August 8, 2022 – Has decision making just become harder? With the business world spinning faster than ever before—and with no pre-established playbooks to fall back on—making high-stakes judgments in exhausting situations is now a daily task for every CEO, according to a new report from Russell Reynolds Associates’ Anita Wingrove, Alistair Macrae, Aimee Williamson, Ruben Hillar, and Eric Wimpfheimer. “The costs of getting it wrong are high,” the report said. “CEOs are under the microscope, with shareholders, customers, communities, and regulators scrutinizing every decision. Even seemingly innocuous choices can lead to a backlash. CEOs must now walk the tightrope of ensuring their decisions keep as many groups happy as possible.”
Take the sustainability agenda, for example. Coming up with a plan to curb emissions requires thinking through multiple levels of complexity and engaging with multiple stakeholders to drive momentum, the Russell Reynolds report notes. At the same time, CEOs have to manage resistance. CEOs face the tricky task of navigating a diversity of expectations—and finding a path forward.
Of course, leaders can never make a perfect choice. “No answer is ever 100 percent right or 100 percent wrong,” the report said. “Yet, there are certain skills that help CEOs make high-stakes decisions that keep their business moving forward and their stakeholders onside—even when they’re up against the clock and don’t have all the information. Our research has revealed key capabilities that effective decision makers share.”
The Three Skills that Effective Decision Makers Share
Russell Reynolds studies show that good decision making isn’t just about how smart you are. CEOs who make the best judgment calls typically share three common traits. “Together they help the CEO tap into an ecosystem of information internally and externally that keeps them alert to a fast-changing business context, as well as the short-term and long-term implications of their decisions,” the search firm said.
1. The courage to stay open to new ideas and solutions.
As the CEO’s job expands in complexity, so does the need to stay open to new answers. In a fast-moving world, the usual fixes no longer apply, according to the Russell Reynolds report. “Solutions now come in many different shapes and sizes—and sometimes from unusual places,” it said. “CEOs who are confident in making complex decisions index highly on curiosity and empathy. This allows them to understand issues from different vantage points and think through all possible outcomes (and trade-offs) before making their decision.”
At the same time, the report notes that they are not afraid to ruffle feathers with unpopular or confrontational decisions. They take an active role in managing stakeholders’ expectations with the help of the board, particularly the chairperson.
2. The humility to admit they don’t have all the answers.
It used to be that CEOs could adopt a command-and-control approach to decisions. The Russell Reynolds report explains that there was no wrong answer—only their answer. But the maverick lone-ranger CEO archetype is now out of favor. Today’s CEOs need to act as a “collaborator in chief.”
“CEOs who make high-stake decisions in complex environments are comfortable saying they don’t have all the answers,” the Russell Reynolds report said. “They know that fielding a wide range of viewpoints from across the organizations leads to a better understanding of blind spots—and better decisions. That’s why these CEOs build leadership teams that provide complementary capabilities, diversity of experience, perspective, and cognitive abilities. And it’s why they are proactive in partnering with the board on sticky problems—as well as external stakeholders, such as regulators and the communities in which they operate. Of course, the buck always stops with the CEO; they remain accountable for decisions both good and bad. Yet by fielding advice from a range of sources, they feel less alone when it comes to making the final call.”
3. The ability to tune into their emotions—and use them for edge.
Complex decisions often carry a heavy emotional weight. Trying to make a decision when you don’t have all the information can leave you feeling vulnerable and exposed. And this pressure and stress can lead to extreme behaviors that undermine your ability to make a confident judgment call.
When it comes to business, growing and succeeding requires more than just maintaining the status quo. To do that, you need people who are leaders – not just managers. But aren’t leaders the same thing as managers? In a word, no, says executive search and leadership consulting firm Alder Koten in a new report. “Sure, both leaders and managers supervise people,” said Alder Koten. “But leaders motivate as well as manage. They engage and improve their employees as well as oversee them. To reach your goals, your organization needs leaders as well as managers. And to target the top talent, you need to know the difference.”
According to the Russell Reynolds report, when emotions take over, you lose the ability to think rationally. “Your curiosity disappears and your desire to see issues from different vantage points evaporates,” it said. “You begin to seek comfort in tried-and-tested answers, instead of staying open to novel solutions or new ways of doing things. CEOs who make the best complex decisions don’t run away from their emotions. They tune in to them, while not letting them take over. They show high emotional intelligence. Their clear-headedness ensures they avoid knee-jerk reactions and remain flexible to new ideas. When things change—or new information arises—they react with agility, managing the unexpected with maturity and poise.”
Where to go From Here
- Avoid groupthink. Build a leadership team that complements your strengths and offers a diversity of viewpoints, the Russell Reynolds report says. Prioritize team effectiveness to ensure that individuals still gel together as a team.
- Collaborate. Create a strong working relationship with your board chair, using them as a partner and ally, and as a sounding board for complex decision-making.
- Lean into your emotions. But learn to control them, rather than letting them control you. Self-awareness is key here. Make an honest appraisal of how you react to high-stakes situations. The report notes that executive development programs can help you develop your EQ and LQ.
- Get to know your limits. Everyone has a “shadow side”—the parts of yourself that you don’t want others to see. But the best decision makers are those who can admit that they don’t have all the answers.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media