How to Avoid Making Bad Decisions During Change

A man backs away in fear of Avoid Making Bad Decisions

Avoid Making Bad Decisions
We would all like to avoid making bad decisions.  Rarely, one hopes, do bad decisions end in a disaster like the one pictured above. But they do cause a rash of problems.

Avoid Making Bad Decisions about Organizational Change
And, in the corporate world, bad decisions around organizational change initiatives can lead to epic business failure. Managing change is difficult enough but don’t make it even more challenging by sending the company in the wrong direction by poor decision making.

Emotional Bias
As much as we would like to think that decisions are made purely rationally, decision makers are human beings after all. We are all subject to emotional biases that taint the process. Let’s face it…decision making is a messy but critical skill for business leaders.

Decisions and Risk
The bigger the decisions around major change, the greater the risk if they are wrong. The hope for those of us in charge is that, if we are aware of the emotions that get in the way of sound decisions and well-managed change, we can better account for and avoid them.

Three Feelings to Pay Attention to Avoid Making Bad Decisions
From our over two decades of change management consulting, we share a list of three feelings that color the way we make choices around change and some consequences of those decisions:

1.  Beware of the Bias of Overconfidence
We all like to think we’re better than we actually may be. We see our abilities through rose-colored glasses. In business this can lead to unrealistic and foolish optimism.

Remember the deal the chairman of Time Warner made to merge with America Online? He was so confident in the deal he had crafted that he decided not to place a limit whereby he would have the option to revisit terms if stock fell below a certain level.

Soon thereafter AOL shares dropped 50%. Time Warner was out of luck.

The overconfidence bias measures the difference between what people really know and what they think they know. And experts suffer more from the overconfidence effect than laypeople because they consistently forecast no better – but with a higher degree of certitude.

2.  Avoid the Bias of Motivated Reasoning
Confirmation bias (or motivated reasoning) is a tendency to search for or interpret information in a way that incorrectly confirms one’s preconceptions. It leads decision makers to actively seek out and assign more weight to evidence that endorses their hypothesis, and ignore or under-weigh evidence that could disprove their premise.

For example, GM failed to recognize the trend toward smaller cars. They had an edge with their large models and believed that they could continue to “win” because that is what they wanted to believe. This bad decision resulted in their 2009 bankruptcy.

Could this have been avoided if GM had not ignored information which challenged their preconceived notions?

3.  Be Careful of the Bias of Faulty Framing and Anchoring
A framing bias occurs when people react to a specific choice in different ways depending on how it is presented. In general, people tend to circumvent risk when a positive frame is presented but pursue risks when a negative frame is presented. An anchoring bias occurs when people rely too heavily on the initial (or only one) piece of information offered when making decisions.

Good decisions are based on good information. But what happens when the information is poorly framed or anchored in a predetermined reference point? For instance, when negotiating, the initial price usually sets the baseline for the rest of the conversation.

Because of this, prices that are lower than the initial price seem more reasonable even if they are actually higher than what the products or services are truly worth. An example in business is the decision of the London executive of Decca Records who rejected the Beatles when they auditioned there.

He framed his remarks around his belief that “groups were out”…especially those with guitars. Or consider the decision Coca-Cola made in introducing the New Coke. They had run numerous taste tests but never asked if their tasters really wanted to replace the old with the new. Coke executives used the wrong reference point to make their faulty decision.

The Bottom Line
To avoid making bad decisions during change, think carefully about how you structure your communications and initiatives because people will naturally “anchor” whether you want them to or not.Watch out for emotional biases as you make decisions and plan for change.

  • Follow a sound decision-making process so you don’t leap ahead to conclusions without careful evaluation.
  • Invite colleagues to challenge your thinking and to represent another opinion.
  • Minimize overconfidence, motivated reasoning and faulty framing so that the decisions you make and the changes you propose propel your business toward a healthy, robust future.

To learn more about managing organizational change, please download 5 Science-Backed Lenses of Change Leadership

Comments are closed.

We partnered with LSA to pilot a customized behavioral interviewing program to help ensure that we continue to hire the best and brightest as we continue to rapidly scale. LSA’s ability to understand our business and our unique culture combined with their desire to ensure that the best practices framework truly fits our performance environment and is highly adopted by our people is a real blessing. Most other firms want to just ‘give you training.’ Not LSA, they are focused on helping me hit our hiring forecasts and attract A players.

Jennifer Remling
Director of Global Recruiting

AKQA

In the Next Generation Management Development courses, I was trained with skills and tools that have made me and my team more productive, motivated, and successful at communicating with other departments.

 

Kevin Ashman
Firmware Engineering Supervisor

I had been working with LSA for many years with my prior company. Currently, I’m with a company who hadn’t done much basic management skills training. After identifying and presenting a program recently, our managers are excited and talking in the halls about the great experience. LSA saves us time in delivering the right training for our needs.

Phyllis Moracco
HR Director

What a refreshing change from the half-baked psycho-babble you normally get from training and consulting organizations. LSA gives you the practical and results-oriented assistance you need to define and reach your goal.  They provide a results driven plan – not just a temporary fix. They are great to work with, and even more importantly, they “get it!”

David Fiano
Vice President Human Resources

LSA helped to meet the needs of my teams within a very narrow timeframe. My team walked away with highly useful management tools and practices. LSA saved us time in delivering the right solution for our specific needs.

Sandeep Kumar
Director, Software Engineering, EPG

The Next Generation Management Development courses have helped me communicate more effectively with my peers and teammates. By utilizing effective communication techniques such as clarifying and confirming, and asking open ended questions, I have been able to clarify and understand information in situations where I would have otherwise asked limited questions and made false assumptions.

Robert Breckner
Firmware Engineering Manager

Here’s a token of my appreciation for ALL your efforts. I’m offering my most sincere appreciation, and it extends to all the folks who made our customized management development programs possible.

Susan Anderson
Workforce Planning Bureau

The Managing Virtual Teams program was extremely valuable. Your consultant/ facilitator’s fundamental knowledge of Synopsys as a company provided an incredible base to build upon while tackling the complications of managing and working with globally distributed teams. My team walked away walked away with highly useful practices and tools. It was an excellent use of our time.

Debra Martucci
Vice President, Information Technology

We consider LSA Global our outsourced learning and development partner. We worked closely with LSA to customize a management development program to meet our growing business needs. I would highly recommend LSA to any company wanting to deliver quality learning solutions.

Terri Wright-Scheer
Vice President Human Resources

We recently contacted LSA Global to assist us with a unique training request. We gave LSA a very short deadline and LSA custom designed a training program to meet our exact requirements within the limited time allotted to them. We found their facilitator to be well versed in the subject matter and very credible; the design provided practical and valuable information to our team of managers. I highly recommend LSA Global, particularly in the area of management training.

Julaine K. Souza
Senior Vice President

I’ve been associated with LSA for the last 8 years and have found them to be an extremely professional, well managed full service training organization. Since working with LSA, I’ve participated in a number of solutions ranging from Performance Management to Assertiveness Training – I’ve found that the quality of the resources is superior. They are well prepared and have definitely done a considerable amount of pre-work in order to customize our culture and business into the total learning experience – making it most beneficial for our employees.

Duane Schroeder
Human Resource Manager

Congratulations on your pro-activity in establishing this program and developing such an effective New Employee Orientation course.

Farhat Ali
President and Chief Executive Office

Fujitsu

Each program is preceded by an assessment of the participants. The course is then designed to fit the specific parameters and needs of the group. The highly interactive delivery is provided by recognized experts in their fields. On the spot coaching is provided during the program and each participant receives individual follow-up after the course. Courses can be delivered in-person or virtually. Given the nature of Cisco’s business and the way we operate, these remote workshops are a must for anyone who joins our company. Their work is eye opening. Great content and fantastic delivery.

Frank J. Kuypers
Business Development Manager

LSA is an instrumental training outsourcing partner in helping us to build management capacity and strategically invest in our people. Their flexibility, depth, and breadth of expertise allows us to deliver top quality solutions that are directly tied to key business plans. Their ability to custom design, deliver, and evaluate our Management Curriculum has been excellent. They are true business partners and a pleasure to work with.

Margaret M. Mader
Vice President, Human Resources

Hyperion

Understanding and conforming to legal compliance was very important to our company. We turned to LSA Global to provide a quality and cost effective way to ensure that we were AB 1825 compliant. Their interactive eLearning program was top-notch. It allowed our managers to learn at their own pace, and on their own time. The program was tailored to include our logo and our internal harassment policies. It was interactive and met all federal and state legal requirements. I would highly recommend LSA Global to any company looking for an efficient and effective and top quality way to train their managers to be in compliance.

Kelly Warren, SPHR
Director, HR & Compliance

Evaluate your Performance

Toolkits

Toolkits

Download key published insights and tools from industry experts highlighting best practices in the areas of talent, strategy and culture.

More

Health Checks

Health Checks

Want to know how you stack up against leading organizations?  Receive a complimentary benchmarking analysis courtesy of an LSA Expert.

More

Whitepapers

Whitepapers

Get up to speed on timely solutions critical to your business. Published by LSA Experts based upon client feedback and key industry trends.

More

Methodology

Methodologies

First we identify the key metrics you want to improve. Then we assemble a dedicated team of elite experts who have successfully solved similar problems with similar clients.

More

Blogs

Stay up to do date with the latest information on how we help high growth companies align their culture and talent with strategy.

More

Case Studies

Client Case Studies

Real world consulting and training approaches from LSA projects, providing insights on how your company can outperform the competition.

More