At the beginning of the pandemic, I met a prospective client on the phone: a young man who has been quite successful in his business selling luxury items in a niche market. Now that his company is at a mature stage, he said he wanted to set up a team of professionals to do things like corporate governance and risk management. He sounded intelligent, seemed to know what he was talking about, very confident in his abilities and felt very much in control of things.
At one point in the conversation, I asked him how old his oldest child was. And he told me. Then I said, "You know that this company is your first born, right?” There was dead silence before we continued to talk some more but he was much more is thoughtful after that. When we parted at the end of the short conversation, he said in a soft voice very unlike the confident one that he had been using, "Yes, this company is my first-born.” He went away and we never spoke again but I hope that I had left him with something to think about.
We tend to assume that management decision-making has to be fully objective and is based on data only. We shouldn’t bring emotions into it. I have to make two points here.
First, decision-making is always about what you are going to do in the future. I mean, you don’t make decisions about what to do in the past, right? The information is all about what you expect to happen in the future. Even if the assessment is based on past data, you are still making an educated guess that what happened in the past will continue to happen in the future. And really, what can be more subjective than what we think is going to happen in the future?
We also need to get away from the idea that we need to always make the right decision. Decisions cannot be right or wrong at the point that it is made: much unlike answers in an exam hall are right or wrong the moment you commit them on paper. Decisions will be right or wrong only in the light of hindsight. We will never know at the time of making them whether they are right or wrong. So, all decisions made by management is risky. And it will always be. If there is no risk in a decision, we wouldn’t need a manager to make the decision, right? It then becomes a process and we could just assign it to an operator or a computer following preset rules. We pay managers well in order to make risky decisions based on inchoate information – the greater the uncertainty and the more chaotic the information, the higher the salaries the managers earn. Any manager who expects the comfort of having made the right decision like an operator would, is obviously at the wrong pay grade.
The other point is that the two main factors driving our world-view and, therefore our decision-making, are our sense of priority and our value system. They are both intricately linked and so they both go together. We have to acknowledge that different people with different ideas of what is important and with different value systems will often come to different conclusions from the same data and end up making wildly different decisions. It may be fair to say that nothing drives our decision-making more than our value system from which our sense of priority derives. And we are ultimately very emotionally bonded to our sense of values.
Emotions lie at the root of our decision-making. Our decisions are informed by our value-system. Our value-system is shaped by the multifarious upbringing, training and life/personal/professional experiences we individually encounter. The more varied the upbringing, training and life/personal/professional experiences, the more varied the paths and the conclusions of our decision-making, each laden with its own biases. And all these are molded by the structure and the chemical make-up of the brain making the decision. With all these diversity multiplied by diversity involved, it should not surprise us when people make decisions that we find perplexing.
Postscript
Did I expect the young man to make decisions based on the fact that the company was his first-born? No, I do not expect anyone to make emotional decisions. It is more that I wanted him to be aware of the emotions that drive his decision-making. The awareness that the company is his first-born is a neutral piece of information, like all other pieces of information available for decision-making. It is neither good or bad but can lead to shaping a good decision or a bad one depending on how it is incorporated into the decision-making.
If he were to make decisions for the company like it is his offspring, It is possible that it could be risky if valuation and biases are not managed. On the other hand, the awareness of the centrality of the place of the company in his aspirations could strengthen his projects if he were to allow the plans to place greater reliance on his greater sense of persistence for the company.
We are all emotional creatures and there is no avoiding that. While I do not think we should be making decisions emotionally, I do not think that we should pretend to be capable of making decisions free of our emotions. I believe we should learn to understand how our emotions affect and drive our decisions. I believe we should be prepared to embrace the emotional basis of our decisions and where appropriate, co-opt that emotional basis in our decision-making. Only then could our decision-making reflect the fascinating multi-facetedness of our humanity rather than the consistent symmetry of the corporate personality imposed by a corporate culture driving a corporate managerial standard. And the decision will be all the more robust for all that.
(I hope to explore all these points a little more in future articles)
Comments