The best way to paralyze your team is to assess their ability to make decisions based on the outcome of any one choice they made. I have seen this often enough in performance review meetings: “I chose to reduce their performance rating because of this instance of a terrible decision they made.” This is an example of short-sighted leadership.
There is a difference between making the correct decision vs. making the right decision in hindsight. To assess someone’s decision-making capacity, a strong manager evaluates the process that led to the choice made, not its outcome. Is the person able to justify their choice? If, at that point in time, the decision process was sound and the choice rational, this was the correct decision, regardless of the outcome. We all need to make decisions under uncertainty. Punishing a bad turn of fate artificially tilts the balance against taking risks and leads to a team wanting to reduce that risk past the point of positive return. One way to detect this is when the team is very indecisive on what investments to make, even though they have a clear objective.
That being said, outcomes are important. If someone has a sustained tendency of making the wrong choice, their decision-making process needs to be debugged (and it may be worthy of a ding on their performance). That is why while I’m against punishing people for making the wrong choices unless you collect a lot of evidence, I’m a proponent of promotions requiring to have a demonstrated track record of being able to make the right bets in the long run. This way, it signals that it’s okay to make mistakes and take risks while still rewarding positive outcomes in the long-term.
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