The Cost of Snap Judgments

Are you compromising your leadership by making snap judgments?

Research shows that we use less information than we think when making decisions.

Yet, what can you do when the volume of problems to be solved continues to grow?

If you tend to make decisions quickly without the benefit of “the rest of the story,” your leadership and your company are in jeopardy.

How do you solve this?

Here’s an actual client scenario: (names are fictitious)

Nate, senior manager of operations of Allen, Inc., hurried into Jim’s office. “Our steel inventory won’t meet demands this next month. I’m particularly concerned about making good on our commitment to Shanden, Inc., our biggest account.”

“You are right – we can’t have this,” sputtered Jim, CEO. “I hate to do it, but go ahead and buy the more expensive grade of steel for their current project. I know it doesn’t require it, but we need to keep Shanden. I’ll find the money somewhere.”

Jim and Nate spent a lot of money to procure last-minute inventory – and inventory that was overkill for what Shanden’s project actually required.

Here’s what both men did not consider – and which could have saved them headaches and dollars:

1. Jim lost trust, which was replaced by resentment.

   Jim lost trust with his employees

And he lost trust with his middle management.

In this scenario, Sam, the relationship manager for the top account was not consulted. If he had been, Nate and Jim would have learned that Shanden’s project had in fact come to a standstill for external reasons. The men could have waited and ordered less expensive inventory.

“I could have saved them a lot of trouble and money,” Sam said. “I may as well be invisible here.”

Jim lost trust with Allen employees who worked directly with Shanden to deliver product.

They became resentful, knowing this kind of steel was overkill and required quite a bit more money. Could this kind of decision-making jeopardize things like their raises that they had been promised later in the year? If the boss had such funding, why had he said the company couldn’t invest in better conditions for them? Did he really care about them?

2. Jim lost an opportunity to mentor and empower his top talent.

Nate had a habit of knee-jerking and not getting all the facts before panicking – something that Jim had inadvertently fostered in him by doing the same.

And Sam was furious. “I feel like a useless paper-pusher, here,” he told me. “If I were included in decisions that affect my area, I could contribute quite a bit – and save Allen money and relationships!”

Nate should have included Sam in his fact-gathering – and Jim should have asked that Sam’s input be included before making a decision. Getting the perspective and input from all relevant parties would have resulted in a much healthier, less costly outcome and much better team relationships.

3. Jim weakened Allen, Inc.’s future.

Jim incurred loss for the company. Allen lost money on the Shanden project as a result of throwing money at it. This meant that Allen didn’t have the reserves it needed to invest in some of the company’s top priorities later that year – including the employee raises and some expansion it was considering. These losses definitely affected employee morale and productivity, and Allen’s future opportunities.

What happened to Jim? Jim fell into the psychological trap of allowing his emotions to get in the way of careful judgment.

Ed O’Brien, associate professor of behavioral science at the University of Chicago Booth School of Business, has performed experiments with decision-making that point out the following:

“People view the mind as a rational arbiter, assuming that they and others will withhold judgment until they finish flipping through all the evidence. But the mind isn’t just a passive information processor; it’s also emotional. In reality, once people begin to experience…evidence in real time, they will inevitably react to it as they go along. We won’t need to see later information if we already love or hate the very first piece” (“We Use Less Information to Make Decisions Than We Think,” Harvard Business Review, 03-07-19).

Are you too quick to judge?

Losing trust, weakening your business, and limiting opportunities definitely make a case for slowing down, getting the full picture, and diagnosing the real problem.

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