3 Neuroscientific Reasons Why You Can’t Make Accurate Succession Decisions

Remember Daniel Kahneman’s book “Thinking, Fast and Slow”? It’s easy to ignore how much information our brains process every second, let alone when making important decisions like selecting the next CEO. Yes, our brains make shortcuts, so that we can navigate the world with ease. Most of the time these shortcuts enable us to make quick, “good enough” decisions. But “good enough” doesn’t cut it when it comes to succession planning.

Is Alison a high-potential employee? Is Jennifer ready now for a leadership role? What are her development needs? Get the answers wrong and your decisions cost the organization millions of dollars in wasted development and lost profits. There is no room for “good enough” mental shortcuts in talent management. This is the time to think slow rather than fast.

Our brains love jumping into conclusions even if they are based on weak or little evidence. Most of the time these conclusions serve us well – just imagine how much time and energy you save not having to decide which cereal to eat for breakfast. But when stakes are high, our conclusions certainly need to be checked against solid, scientific evidence.

What are the three common mental shorts? And how can you turn them off?

1. Halo Effect

First impressions have a strong impact on our global judgment of people. See a colleague spill coffee on his shirt and you think, “What a slob!” These global judgments then color the way we evaluate all of their future actions. It doesn’t matter how polished he might come across during the next team meeting – your mind is set, “Once a slob, always a slob.”

The reality is that everyone has some strength as well as weaknesses. Whether you’re evaluating a new applicant, providing development feedback, or deciding which employees show leadership potential, it’s crucial to put together an unbiased picture of each individual that doesn’t rely on overall impressions. This halo effect should be the main reason to scrap overall ratings of performance and potential in your 9-box!

Turn off your brain’s tendency to put a halo (or horns) on your employees. Identify the different dimensions of performance (i.e., your competency model) and rate each dimension separately. For example, rate all of your employees on friendliness before rating them on product knowledge. But whatever you do, just stay away from overall ratings of performance and potential!

2. Overconfidence Bias

A fire captain decides to evacuate his squad from a burning house just moments before it collapses without being sure how he knew it was about to collapse. Similarly, chess experts can identify the best moves quickly with confidence. So it is possible for some people to make excellent decisions very quickly. However, that is always a product of experience – our brains remember similar situations and select the correct action.

Expert intuition can be developed with practice if the learning environment is regular enough to be predictable and rapid feedback is available. But when it comes to making succession decisions, the learning environment is hardly ever predictable, and it can take years to know if the decision was the right one. So most executives and boards don’t get the experiences necessary to develop expert intuition for succession planning.

The paradox is that most of us lack expert intuition, yet we feel very confident about our decisions! It turns out that the confidence we feel is just another trick our brains play on us, so that we can fall asleep easily, knowing that we made “the best” decision. Our brains seek out information to confirm our decisions rather than refute them; and they completely ignore or explain away contradictory evidence. Our overconfidence is also reinforced by our brains’ tendency to “remember” predicting past events even if we previously didn’t have an opinion. It’s called the I-knew-it-all-along effect.

How to turn off your brain’s overconfidence bias? Answer this question quickly: How much gas is left in your car? Now go look. Did you overestimate or underestimate? By how much? Use this information as a proxy to adjust your future decisions. For instance, my brain has a tendency to overestimate things by about 30%.

3. Above-Average Effect

Now I know exactly what you’re thinking, “This doesn’t apply to me! I make much better decisions than most people!” If you don’t believe you are susceptible to these errors in judgment, then you’re probably a victim of the above-average effect. Did you know that when asked 80% of people think that they are above-average drivers? It’s mathematically impossible as only 50% can be above average, but 80% of people will tell you they see themselves as above average in about any area (McCormick, Walkey, & Green, 1986).

A mental shortcut substitutes a difficult question for an easier one: If people feel like they are good at something, they assume they are better than average. Most executives and boards think that they make above average succession decisions, but research shows quite the opposite. Realizing that 50% of us are below average in many areas is one way to turn off this mental shortcut. And it creates the humility necessary to seek outside help when we need to.

It is even possible to make accurate succession decisions?

Yes, with validated employee assessments. For example, virtual assessment centers are built to eliminate the halo effect with separate ratings of multiple competencies. Multiple independent and trained professionals provide expert ratings based on observations in standardized simulated situations. And when you think “I know my employees better than any assessment,” remember the above-average effect. Chances are 50% that you are not above average judge of character and you could be making the worst succession decision in your company’s history.

With Pinsight’s cost-effective simulation technology, we help companies make more accurate succession decisions and develop stronger leaders faster.

Learn more about our Virtual Assessment Center or read Pinsight’s success stories.