“One of the tests of leadership is the ability to recognize a problem before it becomes an emergency”. Leaders deserve their superior position because they are often the only ones that can make the right decisions at the right time. They can sense a problem or a conflict before it ever matures into something big. Leaders, like all other human beings, can make mistakes. However, why good leaders make bad decisions is a predicament.
From arrogance to lack of strategic planning, there can be a lot of why good leaders make bad decisions. This requires an in-depth analysis. So let us now take you on this journey of finding the answer.
10 Reasons Why Good Leaders Make Terrible Decisions
Self-reflection can be hard sometimes, but necessary in times of crisis. If you are unsure of what you are doing wrong, here are 10 reasons why you may be making terrible decisions at work.
- A Dominant Past Takes Over the Present
- An Unclear Head Followed by Lack of Purpose
- Exceeding Capacity and Mismanaging Resources
- Failure to Cash In on Good Opportunities
- Self-Doubt That Translates to a Fearful Personality
- Susceptible to External Influences
- Not Making the Accurate Distinction Between an Action and Decision
- Making Decisions That Are Convenient in the Short-Term
- Personal Taking Over the Professional
- Wrong Person for the Job
1. A Dominant Past Takes Over the Present
The world is changing, and you need to change with it. Leaders who remain fixated on experiences tend to make irrational decisions in the future. This stems from the belief that something that worked in the past will still work.
For instance, the leader of a clothing company decides to run ads on billboards alone and ignores other, more relevant, means such as TV or online advertisements. He will suffer in the 21st century.
2. An Unclear Head Followed by Lack of Purpose
Leaders who don’t have a vision and the means to follow that vision ended up making many bad decisions. A leader should have a very clear vision of what he stands for and why he stands for that particular thing. Failure to inculcate this in their personality results in ad-hoc decision-making that often fails.
Moreover, leaders who are consistent in their policies and beliefs often garner more respect and their followers are more likely to support them in their endeavors.
3. Exceeding Capacity and Mismanaging Resources
Leaders need to take risks to achieve their goals. However, leaders who take unrealistic decisions often fail hard. It is important to assess the kind of resources you have within the company and then move on to make any difficult decision.
Take the example of a leader who promises a client an overnight deadline only to realize that he is understaffed and can not possibly complete that deadline.
4. Failure to Cash In on Good Opportunities
All successful leaders have, at one time or another, cashed in on a golden opportunity. One of the traits that distinguish good leaders from bad ones is the ability to identify an opportunity. Good leaders often have circular visions that help them see the wider picture.
People who have myopic, and shallow vision often end up the over-assessing simple situation and making a mess of them.
5. Self-Doubt That Translates to a Fearful Personality
It is truth universally acknowledged that leaders need to be confident in themselves. Only then can they inculcate this confidence in their team. A person who doubts his capacity and capability will never be able to make the right decisions.
Their self-doubt will engulf other beautiful aspects of their personality, thus making them an overall failure in front of their team. Leaders who doubt themselves also go into their shells when a difficult situation or a competent competitor arises.
6. Susceptible to External Influences
It is okay, nay, preferable for leaders to listen to others’ opinions and expand their worldview. However, the minute leaders start giving other people a lead and doubting their gut entirely, they start failing. Leaders who get influenced easily, either by their team members, or external stimuli, will make ad-hoc and unclear decisions.
Take the example of Sam, the manager of a manufacturing company. He first decided after listening to person A and, after just a day, changed his entire plan after listening to person B. This indecisiveness doesn’t work well in the corporate world.
7. Not Making the Accurate Distinction Between an Action and Decision
One of the biggest mistakes leaders make is that they mistake an action for a decision. Normal people take action, leaders make decisions. The former is acting on a whim and just going with the flow.
The decision, on the other hand, requires contemplation and strategic thinking. Leaders who make quick decisions without assessing all aspects of a situation end up making bad decisions not just for themselves, but also for the company.
8. Making Decisions That Are Convenient in the Short-Term
Most people choose convenient things. This is not to say that this is wrong. But leaders need to fulfill a different criterion altogether. They take difficult decisions, so others don’t have to. If leaders make choices that seem easy and fun in the short term, the company and the team will suffer long term.
Choices need to be assessed properly and should align with the mission of the company. Fear of an uncomfortable or complex situation should not dictate decisions.
9. Personal Taking Over the Professional
Leaders are human beings first, and leaders second. The pressures and traumas of your personal life can often sweep into your professional life and make it hard for you to take any objective decision. This can be things like a divorce, the death of a loved one, or financial constraints.
When leaders feel that they are unable to do justice to both their personal and professional life, they should simply distance themselves from the leadership position for some time and take time to properly process things. Otherwise, they will continue making blunders in the office.
10. Wrong Person for the Job
Sometimes all else is an excuse to mask a simple explanation. Leaders make bad decisions because they are unfit for a particular job. Imagine an engineer heading a medical unit or a lawyer heading a manufacturing company.
In most instances, this is a recipe for disaster. Leaders who don’t have the required experience in a particular job end up making huge messes-not just for themselves, but also for the company.
A Quick Mental Schema to Help Leaders Make Better Decisions
Before you make any decision, answer the following questions. Only when you have a constructive and descriptive answer for each of these questions should you move to the next stage.
- What is my decision?
- What has convinced me to make this decision?
- What other choices do I have if I don’t take this decision?
- What are the consequences of my decision-short term and long-term?
- Who will be affected by my decision?
- Who will help me in the execution of my plan?
- What resources do I have to implement my plan?
- How can I minimize potential harms associated with the worst-case scenario?
- What if my plan fails-do I have a plan B?
What Are the Consequences of Leaders Making Bad Decisions
Before you decide to ignore this, ponder over the consequences of bad decision-making on your reputation and your team. Here are some ways in which your bad decision-making skills will impact the rest of the team.
- Will cost the team and the company a loss in revenue.
- It will affect your reputation and will make people lose trust in you.
- It will hamper resources that might have been available for other projects.
- Make you lose confidence in your abilities and skills.
- Make you adopt a defensive attitude that will repel others.
- Paint you as a complete failure in the eyes of your colleagues and friends.
How to get better at Decision-Making?
Contrary to what is said, improving your decision-making skills is not that hard. All you need is greater self-awareness and a determination to fix your judgment errors, and you are good to go. Here are 8 things you can do to get better at Decision-making.
1. Weigh All Your Options
Most people who end up making bad decisions don’t compare all the realistic options they have. To choose the best alternative, you need to first give all alternatives an equal chance. Compare the pros and cons of them, convert that into a well-documented list and find out the solution that works best for you.
2. Make Sure the Decision Aligns With Your Long-Term Goals:
Doing something that benefits you in the short run only is quite naive. You need to make sure that whatever you are deciding also guarantees long-term benefits for you. Moreover, even if you have to accrue some short-term losses for long-term gains, you should take that chance.
3. Discuss and Filter Out
Leaders who make solo decisions without involving anyone else end up failing miserably. All good leaders take the opinions and perspectives of their team and decide on an outcome that suits the majority. Even when leaders go against the majority opinion, they can do so by first discussing it with their team and explaining why they are deciding B and not A. Explaining the ‘why’ of things is extremely important.
4. Eliminate Stress as Much as You Can
The pressure of doing the right thing can often take over all of your other senses. You may feel bombarded by a lot of opinions and options and may not be able to think objectively. When making decisions, make sure you do not let your personal affect your professional life. If you are not in the best state of mind, take some time out for yourself and take a break. A troubled mind seldom takes the right decision.
5. Ask the Difficult Questions
When people make important decisions, they often consider the best-case scenarios and seldom consider the worst-case scenarios of a situation. Ask yourself what would happen if your decision does not materialize into anything, or worse, produces a counter effect. Can your company survive that outcome? If not, think again and try to come up with a decision with fewer risks.
6. Consider Data your Best Friend
In most corporations, a good evaluation of the market allows you to take better decisions. Good leaders seek out data to validate the relevancy and accuracy of alternative decisions. Moreover, they also assess different proposals and choices that support the data available. All this allows them to take decisions that have a greater chance of proving successful.
7. Trust Your Intuition
No good leader should take rash decisions, however, leaders need to trust their intuition and their gut from time to time. They need to be confident enough of the authority they have and should trust their intellect to objectively make decisions. However, intuition is not enough; it should always go hand in hand with the data available.
8. Taking Responsibility for Bad Decisions
It is almost impossible to always take the right decisions. Even leaders like Mark Zuckerberg and Jeff Bezos don’t fulfill those criteria sometimes. However, leaders must show humility and accept when they have made a terrible mistake. This gives them room for self-improvement and increases their self-awareness.
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When you see successful leaders, you often think that it was easy for them to succeed. You attribute their success to the immense amount of money they had. But this is seldom the case. Some leaders succeed more than others because they are extremely self-aware of themselves and their surroundings. They have spent months or even years honing their skills so they can command a room effortlessly. You can do it too, all you have to do is try.
Why Do Companies Make Bad Decisions?
Companies, like individual leaders, can also make bad decisions. Although there are gatekeepers in place to stop this from happening, in most cases, it becomes inevitable.
Inadequate higher management that prioritizes short-term goals and wins can pressurize the team members from making mistakes. Moreover, market discrepancies and external stimuli also contribute to bad decision-making.
What Causes Bad Decision-Making in Most Humans?
Most people make bad decisions because their emotions and their feelings get the better of them, and they are unable to separate their personal life and their traumas from their professional life.
Emotions steer them in a different direction altogether and make them take subjective and irrational decisions at times. Moreover, biases and prejudices against other people also affect our decision-making.
What Are the 7 Factors That Affect Decision-Making?
7 main factors affect decision-making in humans. These include
1) Programmed versus non-programmed decisions
2) Information inputs
4) Cognitive constraints
5) Attitude about risk and uncertainty
6) Personal habits
7) Social and Cultural influences