Making Better Decisions

 

Decision-making with respect to improving performance is a matter of prediction. So is leadership. For example, was the energy crisis a rational, predictive event 30 years ago? Or was it random, unpredictable, and unpreventable? If it’s the latter, then we must believe that we are morons with no theory, knowledge, or predictive capability, and are powerless to influence our environment or future. No reasonable person accepts that.

People in business, education, and government make decisions to create positive outcomes for themselves and their organizations. There are basically three categories of decisions:

1. Decide to take some form of action. (We can cause a positive result.)

2. Decide to take no action. (The status quo is just fine, thank you.)

3. Decide not to decide. (i.e., management by paralysis)

To make better decisions and improve future performance, we need to understand what drives performance. There can only be two major components that affect performance independently, or interactively, and those are the systems that are being used in the creation of the business outcomes and the performance of people working in and around these systems. The diagrams in figures 1 and 2 show the possible basis of performance.

The causes of past and present performance can be formulated as follows:

For figure 1: P = I

For figure 2: P = (I and S) + I

Where P = performance as observed or measured, I = the effects of performance caused by the individual, and (I and S) represent the interaction between the individual and the system.

In hundreds of seminars to thousands of people in multiple countries I have asked the following question: “Are the drivers of performance represented more accurately in figure 1 or figure 2?” Overwhelmingly, everyone agreed that performance in the real world of business, education, and government is more like figure 2.

With the premise that decisions are made with the goal of improving future performance, we may now consider some popular decisions and actions that are taught in courses and seminars, and applied in business and government, to improve performance:

• Conduct performance appraisals that measure the individual’s performance, and rank, grade, or rate the individual on a scale, or in comparison to, his or her peers.

• If the last data point is different from the previous one, and is considered unacceptable, then action has to be taken to find the cause of the last data point.

• Identify, reward, and benchmark “high performers”; identify, punish, or humiliate “low performers.”

• Rank the numbers, physicians, etc., based on the outcome of data.

• Benchmark high-performing organizations.

• Take immediate action on any undesirable outcome… find the culprit!

• Improve performance by establishing numerical goals for individuals, and hold these individuals accountable.

• Establish dashboard indicators and balanced scorecards; take action on metrics that stand out or do not meet pre- established numerical goals.

 

Each of these actions can only be effective if performance is caused as indicated in figure 1--by the individual. Considering the agreement that the appropriate performance model is shown in figure 2, we have to be honest and admit that we tend to apply remedies for improving performance for which there is no disease, or worse, turn knobs that aren’t connected to the real picture.

The U.S. economy has been on a decline for the last 30 years. If these decisions and actions have not worked for 30 years, what makes anyone think they that they will work in the future?

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