Yesterday, I introduced the topic of judgment for compliance professionals. I recently read a Harvard Business Review (HBR) article on the topic by Sir Andrew Likierman, entitled “The Elements of Good Judgment: How to Improve Your Decision-Making”. Today I want to go through some of Likierman’s six key elements of good judgment, which he identified as: (1) learning, (2) trust, (3) experience, (4) detachment, (5) options and (6) delivery. I will begin by considering the first three, learning, trust and experience.
Nothing is more important for any business professional than to be a lifelong learner. This is even true for compliance professionals as our profession is evolving about as quickly as any other corporate position. It goes beyond simply following the regulatory pronouncements released consistently by the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) on what currently constitutes a best practices compliance program. It goes to the breadth and scope of what is needed in a compliance program in 2020. It also means learning through reading and listening. Listening is universally known to be a top leadership skill. Reading is equally important but the author notes that there must be both synthesis of material and filtering of information.
Likierman says “Active listening, including picking up on what’s not said and interpreting body language, is a valuable skill to be honed, and plenty of advice exists. Beware of your own filters and of defensiveness or aggression that may discourage alternative arguments.” Moreover, if you find yourself “overwhelmed by written briefing material, focus on the parts that discuss questions and issues rather than those that summarize the presentations you’ll hear at the meeting. Look for gaps or discrepancies in what’s being said or written.” He concludes by noting, “Finally, make sure the yardsticks and proxies for data you rely on are sound; look for discrepancies in the metrics and try to understand them.” Listening is one of the most significant skills you can develop. This is something that will help you in any endeavor you choose to engage in going forward.
Trust: Seek Diversity, Not Validation
Likierman believes, “Leadership shouldn’t be a solitary endeavor. Leaders can draw on the skills and experiences of others as well as their own when they approach a decision. Who these advisers are and how much trust the leader places in them are critical to the quality of that leader’s judgment is that he has found that leaders with good judgment tend to be good listeners and readers—able to hear what other people actually mean, and thus able to see patterns that others do not.” The problem is the lack of diversity. One can consider the largely white and largely male Board of Directorship of public companies in the US as but one example. You need to have people around you who have different perspectives and are willing to speak up and share them. Too many leaders surround themselves with like minded thinkers who do not speak up.
Likierman says that to improve, a leader should “Cultivate sources of trusted advice: people who will tell you what you need to know rather than what you want to hear. Don’t be put off by assessments that a candidate is “different.” Someone who disagrees with you could provide the challenge you need.” You need not only a diversity of skills and views but people who will speak truth to power when it is necessary to do so. Finally, you should also make “judgment an explicit factor in appraisals and promotion decisions.” By doing so, it will improve your organization as a whole.
Experience: Make It Relevant but Not Narrow
Here Likierman says, “Beyond the data and evidence pertinent to a decision, leaders bring their experience to bear when making judgment calls. Experience gives context and helps us identify potential solutions and anticipate challenges. If they have previously encountered something like a current challenge, leaders can scope out areas in which to focus their energy and resources.” The problem is if a leader has some knowledge or familiarity, they may believe such knowledge gives them a deeper insight than is warranted. Moreover, “leaders with deep experience in a particular domain may fall into a rut, making judgments out of habit, complacency, or overconfidence.”
To improve this element, Likierman suggests two areas. First, you should “assess how well you draw on your own experience to make decisions. Start by going through your important judgment calls to identify what went well and what went badly, including whether you drew on the right experience and whether the analogies you made were appropriate.” From there move to “expand your experience. Try to get postings abroad or in key corporate functions such as finance, sales, and manufacturing. Get yourself on an acquisition team for a major deal.” Likierman sees this action as critical for any company as “it will help the company and very possibly you, because it will broaden the experience into which you can tap.”
I hope you will join me for the next blog post, where I take up the final three elements: detachment, options and delivery.