This article was first published in the April 2019 International edition of Accounting and Business magazine.

Decision-making is an essential aspect of our lives. On average we make more than 30,000 choices every day. Furthermore, our decisions are often scrutinised by ourselves or others, and our professional and personal achievements frequently depend on the effectiveness of our judgments.

Working in a finance-related role requires sound, logical decisions to be made. In most instances, we believe that our decisions are logical, driven through the application of rules, consideration of the facts and careful reasoning. But this becomes more complex when more than one solution exists, or the decision to be made is not ‘black or white’. We are most likely to encounter these complexities when managing and leading others, or when making decisions that directly affect people (including ourselves).

Head versus heart

The information that helps us to make our many daily decisions is initially processed in an area of our brain that deals with emotions rather than logic. This is primarily to ensure that the information received does not relate to immediate danger, during which the need for logic becomes redundant – a swift decision is required, based on our natural flight, fight or freeze response.

Hopefully, the majority of our daily decisions aren’t quite so ‘life and death’, but sometimes our brains confuse the information we receive and invoke an emotional, irrational response anyhow. When this occurs, our ability to think logically is significantly hampered, and our actions are driven by our hearts not our heads – an ‘emotional hijack’.

Regardless of whether we experience a ‘hijack’ or not, we are likely to be influenced by our emotions, particularly when making more complex or ambiguous decisions. On these occasions, we may convince ourselves (and others) that our choices are purely logical and without emotion. However, when this happens, we undertake a neurological activity known as post-rationalisation – ie we find logical reasons for why our emotional choice was the ‘right’ thing to do.

We’re all individuals

For those of us with good emotional control and awareness, another set of challenges awaits – our own belief systems, cognitive biases and assumptions. All of us view the information presented to us in different ways, based on our own beliefs and the assumptions we make. This explains to some extent why we can form different conclusions based on the same information; although we may adopt a logical approach to assessing the information we see, hear and feel, we unconsciously use our own beliefs to determine our actions and decisions.

A simple example of how we use our beliefs and assumptions relates to our interaction with others. When meeting someone for the first time, we quickly form a view of the individual, based on what the other person says or does not say, their actions (or lack of), and what we believe or assume about this individual.

This explains why we can perform a rapid ‘assessment’ of an individual during a job interview (usually within the first 10 seconds) without asking the candidate a single question.

Confirmation bias

To make matters worse, the information is quickly processed by our brain and is subject to a naturally occurring event called confirmation bias. In other words, we seek evidence to support our beliefs and assumptions, and unconsciously ignore information that may suggest our view is incorrect. In such instances, we can find ourselves or others presenting a range of arguments that make perfect sense, and will sternly defend their perspective on matters.

Making logical decisions is an important part of our professional and personal lives. Improving our awareness of factors that could impact our ability to make such decisions could assist us in challenging such choices in the future.

Ben Rawal FCCA is lead consultant at Aspire Consulting Solutions.