethora of resources that most new parents have never dreamed of. She will be able to manage this transition just fine.

In all the excitement concerning her pregnancy, few are writing about the real challenges that await Ms. Mayer as the new chief of Yahoo. For 13 years she has been with Google, leading the charge as the company grew from the tech nerd’s search engine of choice with a funny name, to the dominant search, cloud, mobile, and advertising giant we know today. Fortune has named Google the top company to work for in 3 of the past 6 years, allowing them to attract top talent in the industry. Google has developed a culture of success.

On the other hand, Yahoo has been a steady state of decline during the same period. An early internet darling in the late 20^th century, Yahoo has gradually ceded ground to others in areas such as search, content, mail, and advertising, all areas where they were formally leaders. Ms. Mayer is Yahoo’s 4^th CEO in as many years (not including interim CEOs), and former leadership has been criticized for failing to provide any direction or strategic leadership. Yahoo’s sales peaked at over $7 billion in 2008, and have steadily fallen to less than $5 billion in 2011.

All of this points to the biggest challenge; changing the culture at Yahoo. Where Google was a confident culture that expected to succeed, Yahoo’s culture is one that has been continually losing ground and lacks confidence in leadership. Yahoo has been losing out in the talent war to organizations like Google, Facebook, or promising start-ups in Silicon Valley. Ms. Mayer will need to convince Yahooers that they can be successful, and that they can trust her vision. She will need to put in place a strategy to recruit, develop, and retain the highly-prized talent that helped Google be so successful.

We know that leadership is not about the individual, and Ms. Mayer cannot expect to single-handedly rescue Yahoo from its recent woes simply by decreeing a new strategy or direction. Leadership is about facilitating the performance of others, about building and maintaining high-performing teams, and about winning and beating the competition. The biggest challenge that Ms. Mayer will face is building a company culture that, after years of losing ground and churning through leadership, believes it can compete and win against the Googles of the world.

Last week I attended the Developing Leaders for Global Roles Summit at the Thunderbird Najafi Global Mindset Institute in Glendale, Arizona. The summit brought together academics and practitioners from around the world to discuss the concept and issues surrounding global leadership, and approaches to closing the talent gaps that virtually every organization experiences. The stories and insights from the other attendees were enlightening, so I thought I’d summarize a few of the takeaways here in our blog.

First, this will come as no surprise, but nobody is defining their problem in terms of a surplus of global leadership talent. Talent in this area is particularly scarce and extremely valuable. This is a prime battle in the broader war for talent.

Second, good leadership skills do not necessarily generalize to a global setting. Leadership skills are distinct from having a global perspective, and successful global leadership requires both. The folks at Thunderbird have a robust body of research on the concept of global mindset, complete with a measurement tool (the Global Mindset Inventory, or GMI) and taxonomy of skills and attributes. The good news is that global mindset can be developed. The bad news is that not nearly enough organizations are actively developing global mindsets in their leadership talent pools or organizations. 

Third, success in a global environment requires not just leaders that think globally, but an entire organization that sees itself as global and thinks in those terms. Making this transition is difficult. For example, moving from being a U.S.-based business that works in China to an organization that does business in both the U.S. and China is a big adjustment, and requires commitment from the entire workforce. From this perspective, global mindset is an organizational development issue, not just a leadership development issue.

So what are people doing to move towards a global organization? I heard a few things from a fantastic lineup of speakers, including:

• Building cross-cultural work teams. These might be traditional or virtual work teams, but getting some exposure to different people, different business cultures, and different ways of thinking is key.
• Spending time in-country. Most of the speakers agreed that there is no substitute for spending time in another culture. If you want to do business in Japan, for example, you need to get over there and really get a first-hand feel for the way things work. This is difficult and expensive, but also provides tremendous development.
• Debriefing past experiences. After projects are implemented, the project teams sit down and replay the scenario, debriefing what decisions were made, and how things could have been done differently. This is probably good practice for any significant project, but hearing the story from others with a different cultural perspective can provide valuable insight that might not have been acquired through the process of just getting the work done.
• Targeting global mindset specifically through development programs. This is relatively new, but seems like a great idea. The GMI and other assessments are being integrated into development programs to help people recognize their own tendencies (individual and cultural), and how to think outside of those constraints.

It’s a cliché – but no less true – to say it’s a global business environment. Those who can adapt to this playing field will be more successful. Those who impose their ways of doing things onto other culture will struggle. Developing leaders who can be successful in the global business environment will be critical, and the Global Najafi Global Mindset Institute is doing a lot of great work to help organizations meet this challenge.

Globalization has arrived. The work of individuals, teams, business units, and companies span geographic boundaries, markets, cultures, and languages. Organizations have operations around the globe, and the major economies of the world are tightly interconnected.

As applied practitioners of organizational psychology, it’s important for us to understand the implications for work in these organizations, and in particular how to manage talent needs as the nature of business changes. Tasks and duties in low-complexity jobs are often more tangible and easily defined, may have little differentiation across cultures. For example, basic assembly and manufacturing positions require some degree of conscientiousness and teamwork, and may have little variance in the knowledge, skills, abilities, and personality characteristics (KSAPs) required to successfully perform the job in different cultures. In high-complexity jobs, the specific task and duty requirements may be harder to define, and require a higher degree of judgment and discretion on the part of the employee. In these roles, the cultural context may dictate the specific set of KSAPs that will facilitate performance.

Management and leadership positions are generally considered to be high-complexity jobs. The people that fill these roles are given broad goals and targets to accomplish, and are afforded the discretion to exercise their judgment regarding the best way to meet these goals. Just about the only common characteristic of these jobs is the responsibility of the leader to facilitate the work of others. But how do leaders facilitate the work of others? How do they build and motivate high-performing teams? The answer to this is the most oft-uttered line of any psychologist – “it depends.”

Here at Hogan we’ve initiated some research to explore the leadership characteristics in various cultures around the world. These characteristics reflect a culture’s beliefs about what constitutes leadership. According to Implicit Leadership Theory (Fischbein and Lord, 2004), people develop ideas of what constitutes leadership. Collectively, these beliefs form an individual’s leadership prototype. People then compare others to this leadership prototype, and to the extent that a person matches the leadership prototype, we ascribe leadership qualities to that person. Through this research, we are examining whether there may exist cultural differences in leadership prototypes, and thus in the people that are promoted into leadership positions in organizations. Naturally, this will hold implications for organizations whose operations span cultural boundaries.

Stay tuned for research updates, and look for our findings to be presented at the 2012 SIOP Conference in San Diego.
 

Last month I chaired a panel at the annual SIOP Conference in Chicago on the topic of norming personality assessments. We had participation from a number of other test publishers, and a couple of audience members that added some real value to the discussion. The topics ranged from things such as factors that influence norms, to the appropriateness of global norms, and the implications of highly specialized norms. Overall I came away with a greater awareness that we’re all dealing with the same issues, and pleasantly surprised that the thoughts in the field seem to be converging, at least to some extent. For those of you with an unquenchable thirst for all things norms, here’s a brief summary of some of the key takeaways.

1. Norms are critical for the interpretation of personality assessments. A reviewer of our SIOP submission suggested this might not be so clear cut. However, the entire panel and the active audience members were in complete agreement that without norms there is no effective way to interpret personality results.

2. There are a lot of factors that influence norms, and decisions about the appropriate level for norming are rarely obvious. Make a norm that’s too specific, and it likely loses interpretive value. Make a norm that’s too encompassing, and it is likely just averaging the true cultural differences to create a norm that isn’t really representative of anyone. The bottom line: selecting the appropriate level for norming is a both an art and a science. Select a level that is conceptually meaningful, representative of the target population, and then put a lot of work towards minimizing differences due to extraneous factors such as language.

3. In reference to benchmarking vs. norming, the panel seemed to agree that the appropriateness of each varies by the level of specificity. Norms are appropriate for macro levels of analysis (e.g., country). As the level of analysis gets more specific, benchmarks become more appropriate. If you’re thinking about making a norm for left-handed, midwestern, senior Account Managers in the pharmaceutical industry named Robert, you should probably reconsider.

4. A fascinating bit of research share by one of the panelists displayed personality characteristics in the US by state using a heat map. Check out Rentfrow, P. J., Gosling, S. D. & Potter, J. (2008). The findings? New Yorkers are as neurotic as you think, the West Coast is pretty high on Openness, and southern hospitality (Agreeableness) in real, though maybe not in Alabama.

5. Another good reference. For factors contributing to the variance in norms (error and otherwise), check out Meyer & Foster (2008). They have a 3-factor model that presents things nicely.

Overall, it was a good session with great contributions from the panelists and audience. We continue to struggle through some of the same issues, and hopefully collaborative efforts like this will help us arrive at a set of best practices and solutions to some the issues that have plagued the field for years.

In the past 10 days, much of the country has been blanketed by snow, courtesy of a blizzard that swept through the Midwest and buried the Hogan offices under nearly 30 inches. Stores closed, events were cancelled, businesses sent everyone home, and most of the area hunkered down and braced for the worst. The local meteorologists provided marathon sessions of analysis and updates, warning everyone not to go outside unless absolutely necessary. In the following days, the city cleanup crews described their efforts to clear the streets, noting that the largest obstacle was the number of abandoned cars on the road. This included cars deserted in the middle of the street, on the side of the road, on highway ramps, and just about everywhere.

This made me think about the judgment exercised by the owners of the autos lining the roads. The majority of these vehicles were smaller cars that had virtually no chance of navigating the streets. I assume that most of the owners simply walked home, as they couldn’t have possibly made it far before getting stuck. Was it that they were skeptical and didn’t trust the weather forecast? Did they believe their driving ability was far superior to others? Did they think the warnings and advice didn’t apply to them? Or did they really just not understand that 15 inches of snow was too much for them?

Whatever the case, the same types of characteristics that drive these decisions will influence decision-making and judgment in the workplace. We’ve all encountered the skeptical co-worker that doesn’t trust others and plays political games, the employee who believes that his or her talents are infinitely superior to those around them, the folks that don’t believe the rules apply to them, and the ones that just don’t seem to have the ability to analyze the situation and make good decisions. Often the results won’t be as immediate and obvious as an abandoned car in the middle of the street, but over time the results will become visible and detrimental.

While we can’t dramatically improve other motorists’ skills on the roads, we can identify and target the types of behaviors that lead to these bad decisions in an organization. Many of these characteristics are rooted in our personalities and cognitive abilities. We can screen these characteristics out of candidate pools, or we can raise awareness of these characteristics with current employees and enhance decision-making styles and abilities.

Last week, Steven Slater, the former JetBlue flight attendant acted out the fantasy of a large contingent of employees who have had enough of on-the-job stresses. After a heated exchange with a passenger (an exchange that is now more in doubt than previously reported), he grabbed the PA and let out a few choice words, grabbed his stuff (including a few beers), and stormed off of the plane via the emergency exit slide announcing that he quit. Fortunately, the plane was on the tarmac and near the gate. Nobody was injured.

In the aftermath of this instant-classic example of how to quit one’s job, Mr. Slater has garnered the adulation of many, as evidenced by the numerous Facebook fan pages with thousands of friends and any number of blogs on the internet. Many have romanticized his actions, making him out to be a man who stood up for himself, didn’t take abuse from anyone, or had just had enough and decided it was time to move on.

However, the reality of the situation is quite a bit different. Within days, Mr. Slater had retained a lawyer, and was asking for his position with JetBlue back, saying he loved his job, the airline, and he wanted to return to work. His lawyer offered a number of explanations for his behavior, including the stress of the job, an injury sustained in the course of the flight, and a confrontation with an unruly passenger (which is, at this time, unsubstantiated by any of the passengers).

Mr. Slater’s behavior is actually a perfect example of derailing behavior. He lost his cool under stress, made an emotionally charged decision (the Excitable derailer), and executed his decision in a dramatic and attention-seeking manner (the Colorful derailer). Despite all the adoration lavished upon him in the aftermath, Mr. Slater quickly regretted his decision and is now contemplating a lawsuit to retain the position he so sensationally abandoned. A working-class hero sticking it to the man, or a case of derailment played out in dramatic fashion? The preponderance of evidence at this time points to the latter.

Jarrett Shalhoop
Senior Consultant
Hogan Assessment Systems

Unless you’ve been living under a rock, you’ve likely been hearing about the Mel Gibson audiotapes lately in the news. There’s no need to recount specific quotes in this family-friendly blog, but needless to say that Mel’s language could make a seasoned sailor blush. We’re obviously hearing Mel at a low point. He’s stressed about his finances, some negative publicity, and a recent divorce, not to mention that things clearly aren’t going all that well with his new love interest, who is recording their conversations. So it’s a tough time, and his behavior during this period is unfortunately playing out on a very public stage.

So what does this have to do with assessments and business results? The Mel Gibson thing is a prime example of how critical our behavior is when we’re stressed, under immense pressure, or just fatigued enough to let our guard down. In Hogan parlance, he is “derailing.” His behavior under duress has invited a heap of embarrassment and bad publicity, and his career is in jeopardy. His long-time talent agency has dropped him. The film studios, producers, financers, and other assorted movie-industry folks that have invested in the Mel Gibson brand are watching the value of their investment plummet.

In our world, I see this as a parallel to the growing movement to “focus on your strengths.” Such a perspective emphasizes what we do well, and essentially tells us not to worry about our weaknesses. Intuitively this is an attractive proposition – nobody likes to spend a bunch of time worrying about things we don’t do very well. But the reality is that these moments often occur during crucial periods such as when we have to make a critical decision or during a time of crisis. It is our behavior in these circumstances that can ultimately dictate how well we perform, how we are evaluated, and determine our reputation among others. People are quick to forget how we behaved when everything was going well.

At Hogan we promote the view that strengths are important, but that it is essential to be aware of one’s derailers and to target risks to performance. Indeed, any list of figures who have derailed in spectacular fashion will be populated with immensely talented people. They have ascended to positions of influence and been granted wide latitude and discretion based on impressive bodies of work and dazzling talent. But left unchecked, their derailers eventually led to poor decisions, inexcusable behavior, or other things to initiate their fall from grace.

Tying this back to our current subject matter, what were the first things that you thought of when you saw Mel Gibson at the top of this post? Was it a string of blockbusters? An impressive filmography that has grossed over $2B? An Academy Award for Best Director? Or was it a series of rants being played on the evening news? These brief periods of derailing behavior have dimmed what was otherwise one of Hollywood’s brightest stars.

Jarrett Shalhoop
Senior Consultant
Hogan Assessment Systems

Personality has been one of the hottest trends in assessment over the last 10-15 years, as organizations and practitioners realize the value and utility a personality can provide in selecting and developing talent. Witness the rise of numerous personality instruments in the marketplace, the use of personality to develop the most highly-prized organizational talent, and the role of personality in the red-hot topic of derailment. While everyone at Hogan certainly would agree whole-heartedly with this movement, we’ve also been banging our drum about the role of values and culture in organizational performance. Despite ample evidence (both scientific and anecdotal), values just don’t seem to get the same degree of attention from organizations and practitioners.

This is a shame, because there is a lot of utility in these types of instruments, and the return on investment for assessing culture is tremendous. In a recent example, one of our financial services clients used the Motives, Values, Preferences Inventory (MVPI) in an effort to reduce turnover in one of their frontline positions. After one year of using the MVPI, they had reduced their turnover by 66%. That’s not a typo – two-thirds reduction in turnover!

I’m not arguing that we should abandon personality and narrow our focus on values. Quite the opposite. Personality and values are very distinct constructs, and each adds incremental prediction and validity over the other. Personality has a lot to do with our abilities to perform certain types of tasks, while values have more to do with our motivation and satisfaction with an organization’s culture. An employee whose values align with the organization’s culture will be more satisfied, and likely to work harder and with a better attitude. If the values and culture don’t align, then even a very capable performer won’t be motivated to do his or her best.

Going back to the study above, we were able to find significant reductions in both voluntary turnover (employees who wanted to leave the organization) and involuntary turnover (employees who were shown the door). Voluntary turnover is naturally where we would expect to find the biggest impact; satisfied employees won’t be searching Monster.com on their lunch break. But the reduction in involuntary turnover means that the organization had employees who were capable of doing the job but just didn’t want to, and were subsequently being terminated for poor performance. By aligning the culture and values for these employees, these underperformers improved as a result of increased motivation.

So how much is this all worth to an organization? In the study above we estimated the cost of turnover at half an employee’s annual salary (a conservative estimate). The annual savings attributed to this program (the difference in the number of employees turning over each year) is well into the millions. Annually. With an ROI of greater than $30 for every $1 spent, this program has paid for itself over and over and over again.

Jarrett Shalhoop
Senior Consultant
Hogan Assessment Systems