Using a structured decision-making process is hugely popular in corporations for two common yet critical types of decisions: capital expenditures and hiring. Indeed, in many of our client organizations, these are two areas that require use of KT Decision Analysis as standard procedure. That’s not to minimize the value of an analytic approach to organizing all kinds of decision making. But capital expenditures require a huge financial commitment that can call for diverse input and demand a detailed record of the factors that guide a decision in order to secure funding and justify the expense.
Hiring decisions are a big commitment too with their own set of challenges. Objectives for personnel decisions must be clear, visible and documented. The right hire needs to be done within the context of what needs to be accomplished. Making good hiring decisions depends on three elements: the quality of our definition of specific factors that must be satisfied, the quality of our evaluation of the available alternatives and the quality of our assessment of the risks associated with those alternatives.
Following a good standard hiring process sounds so straightforward and yet, we wonder how bad decisions come to be made
Here is one simple and highly typical example:
A search committee for a new head of R&D at a corporation stated: “We need to increase the research and development capabilities of this organization.” Based on this assessment, the committee sought out and hired the head of R&D at a competing organization. Yet after six months, the committee came to three conclusions: (1) The new director was not “best” for their organization; (2) He did not really address any of the firm’s pressing R&D concerns; (3) The question of a suitable direction for R&D at that point in the company’s life had never been adequately discussed.
At the time the decision was made, everyone was enthusiastic about the choice. Yet because the committee had no clarity of purpose and had not discussed the organization’s specific needs in matters of research and development, the committee had not understood the kinds of alternatives most likely to benefit the organization.
A Better Approach
The KT approach to analytic decision making begins with a simple statement of the decision dilemma that must be resolved. A decision statement provides the focus for everything that follows and sets the limits of the choice. In hiring, this is as simple as “Select a new director of R&D.” This indicates that there is a choice to be made and lays the groundwork for setting objectives. By beginning with: “We need to increase the R&D capabilities of this organization,” we failed to mention the level of the new hire (director) and what increased R&D capabilities would look like and would mean to the organization (objectives). In the example, the search committee immediately began looking for candidates without defining what their organization needed at this point in time.
KT Decision Analysis is the antithesis of identifying a course of action and then building a case to support it. Perfect for making hiring decisions
After agreeing on a decision statement, instead of immediately looking at our alternatives, we need to establish some objectives. Decision Analysis is the antithesis of identifying a course of action and then building a case to support it. Instead, we are moving from what needs to be accomplished toward the alternative that can best accomplish it. Objectives are clear measures of the ends we want to achieve, for only with clear measures can we make reasoned choices.
We divide objectives into two categories: MUSTs and WANTs. The MUST objectives are mandatory, minimum standards required for the job. While not the most important, they set a standard required for consideration. Common MUSTs are education, language and experience requirements. Yet before they are included, consideration should be given to whether an objective is truly valid in order to meet other objectives.
WANT objectives provide a comparative picture of alternatives—a sense of how the alternatives perform relative to each other. For example, “Two years’ experience in this industry” (MUST) may be rephrased as “Maximum experience in this industry” (WANT). As a MUST, candidates with less than two years’ experience will be eliminated. As a WANT, the remaining candidates will be judged relative to each other based on years of experience. To put it bluntly, the MUSTs decide who gets to play, but the WANTs decide who wins. In our process, the WANTS are weighted by their relative importance to each other. This clarifies what things are most important in selecting a new hire and what things are good but not deal breakers.
A system of scoring provides evidence of why a hiring choice was made
These WANT objectives will guide the search process, allowing a candidate pool to be developed based on an array of factors that have been weighted by their importance to the organization. The objectives and their relative importance guide the search for candidates and from this candidate pool, alternatives can be compared and considered based on how well they meet each objective relative to the other candidates. New hires selected by using this approach are chosen for well-defined reasons, based on clear objectives set with an eye towards organizational goals and needs. A system of scoring provides evidence of why a choice was made.
The final step in making the best-balanced choice is to weigh the risk of the top choices. We then rate the adverse consequences of an alternative on the basis of probability and seriousness: What is the probability that this (adverse consequence) will occur? If it (the adverse consequence) does occur, how serious will it be? While this sounds pessimistic, it allows you to consider what could go wrong before taking any action and what you can do to prevent a future problem. For example, in a hiring decision, a risk might be that a top candidate considered for the job is drawn from a similar but different industry. What adverse consequences could occur and how serious is this? We will not lose any sleep over an adverse consequence of low probability and minimal seriousness. But we will be very attentive if an adverse consequence is considered both highly probable and very serious.
Decision Analysis is a methodical, systematic process. But it is also as creative and innovative a process as its users choose to make it. This makes it a flexible tool not only for finding the right person for the job but also for controlling factors (nepotism, bigotry, favoritism) that should not be guiding decision making, and for expanding objectives (diversity, hiring from within, apprentice programs) that build opportunities. As a hiring tool, structured decision making clarifies and improves the hiring process. In addition, when candidates are hired, their roles have been carefully considered so that once on the job, they can step forward with clarity, in the right direction.
Software and templates don’t solve problems. People solve problems!
What kind of people? People who are curious, ask great questions, make decisions based on facts, and are empowered to lead. They remain focused under pressure and act confidently to do what needs to be done. You’ll find these problem-solving leaders both at our clients and here at Kepner-Tregoe. For over 60 years, Kepner-Tregoe has empowered thousands of companies to solve millions of problems. If we can save millions for a manufacturer, restore IT service for a stock exchange, and help Apollo 13 get back from space, we can help your business achieve success.