Business

Friday March 27, 2009

How could an organisation with so many intelligent people make so many poor decisions?

By Dr Goh Chee Leong


The dangers of group think

IN the last 10 years we have witnessed what many thought was impossible – the complete destruction and capitulation of several global iconic companies. These were billion-dollar giants which were headed by huge teams of experienced corporate leaders.

The question many of us asked was: “How could an organisation with so many intelligent people and almost limitless intelligence gathering resources still make so many poor decisions?”

Group decision-making process is one of the areas that organisational psychologists are interested in. Research has indicated that there are patterns of “poor decision-making.”

An example of this is “group think” which is defined as a decision-making “system” in which a high level of consensus is sought at the cost of honesty and accuracy.

It is a decision-making environment in which people are pressured to conform to opinions they may not really subscribe to and where over time people stop contributing meaningful intelligence. So, is your organisation in danger of cultivating a system of “group think”? The following are several danger signs of group think to watch out for:

● Over-estimation of the group: Some companies think they are fundamentally superior to their competition. They think they are invulnerable, untouchable and immune to whatever challenges afflicting their industry.

This is one of the first danger signs of group think. This false sense of security can lull the leadership into being complacent and lazy in their decision-making.

A local CEO once noted to me that once his staff started behaving as though the company “could never ever go bankrupt”, that was a dangerous sign of complacency.

As a result, decision-making becomes very slipshod. Facts are not properly checked. No thorough intelligence is sought. There is no effort to look at options in a careful and precise way. “Why bother, we’re going to succeed whatever we decide on anyway.”

● Underestimation of rivals: Companies which have a culture of group think tend to look down on their rivals. They act as though they have a monopoly on good practices and therefore can afford to discount and ignore anything their competitors are doing.

The message is simple: “You are no threat to us and there is nothing we can learn from you.”

Of course, more experienced corporate leaders will know that these are dangerous words to utter. The history of business is littered with examples of goliaths being brought to their knees by a bunch of “Davids”.

Another interesting feature of organisations that practice group think is that they tend to believe in the inherent morality of their own group. In other words: “We are the good guys and they are the bad guys” or “We are the good, honest company, and they are the evil, unethical organisation.”

This belief that “we are the good guys” can get in the way of objective, logical decision-making, because it encourages the idea that everything we do is right and everything they do is wrong, so there is no impetus to learn from our rivals and to listen to our critics.

● Pressures to conform: A third symptom of group think in an organisation is a high level of pressure to conform to the same opinion. Everyone puts pressure on you to agree.

And in most cases the pressure does not come directly from the boss, it comes from the middle management, from your peers.

In fact in some organisations I have done consulting for, the CEO or MD themselves may not even be aware of the fact that so much censorship and pressure is being placed on lower level staff.

They are not aware that the important feedback and critiques are not reaching them. This type of corporate culture results in meetings where there is no debate, no expression of divergent opinions, no questioning of the status quo. In my opinion these meetings are a waste of time; more like a time of announcements rather than the lively synergistic debate of ideas it should be.

Anyone who raises a different opinion or idea is cut down to size; they’re told they are not team players, they are criticised for rocking the boat and – in the long term – they are sidelined and put in cold storage.

A worker polishes the Enron emblem that stands in front of the company’s Houston headquarters in 2002. In the last 10 years we have witnessed what many thought was impossible – the complete destruction and capitulation of several global iconic companies — AP

The balance between openness and authority

At this stage please allow me to state my opinion of how I think it is possible to strike a workable balance in our organisations.

I believe in the importance of working as a cohesive team with a shared vision, goal and direction. I believe in accepting the decisions of our corporate leaders. In the end someone needs to make the call, and my job as an employee is to work hard to implement their decisions.

If I have a disagreement with my leaders that is so fundamental that it affects the heart of my work, then I am free to leave the organisation rather than to stay and create problems.

Having said all that, I believe that it is also my job as an employee to share honest opinions and ideas in the closed, private setting of our corporate meetings. I believe that being a “yes” man, while expedient and convenient in the short term, will end up destroying the company in the long term.

Group think happens when we deprive our leaders of the information they need to make good decisions. Group think happens when we tell our leaders what they want to hear even though it may kill them in the long run.

Good companies create a system where the collective intelligence of the staff is harnessed, it is funnelled, refined and channelled.

What our corporate leaders need is all the information. They need to know all our opinions and our ideas. They need us to cover all the angles. They need to know all the good news and all the bad news. They need a REAL picture of what is going on. This enables them to be clear on what options are available to them and to make good decisions based on real intelligence.

  • Dr Goh Chee Leong is vice-president of HELP University College and a psychologist. We welcome feedback on this article. Please email to starbiz@thestar.com.my

    • E-mail this story
    • Print this story