How to Make Good Decisions in Bad Times

By: Nick Tasler

From Detroit to Wall Street to Silicon Valley, it seems that bad executive decisions have become the rule instead of the exception in today's corner offices. Shareholders, employees, politicians and even managers themselves are asking - if not begging - to know why. What is the cause of all these bad decisions, and how can we start making good decisions again?

Bad managerial decisions do not stem from low intelligence. Bad decisions are not rooted in flawed logic, deficient math skills, a poor understanding of business trends or any other of the usual suspects. Bad decisions result from emotional ignorance.

At TalentSmart, we surveyed over 6,000 board members, colleagues and employees from a cross-section of industries that ran the gamut from hospitals to tobacco companies, churches to casinos and everything in between. The key stakeholders of these organizations rated managers on 22 separate leadership skills, including such stalwarts as strategic thinking, focus on results, character and the ability to communicate and articulate vision. When we compared scores on all 22 skills to managers' ability to make good decisions, one in particular stood out: emotional intelligence.

Emotional intelligence ratings tell us how well managers understand their emotions and regulate their impulses. As it turns out, nearly 70 percent of leaders ranked highly in emotional intelligence were also among the most highly skilled decision makers. Overwhelmingly, it's the managers who are most adept at understanding how others influence their own emotional state; take responsibility for their part in difficult situations; and make the most of bad situations, that are capable of making sound decisions in a timely manner.

In contrast, guess how many of those with a poor grasp of their own emotions ranked among the most skilled decision makers? Zero. In fact, 69 percent of emotionally ignorant leaders ranked among the bottom 15 percent in decision-making skill. Those who fail to handle conflect effectively; refuse to shoulder responsibility for their actions; and remain unaware of their own fear, anger or excitement are dreadfully inept at making decisions.

If emotional intelligence is so critical to a manager's ability to make good decisions, the next logicl question is how emotionally intelligent are most managers?

This is where the story takes a dark turn. In another study a few years ago, we measured the emotional intelligence of hundreds of thousands of workers from janitors to CEOs. We found that emotional intelligence rises steadily as people get promoted up the ranks into middle management. From there, however, emotional intelligence declines precipitously with every rung up the corporate ladder, finally bottoming out with CEOs. It seems that the people least equipped to make good decisions are those we trust to make the most profound decisions. Perhaps this sheds some light on how so many of our businesses have ended up where they are today.

The good news is that emotional ignorance is curable. It doesn't happen overnight, but it can be learned in a couple of months with just a little focused effort. Here's how to get started.

1. Understand Your Emotions as They Happen
Take note of what you are feeling and doing as a situation unfolds so you can learn to harness your emotions in difficult situations. Remember that ignoring emotions doesn't make them magically disappear. Only now after the Wall Street crash are we finally hearing people talk about fear and panic. A year ago, nobody wanted to talk about anything except fed policies and interest rates.

2. Step Away from the Emotional Situation
Keep your finger on the pulse of your emotions and know when to allow yourself the opportunity to step back from the situation. Once you get food at sniffing out your emotions as you feel them, evaluate them objectively. Try picturing the current situation in your head as if it were happening to someone else. What would you recommend that "someone else" to do in order to create the best results?

3. Prepare Yourself for Feelings of Uncertainty
Be definition, every choice you make depends on your estimation of uncertain outcomes. For nearly everyone, that uncertainty feels uncomfortable so expect some anxiety to accompany decisions. Anticipate it and prepare yourself for it by talking through your thoughts and feelings with a third party who may ot be as closely involved with the situation. Then, accept the fact that you may not have complete control over the outcome, but you can control your reaction to it.

Remind yourself to practice these steps everyday for one month each, starting with step one. Set a reminder on your Outlook calendar or jot it down on a sticky note and post it on your bathroom mirror. At the end of the first 30 days, switch the reminder to say, "Step Away From the Emotional Situation," followed by step three in the third month.

About the author: Nick Tasler is the award-winning author of The Impulse Factor: How to harness your impulses and start making better decisions, and is the former director of R&D at global think-tank and consultancy, TalentSmart.