The landscape of decision-making in human resources

By NEHRA, 12/20/2004

A familiar scenario

"I just have a good feeling about this person. He just feels right for that sales job." We all make judgments about other people, situations and events based on "intuition," "gut feel," or "hunch." We all use an internal guide in making decisions.

When this intuitive approach becomes the basis for employee selection decisions or other significant decisions in HR practice, however, we are on more shaky ground. A typical scenario: Several candidates are being screened for positions in a thriving, mid-sized company. Background checks, references, and the technical expertise and educational level of the candidates are similar and all are qualified based on traditional methods. The interviews gain in significance as deciding factors in the process, since each candidate appears to be "a good fit."

The selection team meets to discuss the candidates. They have a good feel about two of the candidates, but are less enthusiastic about the others. As the discussion progresses, with the pressure to "get them in the door," the group agrees to go with the first two candidates. Six months later one candidate seems to be doing well, fitting right into the organization, bringing much-needed expertise to the team. She seems to be a great match. The other candidate does not fare as well: team conflicts have erupted around projects and responsibilities, bad feelings are taking hold, team members are grumbling, and the work is not getting done. Individuals are already talking about "lateral moves" to other teams and looking around at "what's out there."

What happened and why did one candidate do less well? Was this a poor fit? Did the HR team miss some crucial bit of information, or misjudge from the interviews? What does this cost? How can this be improved?

Filters and internal models

Decision-making is inexact. Even well-trained interviewers are influenced by a host of factors, including:

• Organizational/systemic factors: such as pressure to get the hiring completed, team dysfunction, and poor training.
   
• Environmental factors: such as temperature, time of day, the weather, the season.
   
• Internal factors: such as one's internal decision-making process, and stylistic differences in decision-making, i.e. some are more rational/analytic decision-makers, while others are more intuitive, "gut feel" decision-makers. These internal factors are the most elusive and most difficult to understand and control. Their influence is great, sometimes insidiously undermining good decision-making.

Let's briefly examine some of these hidden, internal influences on our decision-making:

• Heuristics - These are unconscious routines which enable us to cope with the complex layering of decision-making. For example, we make judgments about a person based on our own past experiences with many different kinds of people. Internal templates, or heuristics, help us to quickly size someone up and decide "too fussy" or "no sense of humor." Sometimes we are correct and sometimes we are wrong. Even when faced with our mistakes, we continue to use these same routines until such time as we are forced to modify them.
  
  These routines do enable us to attend to many complex situations simultaneously. Most times, they are helpful, freeing us to focus our attention elsewhere. The downside to these internal, automatic routines is that we misjudge and do not learn from them. In attempting to address the issue of the bad hire in the first example, the team relied on generalities about poor team dynamics and "just a poor fit" rather than thoughtfully examining all the factors influencing the process.
   
• Biases - These are outright irrationalities in one's thinking, disconnected from the real world. These hardwired types of irrationalities influence one's decision invisibly, making them extraordinarily dangerous. Being biased against someone rarely results in good decisions.
   
• Pattern Recognition - The recognition of patterns is an essential ingredient in the decision-making process. What most call "experience" is this accrual of seeing the patterns in situations. With time, this recognition of patterns allows the decision maker to quickly move to conclusions, based on apparent similarities between the new situation (or person) and the internalized template (pattern). The thought, "I know this, I've seen it a thousand times" reinforces the decision. Over-reliance on pattern recognition, however, can sometimes lead to faulty and disastrous consequences, especially in high-stress, pressured situations.

Decision-making as an intentional process

In recent years researchers have turned their attention to the process of and the influences on decision-making. Several findings have relevance for our discussion here:

• Decision-making is a process. A genuine, good decision cannot be forced or be made to happen. It can be guided, influenced and moved along, without doing harm to the resulting decision. "Let's just get this over with and move on" signifies that the process is already influenced by something not acknowledged by the decision-making team. It would be the time to stop and pay attention to what might be causing the pressure in the room at that moment, rather than force a poorly-made decision.
   
• Experience, training and education help. These can have enormous impact in helping HR professionals make good decisions across a range of situations. In well-run, successful organizations, OD and leadership development programs include concentration on and training in decision-making.
   
• Knowledge is the key. Self-knowledge is the key to better decision-making. Knowledge about one's own irrational biases and internal templates can have enormous impact on the quality of one's decisions. What is learned in a low-risk decision-making environment, and reinforced by experience at that level, serves as a substantial base for more complex, higher risk decision-making.
   
• There are great variations in decision-making styles. Rooted in our personal, internalized routines - heuristics - we tend to be either more analytical decision-makers (planned) or more intuitive types (reactive). Both types together are complementary and each brings something to the process, thereby broadening and enriching the decision-making landscape. Whichever personal style one has, the aim is to make sound, informed decisions, less influenced by biases and heuristic distortions.
   
• Teamwork can correct for biases and other influences. Well-functioning teams can have enormous positive impact on good decision-making, as the team can help correct other, unseen influences affecting the decision.
   
• Managerial and executive-level hiring decisions have a greater likelihood of failure than mid-level and lower hires. Much of this is attributed to the unseen influences in the process, particularly more internal, personal pressures on those involved in the process. Competing agendas of the members of the team, in combination with personal, internal competing agendas, influence decisions in complex, unrecognized ways.

Next steps

There are several implications for HR to be drawn from this approach to understanding the decision-making process:

• Only by attending to the process, not relying on shortcuts or easy fixes, will the process improve.
   
• Those involved in the process, the team, can improve the process for each other and the team by acting as sounding boards, doing multiple interviews of candidates and creating a forum for offering constructive help to each other.
   
• By utilizing the suggestions of the "what to do list" (see box), a thoughtful, legitimate and not-too-cumbersome template for the entire selection process can be created.

The suggestions offered here are meant to be a starting point for a reasoned, substantive understanding about decision-making. As HR evolves as a profession, decision-making and problem solving skills play an increasingly prominent role for professional growth and need to be nurtured.

For More Information

Klein, G., Sources of Power: How People make Decisions, Cambridge, MIT Press. 1998.

Hammond, J.S., Keeney, R., Raiffa, H., "The Hidden Traps in Decision Making," Harvard Business Review, September 1998.

Garvin, D.A. and Roberto, M., "What You Don't Know about Making Decisions," Harvard Business Review, September 2001. 108-116.

Hayashi, A., "When to Trust Your Gut," Harvard Business Review, February 2001, 59-65.