Ram Charan What Every Company Should Know

When it comes to making decisions about people, don't believe only what you see.

Patrick is a whiz at financial analysis, can spot market trends others overlook, is a gifted presenter, and is a true team player who builds great working relationships with senior leaders as well as his peers.

But despite his many skills and talents as a leader, Patrick's never been good at making decisions about people.

Three Strikes

First there was Lynn, who gave a fantastic R&D presentation to the operating committee. She was the logical person to put in charge of the new product launch. How could Patrick have predicted that she would miss important deadlines, costing the company millions of dollars in lost sales?

Then there was Chris. He was always so tenacious during the wrangling over budgets. Why wouldn't he have been the right choice to negotiate a new contract with a major supplier? He seemed like he could get favorable terms, but in the end he failed to get a deal done at all.

And finally there was Andrea, who never stood out as a star performer. She must have been holding back and not giving 100 percent -- until she went to work for the company's main competitor and her career really took off. How could Patrick have possibly known about her hidden potential?

The truth is that in all of these instances, Patrick had trusted only what he saw with his own eyes and felt in his own gut to guide his people decisions. And in each case, he made the wrong call.

Costly People Mistakes

Judgments like the ones Patrick needed to make (and made poorly) about each of these individuals are among the most crucial that leaders face. It's not overstatement to say that leaders can destroy careers -- especially their own -- through bad decisions about people.

That's why to minimize the risks associated with critical people decisions, it's important to develop your people-judgment know-how. Seeking out the complete truth about an individual's ability or potential is a good start.

It's not hard to understand how otherwise competent leaders such as Patrick make flawed people decisions. They see an individual doing something well -- or something poorly -- and interpret it as microcosmic evidence of the person's full ability.

The Trap of Human Assumptions

Here are other ways leaders can make flawed people decisions:

• They see a midlevel leader give a rousing speech to a group of his peers -- and mistakenly assume that he's a motivator who can drive people to perform at a high level on a daily basis.

• They read a sound strategic plan -- and conclude that its lead author has what it takes to execute that plan.

• They identify an unproven leader they feel they can trust, based on a handful of positive interactions -- and blindly entrust her with the success of an important organizational initiative.

• They see a leader gamble big on the success of a new product that sells poorly once it hits the market -- and lose confidence in his competence as a leader.

Leaders are human, which is why they fall prey to these very human assumptions that often turn out to be wrong. The person who makes motivating speeches might also avoid the kind of disciplined follow-through required to gets things done.

Likewise, the leader who makes a costly mistake might be the only risk-taker in the bunch, and the only hope the company has to reverse its slumping fortunes.

Bad Judgment Means Built-In Failure

Given the tremendous demands on leaders today and their limited time, it seems almost inevitable that many judgments of people will miss the mark. But decisions about an organization's people are simply too important to base on incomplete or entirely impressionistic information.

I've seen firsthand many examples of leaders who were thought to be "perfect for the job," but who instead failed miserably. In each instance, had those charged with making the hiring decision done their due diligence in gathering the right facts and objectively considering them in the proper context, the individual would never have been placed in the role in the first place -- and would have, therefore, not been set up to fail.

The truth about an individual may not be readily apparent or easily revealed, but that doesn't mean it'll prove elusive. Getting to the truth about an individual is a matter of moving beyond your own psychological blocks or the snap conclusions you might reach.

Getting to the Truth

Making well-informed judgments of people requires doing the following:

• Bringing together multiple perspectives and pieces of information.

Your exposure to a person's true abilities and talents will be limited. For instance, the only opportunity to actually see a manager in action might be within the confines of a standing task force meeting. Or maybe you're aware of only one of the person's skill sets, such as seeing the reports he generates or his ability to placate an irate customer.

But others, whom you need to seek out, will likely have had different experiences and interactions with the person. They'll also have observed behaviors and had access to information that falls beyond what you've seen and learned on your own.

• Developing and applying a rigorous process.

In reaching out to others who can provide insight and information you lack, you need to ask probing questions and objectively drill down to test assumptions and inferences. You need to gather relevant facts and evidence on which sound conclusions can be based.

What was her actual role in that major change initiative? What factors contributed to his doubling his business unit's revenues last year? Why exactly was she ineffective in leading that South American marketing initiative? Management loves him, but what do his peers think of him? Answers to such questions are telling -- and leaders who are good at making people decisions make a habit of asking them.

• Remembering that no one is perfect.

If you've gone about your information-gathering the right way, you'll find that every person has shortcomings that may cause you to question her potential to progress. You can make the person aware of those weaknesses, but don't expect to eliminate them completely.

Focus instead on the person's true abilities and natural talents and make hiring, promotion, or deployment decisions based on where those talents will flourish. You'll be amazed by how much energy is released when the person's natural strengths are identified and matched to a job or task.

Keeping on Track

As a leader, you have an obligation to get to the truth of a person, for the sake of the individual and your own career. You need to work at it and improve.

Otherwise, while you may occasionally get lucky, your uninformed decisions will limit your effectiveness and may even place your career -- and your company -- on a slippery slope.