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Group Decision-Making is Really Hard<\/h3>\n

Whom should we hire, promote or fire? Who should we put on this proposal writing team and what should we propose? I’ve made or participated in such group decisions hundreds of times and I’ve never felt confident in the process or the outcome. Did we come up with the right alternatives, in sufficient number? Did we weigh the alternative outcomes according to their expected costs, benefits and probabilities, relative\u00a0to common values and objectives? Was the process too political, dominated by one extroverted\u00a0or senior individual, or ended arbitrarily?<\/p>\n

Hiring Decisions are Just the Worst<\/h3>\n

At several points in my banking career<\/a>, I ran the process of hiring new analysts, an entry-level position for graduates of elite colleges. We would accumulate hundreds of resumes, select our favorites, do some on-campus interviews. We’d invite\u00a0those candidates that made the cut using a subjective process to our offices to interview with several senior and mid-level bankers. None of us received formal training in interview techniques. The process culminates in a conference room, where we would informally discuss and select the candidates to get job offers.<\/p>\n

How Many Ways Can We Get it Wrong?<\/h3>\n

We never kept statistics on how well these candidates ultimately did, but I’m not confident in our accuracy. At every stage, unconscious bias<\/a> could limit the quality and diversity of candidates. There was little reliable information about the criteria for a successful hire or how to measure each candidate against those criteria. In the final selection meeting, there were usually one or two people with strong opinions and many who deferred or kept quiet. I’ll never forget the one hire who was perfect on paper and perfect in interviews: but quit the firm after three weeks. This person\u00a0reminded us of previously successful hires (availability heuristic<\/a>), the sunk cost fallacy<\/a> made us loath to keep looking for candidates and groupthink<\/a> made it hard to challenge the consensus.<\/p>\n

Decision Analysis to the Rescue!<\/h3>\n

Our hiring of this person was a clear failure of group decision-making. A bit more structure would have helped reduce complacency, encourage the participation of everyone, surface conflicting views, get everyone invested and improve the quality of our decision. Two of my favorite processes are:<\/p>\n