Making Business Decisions Based on Emotions

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Twenty years ago I attended a “family business counseling meeting” that was conducted by Jim Walsh, Psychologist, who worked for IBM. At the meeting he described how emotional feelings affect people’s business decisions.  

  • The people who have an “amiable personality” have difficulty laying off employees because they are concerned about how they will make a living, pay the kids’ college tuition, and the pets’ veterinary bills.
  • The people who have the “business manager personality,” are only concerned with ‘bottom line profit’ not the human factor. 

Jim told the group participants that between the two above personality types lies the “golden path” that we need to take when we are forced to face the unpleasant decision of letting employees go. 

At the end of his lecture Jim shared with the group his own insecurity saying, “when I look for a parking spot, I end up circling around the block for 30 minutes. Not finding one, I finally give up and end up using a pay parking lot. When I drive with my brother, he tells me that he will find a parking spot right away. Sure enough, he does. Instead of going to graduate school, my brother established his business. Now he is a millionaire and I am a PhD Psychologist working for IBM.”

Making Major Business Decisions

Having the “amiable personality” affected my business decisions when I had a consulting firm for 25 years. When I had to lay off employees who did not perform, I couldn’t bring myself to do it and I always gave myself excuses about why I should give them another chance. It resulted in tolerating my business partner for 20 years, who believed that our business was a source of high income without having to work hard.  

Despite the fact that I knew I should end the partnership; I couldn’t bring myself to do it feeling that we were ‘close friends.’ In 2000, when I finally realized that we had accumulated a substantial amount of debt, he suggested we should declare chapter 11. Facing this bitter reality, I told him that after working on a hand-shake for 25 years, I planned to pay the company debt without settlements, and we should part ways as friends. 

It was a difficult decision to break the partnership and assume all the debts. Our accountant and lawyer, who both disagreed with me, asked why I was doing it. My response was that my ex-partner was broke despite the high income we had and I didn’t want him to lose his home. My decision resulted in a long stressful six year ‘road’ paying back all the debts without lawyers, courts or settlements. When September/11 occurred, my ex-partner did not bother to call and find out how my wife and I were doing despite the fact that he knew that we lived in Greenwich Village, only 2 miles away from “Ground Zero.”

Making the Right Decision

After I finished paying the company debts, I attended an eleven-day photography workshop in Alaska’s Inner Pass on a fifty-foot boat. Looking at the magnificent scenery of glaciers and wild life, I discussed my conflicts about changing my business model with our photography teacher who in her ‘other life’ was a psychologist treating women with terminal breast cancer and the boat captain who in his ‘other life’ was head of a biology faculty in a well-known university. Hearing their stories forced me to face the reality that I must change my business model and let go of my employees who followed my ex-partner’s ‘footsteps’ getting paid $100,000 per year and doing me a favor working. The transition to my new business model created an ‘emotional rollercoaster.’ For the next six months I kept asking myself if I had made the right decision not knowing what the future would bring. Today, looking back, I realize it was one of the best decision I made.

The Amiable Personality Case Study

Being the Trusted Advisor, I often meet my clients and prospects for lunch or dinner and they discuss their various issues with me that are not always related to business. When I had my monthly lunch with one of my favorite clients, he told me that his office manager, who has been with him for the past 30 years, had developed Multiple Sclerosis and was in a very advanced stage. His Business Coach, who was the ex-president of an international company’s division, advised him that he must retire his employee. My client had difficulty forcing her into early retirement and told me, “She has been with me since she graduated from high school. When I told my Business Coach that the job was her whole life, his response was, ‘you can’t let your emotions interfere with your business judgments.’” Next, my client asked me what I would have done if I were in his position. I reminded him of the issue I had had with my ex-partner’s work habits and having to assume the company debts against my lawyer and accountant’s advice, and told him that I was the last person to give advice on such matters. Next, I told him that he ‘needs to sleep with himself at night and look in the mirror in the morning when he shaves.’ My client, who has the “amiable personality,” did not follow his ‘Business Coach’s’ advice and let his employee continue to work. Years passed by and the employee, whose condition drastically deteriorated but got around in a wheel chair, was still working for my client while his ‘Business Coach’ gave up discussing this matter with him.

Conclusion:

Not making the right decisions because of personal guilt feelings often results in an emotional roller-coaster. Many people stay in unhappy relationships or keep employees they should lay off because they can’t overcome their guilt feelings. We have to live with ourselves and bear the burden of the emotional roller-coaster that results from our decisions in order to find the ‘golden path’ balancing our principles with our reality.

About SMC & Dani Kaplan:

Since 1980, Dani Kaplan has worked with manufacturers, distributors food distributors and food processors as the trusted advisor helping them lower their operating costs, stream line their operation and control the inventory.

Dani can be reached via SMC – http://www.smcdata.com/contact