Errors Of Judgment

Judy Olian

(Judy Olian is Dean of Penn State's Smeal College of Business and a leading expert in strategic human resources management.)

Sometimes perfectly reasonable people make terrible errors of judgment, with disastrous outcomes. Here are a few major misjudgments that have had serious consequences.

• Cardinal Law's failure to address pedophilia charges in his Boston archdiocese, leading to his forced resignation;
• Jack Welch's extracurricular flirtations, spiraling into questions about, and subsequent withdrawal of his General Electric luxury retirement package;
• The Air Force Academy commandant's decision to suppress allegations of sexual abuse within the Academy, resulting in a change in leadership at the Academy;
• Lloyd Ward's decision to steer Olympic Games business towards his brother, leading to his ouster as Chief Executive of the U.S. Olympic Committee;
• Peter Arnett's choice to appear on official Iraqi TV and support Iraq's battle successes. He was later fired from his NBC and MSNBC job as war correspondent;
• Trent Lott's effusive praise for Strom Thurmond at his 100th birthday including reference to Thurmond's segregation record, later costing Lott the Republican leadership;
• Senior executives' decisions at Anderson to shred critical documents in the Enron case, spiraling toward the complete demise of an illustrious public accounting firm.

There are, of course, people who are decision-making clods, constitutionally incapable of making smart decisions. But we're not talking about them. It's executives and leaders who have a string of successes behind them, years of experience, admiration of their peers, that astound us when they commit the most egregious errors of judgment.

A primary reason behind these grave missteps is that these executives surround themselves with 'yes' men and women who reinforce the self-centered thinking of the boss. When the boss is also blessed with a high level of self-confidence or even hubris, there's no stopping him or her.

To counter their natural sycophantic tendencies, subordinates have to be emboldened by the boss to challenge and confront with questions like:

• do you realize how this might be construed by others?
• why not pursue other options that might carry less risk?
• are you prepared to deal with total failure of this gamble?
• are you willing to sacrifice your reputation on this?
• does this sit with your core values or, said differently, can you look into your kids' eyes and defend this action?

How many subordinates are secure enough, and empowered by their boss, to ask these questions without being shot as the messenger? It's essential to establish a cadre of trusted advisors who are expected to say no, to challenge, to question, to delay, in the interest of doing the right thing.

There's also a false sense of security at the top, believing that actions at the executive level can be protected and remain strictly private. But that's rarely true, with internal leaks being the norm rather than the exception. Executives must operate as if everything about them is public; that their actions and decisions must pass the public smell test in case they go public, and that includes many aspects of their private lives.

When leaders assume that problems are invisible outside the executive suite, errors in judgment become institutionalized. At the Air Force Academy, decisions by the top brass not to prosecute sexual abuse cases ultimately reinforced a culture that accepted sexual crimes at the Academy. Similarly, Anderson's shredding of documents led to other forms of obstruction of justice within the firm, a climate of permissiveness towards the worst behavior.

Errors of judgment are sometimes a product of executives' trail blazing careers. They've developed a swash buckling 'can do' attitude, succeeding because of their risk taking and behavior on the edge, and they've made a career out of doing things that others couldn't, or wouldn't do. In some instances, they revel in excessive risk taking and overly-spontaneous behavior. Think professional sports where some athletes have lost touch with the code of behavior and ethics that apply to the rest of us. They've been treated as star quality for their entire lives, and have had little experience with restraint.

There's nothing that can take the place of an internal moral code that delineates right from wrong and is embedded within the executive's psyche regardless of rank, success, or fame. Whether in the executive suite or on the assembly line, an inner sense of "true north" helps steer judgments to where they ought to be.

And the best lesson? Actually, it's making errors of judgment and then learning from them, with humility.