8 tips to better decision-making
31 May 2017
31 May 2017
Michelle is a workplace expert and author of three books. Her latest book is 'Bad Boss: What to do if you work for one, manage one or are one’. For more information, click here.
Is your decision-making dangerous? Here are eight tips to guide you through mastering your decision-making.
Financial planners make decisions every day – for themselves and their clients. Consequently, having highly attuned and advanced decision-making skills is critical.
However, most people are unaware of the limitations and bias that surrounds their decision-making. This bias is pervasive and often unconscious.
Decisions aren’t made on facts alone. They are made on assumptions, feelings and gut reactions.
The pre-frontal cortex, which is the part of the brain that’s involved in thinking, analysing and reasoning, gets tired easily.
Consequently, the brain, very cleverly, has found a way of conserving energy. It takes short-cuts. A mental short-cut is known as a heuristic. The brain uses heuristics to make big things and complex issues easier to manage, and ultimately remember.
As the brain takes in new information, it tries to make sense of it, so that it knows what it needs to do. To ease the cognitive load this processing takes, it compresses information and sorts it into patterns. It looks for things that it has seen or experienced before and so, ‘knows what to do’.
Of course, the brain’s short cutting process isn’t always reliable and it gives rise to bias in decision-making. For example, the brain may expect to see something in a certain way, and so it will seek out information to validate that view. It filters out information that doesn’t fit with its view of the way things should be. It’s therefore very easy to close your mind to new information that may be relevant and help you make better decisions.
Daniel Kahneman in his brilliant book Thinking Fast and Slow shared his years of research into this field. He explained how the automatic and instinctual part of the brain can lead to cognitive bias, and that people often place too much confidence in their own judgement.
This leads to decision traps such as: sunk cost (where due to loss aversion, people don’t walk away from something, even when the facts show they should), anchoring (where decisions are influenced by the earliest piece of information received), and others.
These traps are exacerbated when a person is tired.
The brain is like a muscle. When you work out at the gym, your muscles get tired and need to be rested. If you want to be at peak performance, you get the right balance between ‘working’ your muscles and ‘resting’ them.
It’s the same for your brain. Every time you make a decision, you use up precious resources in your brain.
When the brain is tired, it more easily takes the path of least resistance, and this is where it gets dangerous. Because taking the path of least resistance means a person is letting expectations and assumptions drive how they think and act, rather than being conscious and deliberate about the decisions they are making.
For example, a US study of parole board decisions found that the decision to be paroled had less to do with the facts of the case and more to do with when the prisoner appeared before the parole board. If they appeared in the morning, the prisoners received parole about 70 per cent of time. In contrast, those later in the day were paroled less than 10 per cent of the time. Being tired affected the decisions being made.
It’s important to be deliberate about how and when you make decisions. This is because good decisions are the result of deliberate planning, consideration and effort. They don’t happen by chance.
It was the esteemed management guru, Peter Drucker, who said: “Making good decisions is a crucial skill at every level.”
The following are eight tips to help you master your decision-making:
Michelle Gibbings is a change leadership and career expert, author and founder of Change Meridian. Michelle works with global leaders and teams to help them accelerate progress in complex environments.
For more information: michellegibbings.com or email [email protected]
8 tips to better decision-making31 May 2017 Is your decision-making dangerous? Here are eight tips to guide you through mastering your decision-making. Financial planners make decisions every day – for themselves and their clients. Consequently, having highly attuned and advanced decision-making skills is critical. However, most people are unaware of the limitations and bias that surrounds their decision-making. This bias is pervasive and often unconscious. The brain takes short cutsDecisions aren’t made on facts alone. They are made on assumptions, feelings and gut reactions. The pre-frontal cortex, which is the part of the brain that’s involved in thinking, analysing and reasoning, gets tired easily. Consequently, the brain, very cleverly, has found a way of conserving energy. It takes short-cuts. A mental short-cut is known as a heuristic. The brain uses heuristics to make big things and complex issues easier to manage, and ultimately remember. As the brain takes in new information, it tries to make sense of it, so that it knows what it needs to do. To ease the cognitive load this processing takes, it compresses information and sorts it into patterns. It looks for things that it has seen or experienced before and so, ‘knows what to do’. Of course, the brain’s short cutting process isn’t always reliable and it gives rise to bias in decision-making. For example, the brain may expect to see something in a certain way, and so it will seek out information to validate that view. It filters out information that doesn’t fit with its view of the way things should be. It’s therefore very easy to close your mind to new information that may be relevant and help you make better decisions. Decision-making traps are everywhereDaniel Kahneman in his brilliant book Thinking Fast and Slow shared his years of research into this field. He explained how the automatic and instinctual part of the brain can lead to cognitive bias, and that people often place too much confidence in their own judgement. This leads to decision traps such as: sunk cost (where due to loss aversion, people don’t walk away from something, even when the facts show they should), anchoring (where decisions are influenced by the earliest piece of information received), and others. These traps are exacerbated when a person is tired. The brain is like a muscle. When you work out at the gym, your muscles get tired and need to be rested. If you want to be at peak performance, you get the right balance between ‘working’ your muscles and ‘resting’ them. It’s the same for your brain. Every time you make a decision, you use up precious resources in your brain. When the brain is tired, it more easily takes the path of least resistance, and this is where it gets dangerous. Because taking the path of least resistance means a person is letting expectations and assumptions drive how they think and act, rather than being conscious and deliberate about the decisions they are making. For example, a US study of parole board decisions found that the decision to be paroled had less to do with the facts of the case and more to do with when the prisoner appeared before the parole board. If they appeared in the morning, the prisoners received parole about 70 per cent of time. In contrast, those later in the day were paroled less than 10 per cent of the time. Being tired affected the decisions being made. 8 tips to make better decisionsIt’s important to be deliberate about how and when you make decisions. This is because good decisions are the result of deliberate planning, consideration and effort. They don’t happen by chance. It was the esteemed management guru, Peter Drucker, who said: “Making good decisions is a crucial skill at every level.” The following are eight tips to help you master your decision-making:
Michelle Gibbings is a change leadership and career expert, author and founder of Change Meridian. Michelle works with global leaders and teams to help them accelerate progress in complex environments. For more information: michellegibbings.com or email [email protected] |
HelpSelect and copy the HTML code above, or
Thank you a copy has been sent to your email. Your e-book will begin automatically. Please click the link below to download manually.
Click here to download