November 18, 2020
Overview
Leaders are constantly called on to use their judgment to make decisions that are crucial to their organizations. And the novel coronavirus (COVID-19) pandemic has meant that managers and executives have had to increasingly rely on their judgment to make important decisions: where and when to close offices, how to set up a secure and supportive remote working environment, when to allow workers back to the workplace, and so on.
While good judgment doesn’t guarantee a good outcome will result from every decision, it enhances the chances for success. In spite of its importance, “judgment” as a term is very hard to define. But if it can be categorized, the ability to measure judgment — and to improve an individual’s judgment — can be valuable tools.
In fact, both can be accomplished by understanding the characteristics that contribute to good judgment, according to Sir Andrew Likierman, professor of management practice at London Business School and a speaker at the 2020 virtual Aon Insights Series.
“Good judgment combines what you’re born with and what you learn, but it can be honed and improved,” says Likierman.
Given the importance of good judgment to sound decision making, taking steps to improve it could be considered an important element of crisis preparation and risk management.
In Depth
First things first: What is judgment, exactly? Likierman defines it as “the ability to combine personal qualities with “relevant knowledge and experience to form opinions and take decisions.”
And we can improve judgment through experience and by focusing on the characteristics of good judgment.
In assessing judgment, it’s important not to use outcomes as a measure of success, says Likierman. “A positive outcome might simply have been a matter of good luck or timing,” he says. “What seemed like a good decision at the time might, after a number of years, be revealed to be disastrous.”
It’s better to focus on your process: Understand the qualities that contribute to good judgment and work on any areas of weakness to bolster your chances of making good decisions.
“Stack the cards in your favor by going through a decision-making process that is likely to help you on your way,” Likierman says. “The outcome may be outside your control, but you can give yourself the best possible chance.”
Leaders’ ability to make sound decisions in a crisis has potentially profound implications for organizations. Evidence shows that stakeholders reward organizations whose leaders make good decisions in confronting crises, while they punish those whose decisions are flawed.
The Six Elements Of Judgment
Measuring judgment and engaging in the process of improving it requires understanding the six elements of judgment, according to Likierman:
1. What you take in This element focuses on the ability to learn, how well one listens and how much attention we pay to what is heard or read.
How to improve — Be aware of your own “information filters,” and question the information you’re receiving and whether it fits with your experience. If the information you’re provided is insufficient, seek additional or better sources.
2. Who and what you trust More than ever, it’s important to care about the quality of the information we consume. It’s also valuable to seek diversity of opinions and information, rather than looking for an “echo chamber” that reinforces what we think is true.
How to improve — Make judgment a quality you seek in colleagues. Question the credibility of information sources.
3. What you know Experience is a critical element of judgment and decision making, helping shape decisions and allowing an individual to anticipate potential challenges and issues.
How to improve — Track your decisions and what went right and wrong, particularly those made in stressful times. Look for ways to expand your experience.
4. What you feel and believe Values are key drivers of decisions. It’s important to be aware of them, not only to incorporate them when appropriate, but to avoid biases in decision making.
How to improve — Take steps to understand biases and to mitigate their impact. Seek the input of an objective third party.
5. Making the choice This is the stage of bringing together the “raw material” of the decision in a way that improves the chances of success. That might mean not accepting the obvious options as the only options.
How to improve — Examine the way choices have been made for possible mistakes or biases. Pre-decision meetings can help identify potential mistakes before the decision is made.
6. Acting on the decision The execution phase, this stage involves acknowledging that the decision itself isn’t the final step. Who acts on the decision and how the person does so are critical to finding success.
How to improve — Consider your own experience delivering on such decisions and that of others involved in the decision-making process.
On changing your mind and ‘trusting your gut’
An essential element of good judgment is being open and responsive to changing circumstances. In other words, being willing to change your mind.
“I would take the words of the economist John Maynard Keynes, who when asked about changing his mind said, ‘When facts change, I change my mind. What do you do, sir?’ ” says Likierman. “Sticking to something regardless of the facts is one of the best-known biases giving rise to poor judgment.”
And what about “trusting your gut”?
Good judgment requires reflection before action, even if it’s just for a matter of seconds, says Likierman. In crisis, he recommends asking yourself three quick questions:
- Do I tend to act on impulse and later regret it?
- Is this unlike anything I’ve seen before?
- Are the stakes high?
“A yes to any of them is a good sign not to respond on gut instinct alone,” Likierman says.
Good judgement, better decisions
Taking steps to improve judgment can lead to better decision making, a benefit to organizations in the course of normal business as well as in crisis. The key is understanding the elements of good judgment and acting to strengthen them.
“It’s about what do you do to improve your chances of getting it right,” says Likierman. “Looking at the general aspects of judgment and your own tendencies, take stock: Where are your strengths and weaknesses? How can you work on the weaknesses and build on the strengths?”
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