At the intersection between a leader’s personality and decision making, there is a pressure point where personality style will be the ultimate influence on business judgment.
“Leaders with higher learning orientation are more likely to embrace ambiguity, complexity and paradigm shifts and to positively engage in both the practical and intellectual challenges.”
Business Judgment: Who You Are Affects What You Decide
Personality is a vital factor in leadership success. The intersection of a leader’s personality and performance is most consequential when the leader needs to perform under pressure within the pervasive VUCA business context. Most leaders are required to navigate the complexity of unfamiliar situations with fluid, unpredictable outcomes. Too often, though, highly experienced leaders fail due to their dysfunctional personality tendencies.
We studied whether particular personality styles were more related to the decision-making skills that underlie business judgment than others. We were particularly interested in the strong relationships between the business decision-making leadership competencies (i.e., business savvy, entrepreneurship, establishing strategic direction, and operational decision making) and certain personality styles, specifically ambition and learning orientation, as well as any strong negative relationships with argumentative, avoidant, and risk aversion.
Notable personality-judgment links are shown in the “Personality Factors” graphic. Ambition measures the degree to which a person is socially self-confident, resilient, competitive, motivated to lead, and energetic. To be effective when making business decisions, leaders need high energy, a positive and aspirational mind-set, and a preparedness to subordinate other life options to pursue goals. Ambition is difficult to develop and should not be underestimated in considering leadership potential or selecting leaders.
The strong positive relationship between learning orientation and business decision competencies reinforces the importance of learning capacity and versatility for being successful as a leader in a VUCA world. Leaders with higher learning orientation are more likely to embrace ambiguity, complexity, and paradigm shifts and to positively engage in both practical and intellectual challenges.
Leaders scoring high in argumentative, avoidant, and risk aversion performed poorly in the business decision leadership skills. Under pressure, leaders with these dysfunctional tendencies can disproportionality fear failure, become insecure, and become myopically focused. Further, their interrogative styles of questioning can cripple trust-building outcomes.
Leaders who do not learn to manage these tendencies can develop highly short-term, conservative decision styles that lead to distorted perceptions of higher risk. This disconnects them from anticipating opportunities and inspiring people toward a better future.
- Clearly discuss the tangible impact of personality patterns on key aspects of business judgment. For example, if your business has an urgent need to identify cost controls or to find innovative ways to generate sales, consider the impact of a leader with an unmanaged risk aversion tendency, and how the person’s overly constrained consideration of options could lead to actions that would be too conservative and slow to realize results. Or, consider a leader with an argumentative tendency whose interrogative approach tends to dominate discussions and prevent others’ good ideas from surfacing—this would become a serious barrier to generating effective solutions.
- Heighten self-awareness and sustain improvement in managing personality implications on business judgment by creating an open environment and ensuring that leaders have feedback skills. A leadership team that has an understanding of each other’s tendencies and the skills and receptivity to provide feedback will be more successful avoiding situations that trigger these potentially destructive behaviors and their associated business execution problems.
- Ensure that leaders have a 100-day action plan that identifies their personality tendencies linked to business judgment and specifies the actions needed to manage these behaviors. This plan should be reinforced by processes such as time frames, required support (e.g., coaches), and measures to indicate improvement. Implement stronger governance and accountability processes to manage the heightened risk that, in stressful environments, allows individual personality tendencies to get in the way of execution.
First published at https://www.ddiworld.com/