Humans are emotional beings. Our emotional state influences all aspects of our life, our relationships, our performance, and our decision-making abilities. We cannot close down our emotions, but we can learn from them, and regulate them to our advantage.
As a leader, you are constantly faced with investment decisions – how to apply resources and assets to meet your corporate objectives.
Emotions come into play in those investments decisions – whether you are aware of it or not.
How Leaders Make Investment Decisions
We invest in things we hope to gain some desired outcome from – whether that be financial profit or some other strategic benefit. When we invest, we also try to do so with the lowest possible risk. In making this decision, we combine information, intuition, managed risk and a dose of luck.
Sounds simple, but the combinations are quite complex for the brain to compute. So it tends to come up with a satisficing solution, and then stop processing options further.
Leaders are trained in all kinds of rational decision making models – and many will claim that they make rational decisions with no emotional involvement. But this is not necessarily true. Particularly in volatile environments, we need imagination and intuition. They help support our motivation to increase gain whilst minimising risk. Businesses operate in multidimensional markets, and with any political and economic market, major events can happen overnight. Fear or loss, hope of gain are both constant emotions in the life of a leader, and these emotions can both help, and damage your rational decision-making process.
Do Emotions Matter in Leadership Decisions?
The simple answer is “Yes”, but you can control how they matter.
Our emotions are just electrical signals – and in making tough decisions they can be powerful signals as to what values underlie our decisions. Emotions provide an opportunity for us to interrogate ourselves as to why we feel the way we do about something. This self-assessment can guide us to a greater awareness of what influences us one way or the other when we make decisions.
No good leader should ever pride themselves on being able to shut human emotions out of their decision making – rather, they should be investing time and energy into gaining insight into their emotions, and what role they play in their decision making.
Emotions such as fear, hope, and confidence can lead us to caution or recklessness, steadfastness or creativity, fast or slower decisions. Our emotions greatly influence our results.
Once we learn to recognise our emotions, and what is underneath them, we can gain the ability to focus our emotions to enhance our decision-making process.
Emotions that Derail Decisions
There are some emotions that have the power to completely derail decisions.
Blind optimism – when things get too complicated or uncertain we can tend to shut down and let blind optimism take over.
Unfounded optimism – optimism can be an asset when it is backed up by strong evidence. However, unfounded optimism can lead to irrational decisions.
Paralyzing fear – can lead us to lengthy procrastination, preventing us from making decisions, which can irreversibly affect the results and gains of businesses.
Fear of loss – whilst it is prudent to try to minimise risks, you should never allow fear to stop you from taking action. Growth, and profit, can only come from taking chances on opportunities.
Uncertainty – can damage the quality of the decision. You should never second guess a decision you have made, as uncertainty towards your own abilities will lead to an array of highly damaging emotions such as insecurity and low self-esteem.
Insecurity – is a natural emotion for leaders. You are making major decisions that can have lasting financial impact on both the company, its shareholders, and those who work in it. Emotional insecurity is caused by the uncertain aspect of a specific market, and can easily become destructive. The greater the degree of uncertainty, the greater the degree of insecurity. This can lead to being overly cautious, and avoiding decision – leading to missed opportunities that are essential for growth.
Low Self-Esteem – is always a tricky emotion as it can both wrap itself around other emotions or hide within them. The perception you have of yourself deeply affects any activity you perform, not just decision making. All leaders base their decisions on a combination of knowledge and intuition. If you don’t trust yourself with making the best possible decisions, you limit your chances of becoming a successful leader. Therefore, low self-esteem should be addressed with compassionate coaching and/or EQ development.
Conclusion
None of us are immune to emotions – they are a natural response of brain function. They impact our decisions and our behaviour. To rise to greater heights as a leader, you need to be able to identify and eliminate those emotions that can lead to either lack of action or irrational decision making. By analysing your emotions, you will learn what powers them up; what triggers set them off. Only then can we have the courage to take advantage of the opportunities we encounter.
Author: Gail La Grouw. Insight Mastery Program Director, and Strategic Performance Consultant for Coded Vision Ltd.
