Few Ceos Have HR Background

Not understanding that very few CEOs have a HR background. This means that most CEOs have a technical, facts, figures, etc focus rather than people focus.

. Need to understand that most decision-makers who are expecting to have their decisions scrutinised with hindsight (and malpractice litigation) are driven to bureaucratic solutions and are extremely reluctant to take risks. They are overcautious in their procedures, ie

"...hindsight and outcome bias generally foster risk aversion..."

Daniel Kahneman 2012

Focusing on routine functions of the brain

"...makes us see the world as more tidy, simple, predictable, and coherent than it really is. The illusion that one has understood the past feeds to further the illusion that one can predict and control the future. They reduce the anxiety that we would experience if we allowed ourselves to fully acknowledge the uncertainties of existence. We all have a need for the reassuring message that actions have appropriate consequences, and that success will reward wisdom and courage..."

Daniel Kahneman 2012

There is a high correlation (0.30) between a successful firm and the quality of its senior management. Yet follow-up studies on firms studied in management books like "Built to Last"(Jim Collins & Jerry Porras) and "in Search of Excellence"(Tom Peters & Robert H. Waterman) have shown initial performance differences between the different firms disappeared over time, ie regression to the mean.

"...The stories of how businesses rise and fall strike a chord with readers by offering what the human mind needs: a simple message of triumph and failure that identifies clear causes and ignores the inevitability of regression..."

Daniel Kahneman 2012

 

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