Showing posts with label business decisions. Show all posts
Showing posts with label business decisions. Show all posts

Wednesday, September 11, 2013

Are We Prone to Bias in Our Business and Recruiting Decisions?

We chronically evaluate others to determine status as a friend or foe. When such decisions are made on superficial information this can create large problems for organizations that push and promote those who were favored by their environment versus their skills.  The same concept can apply to companies that look at grade point average for recruiting without looking at the difficulty of earning that grade. Research by Swift et. al. (2013) delves into how these superficial decisions are made and how they can impact corporate recruiting.

Research has indicated that the majority of employers look at a candidates GPA without delving into the difficulty of obtaining those grades thereby limiting their recruiting potential. For example, a student who obtains an easy A without having to work for it is not inherently better than a student who earns a C from a school with high standards. One could make the argument that the student with an A is likely to be less prepared for success or failure than the one who received a more accurate C and understands a need for constant improvement. 

The attribution error is so common that it is difficult for employers to overcome anecdotal evidence to make solid decisions. Primarily it is a problem of assuming that the level of performance in one setting will translate into the same performance in another setting and that performance is based upon personal attributions. They are unable to view the important aspects of the situation and the inclusion of personality in the final performance outcome.  In other words, they simply make a surface assumption with no deeper analytical thought process. 

Lewin’s attribution equation is Behavior = Disposition + Situation.  Behavior as seen in terms of performance would be based on both a person’s disposition as well as their situation.  When attributes are situational but contributed to disposition there is a problem in the recruitment process. For example, is one CEO better than another only because they play cricket or maintained performance in an upward moving company? One could make the argument that the CEO who doesn’t play much golf but who was able to turn around a poor running company is the higher performer (i.e. Lee Iacocca). 

The researchers Swift, et. al (2013) used four studies to test the concept fundamental attribution errors in varying situations.  They found that attribution errors are a fundamental problem across a number of arenas with experienced professions. They also found that employees who performed well in favorable (easy) situations, or students earned high grades in colleges with high grade distributions, were more likely rated as superior performers. 

Performance measures can be accurate or inaccurate. At times performance measures can create structural bias that masks superior performance in difficult situations while enhancing mediocre performance in ideal situations. The results are perceptual based upon the information available to the professional making decisions to hire, promote, or admit. Yet even when situational information is known the far majority of professionals do not discount ease of performance attainment creating a bias in their hiring practices. 

The questions becomes do we make these types of errors throughout life? Absolutely! Whether we are discussing children in school, CEO’s, or people we meet in the street we make all types of assumptions. We base these assumptions on anecdotal information because we do not have deeper information. Yet even when this information is available we will often ignore it or not make the time to see beyond our surface assumptions. Critical thinking requires judging premises and looking for alternative explanations even if our social networks are convinced of their rightness.

You may read the entire report HERE.

Swift SA, Moore DA, Sharek ZS, Gino F (2013) Inflated Applicants: Attribution Errors in Performance Evaluation by Professionals. PLoS ONE 8(7)

Tuesday, May 7, 2013

The Essential Skills of Strategic Leadership

Strategic thinkers are important for the success of organizations as well as the nation. When influential power, strategic thinking, and resources are aligned the possibilities and potential solutions to complex problems are endless. Through the Wharton school and consulting practices the researchers Schoemaker, Krupp & Howland have identified six leadership skills that apply to any leader that wants to capitalize on uncertainty (2013).  Their conclusions state that strategic leadership, based upon 20,000 executives, is a result of the abilities to anticipate, challenge, interpret, decide, align and learn.

 Anticipation: It is the ability of leaders to see the market and the possible changes and challenges the organization will face in the future. They do this through staying ahead of market trends, learning about market adaptations, and connecting with those who are leading the field. The majority of leaders are poor at understanding ambiguous threats and challenges around the periphery of their businesses.

Challenge: Strategic leaders are not happy with the status quo. They challenge their assumptions and the assumptions of others. They use a multitude of various theoretical lenses and personal understandings to see opportunities and threats. They challenge the status quo and take concerted action when they become knowledgeable about the events and factors.

Interpret: Leaders who seek to gain knowledge try and interpret problems from multiple vantage points and angles. They seek out complex and often conflicting information in order to make a greater understanding of the problem. They are not locked into a particular vantage point or perspective that limits their ability to understand and solve problems. 

Decide: Once they have the necessary information strategic leaders will come to a conclusion and make a decision. They seek out as many possible options as they make their way to the most viable solution. They avoid simple proposals that limit their position where they can not adjust if new information changes the circumstances. They weigh and balance each of these options for greater clarity. 

Align: Strategic decision makers must pull people to a common ground when implementing their vision and strategy. Such leaders reach out to others, articulate their visions, and find common ground. This alignment offers an opportunity for the strategy to draw in as many supporters and resources as possible which improves their chance of success.

Learn: Strategic leaders never stop learning and encouraging others to learn. Not all solutions come in a simple ready-made can. They know that learning is a process of understanding and applying solutions to problems. They encourage others to learn, succeed and fail so they can take all of the information and make the solution better. They are open-minded and critical of information being presented. 

Strategic thinking entails the ability to take a solid and in-depth look at the environment, come to conclusions based upon multiple sides of an issue, and then enact a plan that maintains the greatest pathways to success. Such leaders are known to continually learn about themselves, their environment, and other people. They are visionaries in the sense that they help others see possibilities and encourage them to try, experiment, and succeed. Yet even when failure occurs it is seen through a process of improvement. 

Schoemaker, P., Krupp, S. & Howland, S. (2013). Strategic leadership: The essential skills. Harvard Business Review, 91 (1).

Wednesday, March 13, 2013

Decision Making of Kuwaiti Business Students

Decision-making is an important skill for young college graduates to learn. The concept of decision making can be seen as the ability to evaluate alternatives in order to develop appropriate methods to obtaining goals (Edwards & Tversky, 1967). The more effective a person is in developing their decision making skills the more effective they will be in designing strategy. 

One of the main criteria for any executive is to develop and implement strategy. One must think through all of the possible outcomes, understand the situation in it’s entirely, and then implement a program that effectively makes its way to an appropriate outcome. This is a complex and informational laden task that can be difficult on a macro scale. 

Decision making skills can be improved with time and effort. For college students they learn these concepts in strategic management while others may learn them in corporate training. Improvement of such skills depends on the strength of that instruction and training (David & Maiyo, 2010). Learning the overall processes and hierarchical decision-making components of strategic thinking is a long-term process.

A  study by Dr. Alduaij (2012) attempted to assess the business decision making ability of students at the University of Kuwait.  A sample of 200 students from the first and fourth year of the university was used within the testing. Two fundamental questions were applied which included the decision-making ability of the students as well as any gender differences. The scale used 56 items to measure 8 decision-making skills.


-Business students were above average in suggesting alternative skills and identifying the problem skill.
-Business students were above average in determining the goals skill, thinking of the requirements of decision-making skill, ordering of alternative skills, and choosing the best alternative skill.
-Business students had average implementation skills.
-Business students had below average consultation skills.
-No significant differences between males and females.
-Decision-making ability increased over the years of educational attainment.


Decision-making ability is developed overtime through education and training. Decision-making is part of strategic thinking and requires the ability to critically think about the various components of a decision as well as the possible outcomes. Students have significant differences in ability between first and fourth years of education. Genders did not appear to have an influence on ability. In the case of students from the University of Kuwait the ability of consultation with others is lacking. Such deficits may be culturally based upon the students socialization.

Author: Dr. Murad Abel

Alduaij, H. (2012). A study of business administration college student’s decision-making skills at Kuwait University. International Journal of Business and Social Science, 3 (2).

David, M,. & Maiyo, J. (2010). Participatory Decision Making in Secondary Schools. Problems of Education in the 21st Century; Vol (21), 120-133.

Edward, W., & Tversky, A. (1967). Decision Making Selected Readings, Penguin Modern Psychology Readings. Clipper Mill Road Baltimore, U.S.A.