Making Better Decisions as a HR Leader MTSHRM-September 2017 - PowerPoint PPT Presentation

Making Better Decisions as a HR Leader MTSHRM-September 2017 Retained Executive Search Recruitment Outsourcing Leadership Consulting “We Speak Your Language”

“We Speak Your Language”

“We Speak Your Language” “We Speak Your Language”

“We Speak Your Language” “We Speak Your Language”

“We Speak Your Language” “We Speak Your Language”

Decisions • How? • Why? • When? “We Speak Your Language”

Making decisions… “We Speak Your Language”

Brain teaser : Please consider Linda, a 31-year-old woman, single and bright. When she was a student, in high school and in college too, she was deeply involved in social justice issues, and also participated in environmental protests. Which is more probable about Linda’s occupation today? a) Linda works as a TV reporter; b) Linda is a bank teller; c) Linda is a bank teller, and she’s very active in the environ- mental movement. Quick, what’s your answer? a) or b) or c)? And, in what precise order? “We Speak Your Language” “We Speak Your Language”

HR leaders and Decision Making • Strategic issues –Global issues (Local vs. Global; Make vs. Buy) –Employment vs outsourcing –Talent acquisition • Internal vs external • Tactical issues –Increase workforce vs overtime –Talent depth vs Talent breadth “We Speak Your Language”

Traditional decision making 1. Create a constructive environment. 2. Investigate the situation in detail. 3. Generate good alternatives. 4. Explore your options. 5. Select the best solution. 6. Evaluate your plan. 7. Communicate your decision, and take action. “We Speak Your Language”

But the problem is this… “We Speak Your Language”

“We Speak Your Language” “We Speak Your Language”

Fill in the blank • SO_P – Why did you answer this way? “We Speak Your Language”

Our decisions are often biased • We have two ways of thinking –System 1-thinking fast –System 2-thinking slow • System one is more intuitive and quick • System two is deliberative and involves effort From “Thinking Fast and Slow” by Daniel Kahneman “We Speak Your Language”

One more example • What is 2 x 2? • What is 12 x 14? “We Speak Your Language”

System 1 vs. System 2 • System 1 thinking is practically effortless • System 2 requires effort and will interfere with other processes – Here is an example “We Speak Your Language”

“We Speak Your Language”

Our decisions are influenced-Heuristics • Priming (environmental impact) • Cognitive ease (familiarity) • Confirmation bias (seeing what we want) • Halo effect (WYSIATI) • Prospect Theory • Loss Aversion • Small Probabilities “We Speak Your Language”

Cognitive ease • Cognitive ease makes us feel more favorable toward things that are familiar, easy to understand, and easy to see or read. • We feel less favorable toward what is unfamiliar, difficult to understand, or difficult to see or read “We Speak Your Language”

Confirmation bias • Confirmation bias causes us to selectively notice and pay attention to what confirms our beliefs and to ignore what doesn’t. – Example: Gun control “We Speak Your Language”

Halo effect • When we consider someone to be a good person, we find it easier to excuse or ignore behavior that is inconsistent with being a good person. – Good people can do no wrong. – On the other hand, if we consider someone to be a bad person, we find it hard to accept that he or she has any positive qualities. Bad people can do no good. “We Speak Your Language”

Recency vs Quality • The brain is wired to notice change over stasis – New email – Text – Social media post • Our brain gives more power to recent information • Too much information can lead to no decision “We Speak Your Language”

Prospect theory • Certainty –People have a strong preference for certainty and are willing to sacrifice income to achieve more certainty. For example, if option A is a guaranteed win of $1,000, and option B is an 80 percent chance of winning $1,400 but a 20 percent chance of winning nothing, people tend to prefer option A. “We Speak Your Language”

Loss aversion • People tend to give losses more weight than gains — they’re loss averse. So, if you gain $100 and lose $80, it may be considered a net loss in terms of satisfaction, even though you came out $20 ahead, because you’ll tend to focus on how much you lost, not on how much you gained. “We Speak Your Language”

Small probabilities • People tend to under-react to low-probability events. So, you may completely discount the probability of losing all your wealth if the probability is very small. This tendency can result in people making super-risky choices. “We Speak Your Language”

“We Speak Your Language” “We Speak Your Language”

System 1 vs. System 2 SYSTEM 1 SYSTEM 2 Subconscious values, drives, Articulates judgments, makes beliefs that influence our “gut choices, endorses or rationalizes reactions.” ideas and feelings Jumps to conclusions regarding Makes up stories to either causality. confirm or deny those conclusions. Operates effortlessly. Requires conscious effort to engage. Can be wrong but is more often Can be wrong or right right. depending on how hard it works. Influenced by heuristics. Examines those heuristics when so inclined. “We Speak Your Language”

Consider this • You can hire two talent acquisition specialists at a fully loaded cost of $80K per person/year • You can outsource talent acquisition at a cost of $130K per year Which project is more attractive to you? • Why? • What affected your decision? “We Speak Your Language”

Situations for discussion 1. Your firm has the choice of the three proposals below for a new HRIS system installation i. Proposal A has a projected cost of $500K, and the probability of success is 40% ii. Proposal B has a projected cost of $1200K, and the probability of success is 75% Which option would you choose? Why? “We Speak Your Language”

Discussion • Priming (environmental Form groups of 3 and impact) discuss the following: • Cognitive ease (familiarity) • Which of the issues • Confirmation bias (seeing discussed interrupts what we want) • Halo effect (WYSIATI) your decision • Prospect Theory making most? • Loss Aversion –What will you do about • Small Probabilities this? “We Speak Your Language”

“We Speak Your Language” “We Speak Your Language”

Thank you Dan Ryan Ryan Search & Consulting dan@ryanseach.net @ryansearch 615 656 3535 office 615 202 0883 mobile “We Speak Your Language”