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The Hidden Role of Personality in Sabotaging Leader Decisions

By Evan Sinar, Ph.D.

Evan Sinar, Ph.D.

Tales of poor leader decisions are rampant and well-publicized. Strategic decisions like raising the price of the company’s flagship product by over 5,000 percent. Overhauling firmly entrenched retail pricing and marketing models. Employee verbal abuse and offensive public statements.

These stories pick up at the point of aftermath, but rarely provide insights into the factors that drove the leaders to act as they did. The consequences—often deep losses in shareholder value and consumer confidence—are clear in hindsight. But could warning signs have provided early insight into a leader’s propensity for decision missteps long before they manifested themselves in a company-crippling error?

Based on our research, we believe that this search for root causes must begin with a deep diagnosis of a leader’s personality. Personality is a vital factor in whether a leader soars or derails, particularly when under pressure in an unpredictable business environment. These are the situations that trigger instinctual actions where who you are affects what you decide. In this new reality, the influence of personality is amplified dramatically—as is the criticality of gauging these risks early.

To understand the role of personality in the behavioral landscape for high-stakes decisions, we analyzed a data set of over 9,000 operational and strategic-level leaders. While being considered for advancement, these leaders completed a rigorous, day-in-the-life simulation of a challenging senior leader role. These simulations elicit the same level of tension that a leader would face once on the job, and don’t allow leaders to simply say what they can do or have done, but to show it under pressure. We scored leaders on four decision-making facets:

  • Business Savvy – Ability to keenly understand of business operations and the levers that drive profitable growth.
  • Entrepreneurship – Understanding of market drivers and emerging trends to seize business opportunities and pursue calculated risks.
  • Establishing Strategic Direction – Commitment to a long-term business direction based on perspective-taking and systematic analysis.
  • Operational Decision Making – Securing and comparing information from multiple sources to identify issues and commit to action.

We then compared the resulting scores to an established measure of personality. We found several reliable connection points between the two, summarized in the graphic below, which displays the relations between personality and business judgment.

The personality factors that drive business judgment

Five personality traits defined the leaders who demonstrated flawed decision making:

  1. They’re NOT Ambitious – Ambitious leaders are self-confident, resilient, and competitive, driving aggressive, entrepreneurial decisions to propel the business forward. Low-ambition leaders lack the unflagging will to make or pursue high-stakes decisions.
  2. They’re NOT Passionate about Learning - Learning versatility drives leaders to excel despite constantly-changing decision frames and strategies. Leaders with low learning orientation disengage from the ambiguity and complexity inherent to strategic decisions.
  3. They’re Argumentative – Argumentative leaders are seen as overly skeptical and critical. Few major decisions are made in a vacuum. Even when these leaders do involve others, their interrogative style cripples trust and commitment, dooming their decisions from the start.
  4. They’re Avoidant – Avoidant leaders are passive-aggressive and resist others’ input. They rarely take a problem-focused approach to decisions. For major, time-sensitive decisions where hesitating is deadly, avoidant approaches are fatal for capturing fleeting business opportunities.
  5. They’re Risk-Averse – Risk-averse leaders are overly cautious and disproportionality fear negative consequences. Because of this, they become insecure and myopically focused, producing a cycle of short-sighted actions and quickly-abandoned plans.

Each of these traits can be accurately measured—many highly reliable tools exist to do so. But they are very difficult to develop once a leader’s behaviors become entrenched through prior acceptance and neglect about the role of personality in shaping leader judgment. For organizations seeking to be proactive in early identification, these characteristics must be incorporated into discussions of leadership potential and advancement. Delayed diagnosis of these tendencies will limit a leader’s ability to manage them, leaving a conservative and erratic judgment profile that can fester into enterprise-level consequences.

What you can do

Once new leaders are in place, heighten awareness—theirs and others’—of the implications of personality for business judgment. Create a feedback-rich environment and recognize leadership as a team concept. Through open communication, organizations can circumvent destructive corporate consequences. Ensure that new leaders have a personal action plan that calls out not only their judgment-related personality tendencies, but also a specific plan of improvement involving time frames, support from coaches and mentors, and tracking measures. And finally, verify that checks and balances are in place to reduce the chance that a senior leader’s unsurfaced personality demons will jeopardize the reputations of their team, business unit, or in extreme but not unheard-of cases, the entire organization.

Evan Sinar, Ph.D. is DDI’s Chief Scientist and Vice President of the Center for Analytics and Behavioral Research (CABER). Evan is a thought leader on leadership assessment and development, talent management analytics, and data visualization. Evan extends his great appreciation to Bruce Watt for his integral input into an alternative view of this research into business decision making, one finding within our High-Resolution Leadership research. Through 18 different lenses on the current and evolving state of leadership, we see everything from how leaders impact financial growth to economic turnaround to what fuels their skyrocketing rise to the top.

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High Resolution Leadership
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Posted: 20 Sep, 2016,
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