Poor Leadership Decision: A Case Study

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Introduction

Leadership is a complex position associated with the necessity to make difficult decisions that will directly affect the performance of the unity. This objective requires a certain level of expertise that would allow the manager to make an informed decision in light of all the factors involved. Yet, even the most experienced leaders may fail to deliver the expected results. In some cases, such failures are associated directly with poor decisions that become detrimental to the unit or the entire company. Mistakes are natural, which is why it is unrealistic to expect the absolute absence of poor decisions across a managers career. Instead, the benchmark of leadership quality consists of being able to analyze mistakes and avoid them in subsequent decisions. There is always a complex psychological process behind every decision, which includes both the leader and the people affected by these actions. Moreover, it is highly unlikely that a manager would willingly take an objectively poor decision. Accordingly, the key objective is to analyze the psychology behind it and prevent similar scenarios from moving forward.

Discussion

The subject matter is reminiscent of the personal experience of a man named Jason D (the name has been changed for anonymity). In 2018, Mister D. was a regional manager in a company that provided telecommunications equipment. His particular unit operated in a middle-sized City X covered by three offices that reported directly to Jason. Following the examination of the 2017 statements, the headquarters decided that the combined performance of the City X unit had been sub-optimal. Therefore, the regional manager was assigned the priority task of improving the net revenues of his area by 20% in 2018 with an additional 10% increase in 2019. Jason D. and his deputies spent a month in intense consultations, attempting to determine the most fitting strategy for this objective. Several options were proposed, including hiring additional sales managers and reworking the monetary motivation system. Ultimately, Mr. D. relied on his vision that stemmed from his experience as a front-line sales expert in the 1990s. As such, he announced a year-long competition for the title of the most efficient office among the three departments in City X.

The idea of this contest was to determine which of the units can yield the most profits by the end of the year. Winners were promised considerable rewards, although the precise nature of the remuneration was not specified. As per the recounts shared by Mr. D. in a personal conversation, he expected the prospects of rewards to motivate each unit to reach a new level of performance. Ideally, they would have worked hard to attract new clients and sell better equipment packages to raise the total revenues of the regional unit. In reality, the ambiguity of these prospects and the overall competitive spirit yielded opposite results. Throughout the competition, Jason D. and his deputies held monthly update meetings to check the progress and motivate each unit. However, instead of instilling positive competitiveness, the management tried to motivate their followers by constant comparison to others. The usual rhetoric was to highlight the flaws within a particular office and emphasize the fact that other departments were performing much better.

Ultimately, the competition was not in good faith, as the offices attempted to seal the victory by undermining others rather than focusing on their objectives. Throughout the year 2018, there was an increased prevalence of whistleblowing and anonymous complaints of other workers actions. Furthermore, sales managers attempted to steal clients from each other rather than expand the overall customer base. Aggravated by constant comparisons and reprimands, front-line employees and supervisors felt insecure, which caused record-high turnover within Jason D.s regional zone. In the end, the performance declined even further, and the expected net profit increase of 20% became a decrease of 11% in reality. In the end, Jason D. was asked to resign by the head office.

Leadership Decision Analysis

The examined case is a vivid example of how a manager makes an individual decision that proves to be flawed. Despite the variety of choices, Jason D. opted for intense competition between different offices which only resulted in unhealthy rivalry between employees. The key fallacy of this decision-making process consisted of the wrong motivation that had been placed within its core. Jason D. expected an intra-unit competition to spark the motivation of each employee and supervisor by engaging them in a contest. His message was a call to prove that some of the workers were better than their colleagues in an adjacent district of City X. Mr. D. did not account for the fact that this mission can be accomplished not only by improving ones performance but also by undermining others. The teams started a competition in bad faith, which lowered the morale of the staff once their workplace environment turned hostile. His methods proved to be too aggressive and inconsiderate, compromising the performance of the whole branch and causing the highest turnover rate in the history of the brand.

Flawed Execution of a Positive Idea

First of all, it is important to note that the overarching idea in this scenario was a positive one. In other words, Jason D. by no means intended to cause any negativity among his subordinates or lower the net revenues of his branch. All he wanted was to provide his followers with an incentive to work harder than they had in the previous year. This represents a case of inconsistency between theoretical reasoning and practical execution. Sowell (1996) discusses at length the social implications of important decisions. In complex environments, such as todays business landscape, decision-makers should account for both economic and social perspectives. The former is explained in fiscal terms and is usually prioritized due to the nature of commercial activities. However, this priority often comes at the expense of completely neglecting the social side of the matter. Effective decisions are expected to be politically correct and non-offensive, aligning with the values accepted by the stakeholder community. Otherwise, a flawed societal vision will undermine all efforts made in the economic domain.

Jason D. fell victim to the excessive emphasis on the financial aspect of the decision. More precisely, he was driven solely by his subjective understanding of the subject matter. In his vision, Mr. D. executed his reasoning in the form of numbers that were expected to grow following the efforts made by the workers. By doing so, he did not consider that the envisaged plan did not meet the value criteria of a specific community, which was the personnel of the three offices in its vast majority. He wanted to ensure motivation, but he did not understand that people sought a different form of it. This way, an otherwise positive idea that could have benefited the entire company failed dramatically.

Mindlessness

Flaws in the managerial decision-making process often originate from a common problem known as mindlessness. Hyman (2002) refers to this concept as a failure to recognize changes in the environment and [ones] reliance on old habits (p. 3). Spoken differently, the issue consists of a managers inclination to follow their subjective experiences rather than objective data. The name of the concept is related to being mindful about a situation, viewing it from different sides, and accounting for the possible implications of it. By doing so, the manager begins by theoretically applying the envisaged plan and considering all scenarios. In the case of mindlessness, even though this theoretic reasoning may be present, it is usually limited to one possible scenario that relies fully on the leaders subjective experience. If a certain solution once worked in the past, a mindless leader will automatically extrapolate the outcome to all similar situations. They do not consider the objective differences in values and incentives, as well as evident generation gaps.

As mentioned earlier, Jason D.s time as a front-line sales manager passed in the 1990s and in a different company. During this period, he often encountered similar situations, in which his supervisors tried to foster aggressive competitiveness within units. He recounts having a regularly updated leaderboard that was updated at the end of each week. Then, leaders were praised and those at the bottom of the scoreboard were overtly laughed at on the verge of humiliation. For Jason, such experiences were motivating, and he worked harder than ever if he ever lost his position on top of the list. Nevertheless, there is no guarantee that similar feelings were common in the 1990s or 2018. Even though Mr. D. felt an impetus to work harder under such pressure, others deemed this environment highly stressful. Thus, the expected outcome of the decision was a mindless one, as it did not account for the response of the personnel.

Book Smart versus Street Smart in the Workplace

In many situations of flawed decision-making, there are serious inconsistencies between theory and practice. Under such circumstances, leaders tend to minimize the projected transformations that occur during the plans transition from the theoretical domain into the practical one. Wagner (2002) introduces the problem that occurs when a clash between book smart and street smart decision-making occurs. In the first case, preference is given to strict academic knowledge, also known as rational management. This concept views a decision-making issue as a logical one that precisely follows commonly accepted theoretical frameworks. In this case, there is an expected book standard that the manager expects to see as an outcome of their decision. Furthermore, this standard is deemed the only correct state of the issue, and all deviations are treated as aberrations. The discrepancy prompts the leader to be defensive and make impulse decisions in an attempt to return to the optimal course.

Jason D.s decision launched a process that encompassed the entire year of 2018. Furthermore, he received regular updates and communicated with the team every month. In other words, there was a sufficient period to identify the problems in development before they result in major losses incurred at the end of the fiscal year. For example, after the first few months after the competition took effect, the first turnover intentions appeared. Once the first employees grew tired of aggressive competitiveness and stress, they expressed their desire to leave the company. This could have served as a sign to Jason D. that his decision was not working as intended. Yet, his book smart stance interpreted these indications as a deviation from the golden standard. He saw turnover and complaints as a temporary aberration whereas the optimal outcome appeared inevitable. In the end, the problems persisted, ending in a total failure of the plan.

The Fallacy of Division

In complex decision-making situations, various fallacies are fairly common. One of them is the fallacy of division, also referred to as the part-whole fallacy. According to Grigorenko and Lockery (2002), it occurs when people reason that what is true of the whole is necessarily true of each part of the whole (p. 167). In todays society, such cases are rather common, becoming a cause for misunderstandings and conflicts. In a way, this fallacy represents a clash between subjective experiences and objective knowledge. This tendency is largely similar to the instances of mindlessness when, for example, one successful implementation of a technique in the past is interpreted as its universal and comprehensive applicability. As a result, managers are hesitant to become open-minded to new solutions and stay loyal to past experiences amid a changeable business environment.

The fallacy of division was partially present in the situation encountered by Jason D. More specifically, based on his prior experience, he thought that his views reflect the perspective of the majority. By his own account, Mr. D. is a competitive person who enjoys contests and performs well under pressure. The prospects of hostility are not daunting for him, and he takes such scenarios as a motivation to show other participants that he is better. Driven by these feelings and memories of his early career, Jason inferred that all front-line managers and supervisors today will accept his initiatives similarly. Thus, the fallacy of division occurred, causing stress and conflicts within all three offices and ultimately making their performance deteriorate.

Managerial Decision-Making Biases

The overall lack of critical thinking in a particular situation makes managers susceptible to biases. These ideas are covered in the discussion provided by Wagner (2002). Acquisition biases describe a situation, in which managers process the influx of data in a non-objective way. For example, if a leader expects to obtain particular findings, they will focus on the data that supports their initial assumption. As a result, any presence of conflicting reports will be disregarded in the process of decision-making. Next, processing biases take effect, often preventing managers from updating their stance even when new elaborations are provided. Thus, they choose to maintain the initial course even when new details suggest otherwise. In terms of response to dilemmas, biased leaders remain prone to engage in wishful thinking, exaggerating the probability of an outcome they expect, in particular.

In the described scenario, Jason D. fell under the influence of managerial biases at all stages of the plan implementation. First, during the acquisition phase, he followed his initial assumptions that front-line employees require a competitive contest to improve their productivity. Despite his deputies suggestions, Mr. D. seized the concept of an incentive and interpreted it in a way that fits his reasoning. Then, the first signs of the plans detrimental effect emerged as the employees began to report a poorer workplace atmosphere and some of them left the company. In light of the new details, Jason refused to alter his plan and insisted on its full completion by the end of the fiscal year. He was guided by his wishful thinking, taking occasional performance increases of individual sales managers are a sign of impending success.

Lack of Reflection-in-Action

The concept of reflection-in-action is inherently related to some of the concepts listed above. Wagner (2002) notes that managerial issues are turbulent and interconnected, which implies that rationalist, book smart methods are of limited use. Such techniques imply a pre-determined action plan with fixed efficiency that will gradually bring the team closer to success with each step. Therefore, a certain degree of intuitive response to issues and dilemmas is required. Reflection-in-action suggests that effective leaders should take a moment to reflect upon their actions in light of coming updates. The absence of this quality leads to a tendency to cling to the initial assumptions, avoiding any instances of reflection.

This is exactly what happened to Jason D. who failed to reflect upon his plan of action. When faced to improve the performance of the three offices that reported to him, Mr. D. designed a specific framework of action. Then, he insisted on implementing his ideas to the latter, even though there was evidence against them. Some of his advisors objected to the proposed model from day one, and the growing stress within the teams suggested that not everything was going as planned. Yet, he failed to reflect upon the situation until the end. Had Jason chosen to reconsider the plan in light of new evidence, the outcome could have been drastically different.

Conclusion

As a regional manager of a telecom equipment company, Jason D. was faced to improve the net sales of his three local offices by 20% within one fiscal year. To address this issue, Mr. D. launched a contest to determine the best-performing office among the three departments. However, the conditions of this competition were rather stressful and aggressive, as followers found Jasons approach to motivation demeaning and unnecessarily harsh. The reason is that Mr. D. fell victim to a series of decision-making biases and fallacies that ultimately prevented him from making an informed decision that would align with the values and expectations of his subordinates. In the end, the prevalence of aggressiveness and criticism was exhausting for most of the team. Instead of performance growth, the net sales declined when contestants started undermining one another, also contributing to record-high turnover.

From a personal perspective, such examinations are useful for future professional practices. Todays business environment is complex, possessing multiple interrelated elements. When making a decision, it is essential to consider as many factors as possible. No leader is perfect, and a certain presence of fallacies is likely at some point. Nevertheless, it is in a managers best interests to remain mindful and considerate about each decision. In light of this information, I have understood the value of reflection and dialog within major team projects. I expect to remain loyal to these principles of mindful decision-making, per which leaders stay open-minded and agile.

References

Grigorenko, E. L., & Lockery, D. (2002). Smart is as stupid does: Exploring bases of erroneous reasoning of smart people regarding learning and other disabilities. In R. J. Steinberg (Ed.). Why smart people can be so stupid (1^st ed.). Yale University Press

Hyman, R. (2002). Smart people doing dumb things: The case of managerial incompetence. In R. J. Steinberg (Ed.). Why smart people can be so stupid (1^st ed.). Yale University Press

Sowell, Thomas. (1996). Knowledge and decisions (1^st ed.). Basic Books.

Wagner, R. K. (2002). Why and when are smart people stupid? In R. J. Steinberg (Ed.). Why smart people can be so stupid (1^st ed.). Yale University Press

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