Harvey Mackay: Good judgment is an essential business skill

A young banker asked a retiring banker what the secret of success was in banking, to which the older banker responded, "Good judgment."

The rookie then said, "How do you get good judgment?"

The older banker said, "Experience."

To which the youngster asked, "How do you get experience?"

And the retiring banker said, "Bad judgment."

Anyone who has ever been in business can identify with that story.

As a business leader and parent, the one attribute that I value most is a person's good judgment. Judgment is the result of a person's decisionmaking. When your values are clear, making decisions becomes much easier.

"In the face of ambiguity, uncertainty and conflicting demands, often under great time pressure, leaders must make decisions and take effective actions to assure the survival and success of their organizations," said leadership expert Warren Bennis. "This is how leaders add value to their organizations. They lead them to success by exercising good judgment, by making smart calls when especially difficult and complicated decisions simply must be made, and then ensuring that they are well-executed."

A variety of challenges confront leaders and team members every day: budgets, mistakes, delays, staffing, conflicts, safety, profits. All call for making decisions that can affect an organization's future.

What are the skills you need to improve your judgment?

In addition to those skills, John Spacey, writing on Simplicable.com, emphasizes the need for pragmatism and situational awareness. Accepting "difficult real-world conditions such as uncertainty, gray areas and imperfections" is a must for making sensible and sound decisions. Equally important is the "ability to be highly observant and diligent to respond to fast-moving situations," he writes.

Here's another story to illustrate my point. A business owner who was nearing retirement invested her life savings in a business enterprise that had been elaborately explained to her by a swindler.

"Oh, yes," said the businesswoman, sadly. "I've always known about you. But I didn't come, because I was afraid you'd tell me not to do it."

It's a sad story we've heard over and over again. Too bad her judgment didn't lead her to ask questions that she might have asked about the proposed investment. Simple but necessary questions could have saved her a life of regret.

Mackay's Moral: Judgment is knowing which door to open when opportunity knocks.