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When gut instinct doesn't cut it

When gut instinct doesn't cut it
The economic cost of bad people decisions is well documented.

According to the results of a study by workplace psychologists OPP, 39 percent still rely on gut instinct when making hiring decisions. A quarter also admitted that whether they liked someone personally was a major influence.

Managers mistakenly believe they know people – a view not shared by their employees: 97 percent of managers say they know a great deal about their people, while only 23 percent of employees share this view.

Moreover, half of employees said that they don’t trust their manager’s instincts on staff decisions relating to them or to others. The result is a workforce that is becoming increasingly distrustful of management decision-making.

And nearly three-quarters of all line managers would change the people decisions they’ve made in the past if given a second chance.

(The use of gut instinct is further discredited in studies done by the hiring experts at Topgrading. Their studies show that on average only a quarter of hiring choices made in this way actually turn out to be “A” Players – high achievers. But if you follow a proven process you can increase your hiring success rate to 90 percent.)

Robert McHenry, CEO of OPP, said: “The results of this study make chastening reading for any management team. Organisations have to ask themselves why they demand objectivity and transparency in other decisions about resources – but when it comes to people decisions they allow themselves to fly blind?

“Managers are making the wrong people decisions more often than not, unable even to stand by their decisions after the fact. Mistakes range from overestimating the potential of a person to discovering information further down the line that would have changed the decision. In any case, these decisions are often made covertly and in the absence of hard facts.

“The economic cost of bad people decisions is well documented. Putting the wrong people in the wrong jobs has a direct impact on productivity and efficiency, and the cost of reversing the decision is often considerable.

“Management habits need to change. It’s possible to obtain robust and objective information on which to decide. It’s the best way for businesses to manage risk when it comes to their people, and it’s a way that every CEO should demand.”

Stephen Lynch is chief operating officer - global operations at RESULTS.com, a company specialising in business execution software with offices in New Zealand, Canada and the US

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