One of the things a Chief Compliance Officer (CCO) must do is to make decisions. What is your decision making process? I was interested by an article in HBR.org, entitled “11 Myths About Decision-Making”, authored by Cheryl Strauss Einhorn. I was very intrigued by her statement that “Ultimately your decision needs to come from a clear understanding of your needs, values, and goals”. In other words, culture and your organization should block out the noise of useless or even worse noise that can be harmful. Einhorn identified a number of deeply ingrained and counterproductive myths that harm our ability to make decisions. I have adapted her list for the CCO and compliance professional.
- I like to be efficient. To be efficient, a CCO needs to be clear on the problem or issues being addressed. This means “Rushing can lead you to make a decision based on the wrong factors, which ultimately will lead to regret.” Give yourself time to understand the problem, the issues and possible solutions.
- I’m too busy; I don’t have time to give to this decision. Do not rush your decision making process. The author believes that “intentionally slowing down to get clear on what you’re solving for will speed up your efficacy. You’ll save time later by spending quality time now to avoid having to revisit the decision.”
- I just need to solve this problem at this moment. Most importantly how can your decision from the compliance perspective not simply make your compliance program more robust but also improve the corporate bottom line? Have a broad enough focus to use your solution to enhance not just compliance but the organization. This will pay off down the road.
- This is my decision alone; I don’t need to involve others. Our important decisions do involve other stakeholders. For the CCO this is even more true. It will “only partially solve the problem and may exacerbate it.” Without involving others, you may well lose their support going forward dooming your decision and project to failure.
- I know I’m right; I just want data or an opinion to confirm my own thinking. Confirmation bias has been behind disasters as disparate as “the Bay of Pigs to the subprime loan market implosion to the NASA Challenger explosion to the Deepwater Horizon environmental catastrophe.” Once groupthink sets in, and no one wants to answer or even raise a red flag. Here the author cautions, “To better understand and define the limitations of what you think you know, look for contrary examples and evaluate rival explanations.”
- I trust my gut. For larger, high-stakes decisions, when we rely on our gut, we are relying upon bias and faulty memory. Important decisions need you to “allow for new information and insight.” You may have set your mind, but more information may well point you in another direction.
- Decision-making is linear. The author posits that “good decision-making is circular; it needs a feedback loop as we gather information and analyze it and our thinking.” This means that sometimes you “need to go back to find information we’ve glossed over, or to gather new information or conduct a different kind of analysis.”
- I can pull my ideas together well in my head. Large decisions are made up of multiple smaller decisions. When we try to keep all of those moving parts in our mind, we end up relying on a faulty memory and a distracted mind. Biased thinking can get in the way. Documenting is an important part of thinking and analysis.
- I have all the information I need. Confront your assumptions with evidence. Look to subject matter experts, who can help you make an educated decision that’s also right for your organization.
- I can make a rational decision. Economists believe that decision making is rational. Psychologists know different. The author noted, “We all operate through a dirty windshield of bias based on past experiences and feelings.” Recognize this and use it going forward.
- There’s just one way to do this. If it is one thing I have learned, it is ‘I don’t know what I don’t know”. Siloed data, environments, and small circles are the bane of good decision making. Every CCO must get “outside your routines and patterns leads you to seeing things differently.”
Yet, it is not simply identifying and understanding these myths. It is recognizing they can rear their collective heads at any time. Einhorn advocates what she terms as “periods of thoughtful deceleration” which she further defines as “calculated pauses empower you to check and challenge your biases, consolidate your knowledge, include others and enable you to decide whether to pivot and move in a new direction or stay the course before accelerating again.”
Einhorn proposes five questions which I think every CCO should ask during this process. Once again, I have adapted her work for the compliance professional.
- Which decision-making myths am I relying on to make this decision?
- How will this decision move the organization and compliance function towards its goals?
- Are my feelings related to this decision based on what’s actually happening or do they reflect my learned patterns of behavior or unconscious bias?
- What information is out there in the world that could help us make this decision better?
- How can I better understand the perceptions and perspectives of others involved in the decision?
Einhorn’s article is quite thought-provoking. I would urge every CCO and compliance professional to consider the myths identified to see if they are embedded, consciously or not, in your decision making calculus.
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