• Categories: Role of the board
  • Author: Graeme Nahkies
  • Published: Oct 25, 2021
  • share on linkedin
  • share article

Judgment is the ability to combine personal qualities with relevant knowledge to form opinions and make decisions. However, Sir Andrew Likierman recognises that—while we are all capable to some extent of interpreting evidence and forming views—this does not necessarily amount to good judgment. In The Elements of Good Judgment, he describes six basic components of good judgment and offers suggestions on how to develop and apply them.

 

1. Learning

Good judgement requires knowledge to be turned into understanding. The problem is we are often not critical enough of what we hear or read. Few of us really absorb the information we receive; we filter out what we don’t expect or want to hear, so miss a great deal of available information.

Effective leaders listen attentively and are adept at eliciting information that people might not otherwise volunteer. They also read critically. Information overload, particularly written material, is a common problem facing board members everywhere. Effective leaders demand quality rather than quantity. They also pay extra attention to the quality of the information they see and hear, and particularly to its source. They are sceptical of information that doesn’t make sense.

To be effective, learning requires active listening, interpreting body language and trying to pick up on what’s not said.

Be conscious of your own filters and of the ways in which you might discourage alternative points of view. Get input and data from people on more than one side of an argument—particularly from those with whom you don’t usually agree. Ask questions and check conclusions.

2. Trust

Boards make decisions collectively. It is important, therefore, to be able to draw on the skills, knowledge, and experience of all board members, as well as executives and external advisers. Then it is a question of trusting in those who contribute. Boards do well to be wary of dominant chief executives who do not countenance opposing views and often end up surrounded by sycophants who just follow orders.

It is important to cultivate sources of advice you can trust; people who will tell you what you need to know, rather than what they think you want to hear. Around the board table, therefore, you need directors who can be trusted to say what they really think. You also need management willing to ‘speak truth to power’.

3. Experience

Beyond data and evidence, leaders bring their experience to bear when making judgement calls. Experience gives context and helps identify potential solutions and anticipate challenges. Be wary, however, of narrowly based experience. Familiarity can be dangerous. Deep but narrow experience can lead to complacency or overconfidence. Judgements may reflect habit rather than great thought.

To make best use of others’ experience, it is important to assess how well you draw on your own experience to make decisions. It is a good habit to routinely review your decisions and be honest about what went well and what didn’t. Share your conclusions with a coach or colleague who might take a different view of the same experience.

4. Detachment

Being able to detach both intellectually and emotionally is a vital component of good judgement. Research shows that cognitive biases are pervasive influences on the choices people make. As well as preconceptions affecting individual judgement, boards are particularly vulnerable to, for example, status quo and confirmation bias. Boards often don’t come into their own until an organisation faces a crisis that requires experience and cool heads who can look at a situation with detachment.

Being detached demands the ability to understand, clarify and accept different viewpoints. Likierman advocates using processes such as role playing and simulations to force people to consider agendas other than their own and to provide a safe space for dissent. Leadership development programmes that expose participants to colleagues from different cultures and geographies—who come to the discussion with different views—are also valuable. It is important to have processes in place to keep directors aware of biases and protect against them. Assume mistakes will occur.

5. Options

Question the solutions offered. Smart leaders question the options formulated and presented by their advocates. Other options almost always exist, such as doing nothing or delaying a decision. Bad calls are inevitable when important options and consideration of unintended consequences are not considered. When all the options can be assessed, the final judgement is more likely to be sound.

So, press for clarification on poorly presented information. Challenge when you think important information is missing. Question the weighting of variables on which proposals depend. When timing is supposedly an issue, determine that this is legitimate. When novel solutions are proposed, look at conducting a trial or pilot rather than going all in. When you think something is being oversold, try to understand what stakes people might have in the outcome. Get clear about ethical considerations, which help filter your choices.

6. Delivery

The right choice can still fail, depending on how and by whom it is executed. It is important to think carefully about the risks of implementation. Flair, creativity, and imagination aren’t always accompanied by a capability to deliver, so a successful proponent is not always the best person to see a decision through to delivery.

It is important, therefore, to make sure that the experience of the people recommending an investment closely matches its context. Is their prior work relevant to implementing what is proposed? Engage in ‘premortem’ discussions to try and surface what might cause a proposal to fail.

Conclusion

Likierman acknowledges that sheer luck and factors beyond your control may determine your eventual success, but he argues that good judgement will stack the cards in your favour.