Critical Thinking for Business

15.08.2019

Smart-Holding's HR and Organizational Development Director Tatyana Gonchar explains why critical thinking is an essential component today, both in everyday life and in business

What is critical thinking and why is it important?

The information has become fully available recently, thousands of alternative sources to obtain it from have appeared, so an argument that “it was reported in the news” or “I read it from a blogger N” ceases to be airtight. However, at the same time, people’s tendency to rely on their individual perception, on first impression and emotions from the information received has not vanished. This is what psychologist Daniel Kahneman calls “What I See Is All There Is” (the book “Thinking, Fast and Slow”). This is why, in the modern world, it is important not to absorb information trustfully and passively, but rather to analyse it, to question its reliability, to form your own attitude to it, and make an informed decision on that basis. It means possessing critical thinking.

Critical thinking is an ability to see all sides of an issue, to think impartially and independently, to evaluate information objectively, to reason impartially and draw reasonable conclusions, to choose the best possible solution, to identify hidden risks or opportunities.

You should not forget that you need to analyse not only the information that comes from outside, but also your thoughts and beliefs. Perhaps it is you who are mistaken, and the understanding of this will help you avoid mistakes.

In what situations does HR manager need critical thinking?

Critical thinking is needed not only for HR officers, but also for everyone who makes decisions. Today, the most important component of business is human capital. It is human capital that has a direct positive effect on all key business indicators and provides an opportunity for significant growth in profits and capitalization. For example, an IT company having a staff of 180 people with one product developed by 16 determined guys did a business that received a capitalization of USD 20 billion (Slack Technologies, Inc.) on the New York Stock Exchange last June. This is many times more than businesses with hundreds of thousands of employees in steel making or conventional power generation.

Contemporary business models are no longer built based on rigid processes and regulations, on operating with raw materials, on possessing physical assets, but rather on the efficiency of using unlimited potential of a human being. This is similar to comparing a possibility of generating energy by burning the same amount of coal in a steam engine and nuclear fuel in a nuclear power plant: the difference is 90 thousand times!

And if we talk about HR, the transition of this function from a service function to the full-fledged role of a strategic partner and a leader of change is obvious. Previously, an HR officer was expected to carefully execute orders given by the CEO, but now he or she is more and more often initiating serious transformations, is more and more often a co-author of the corporate strategy. Such a role requires not only a qualitatively new level of knowledge, but also critical thinking skills.

Do Ukrainian companies have a demand for critical thinking?

In our traditional sectors, for example, in heavy engineering industry and agriculture, a directive/prescriptive management style is common; therefore, critical thinking of staff is usually not welcome. The employer attempts to regulate the work as much as possible, to drive an employee into the framework of instructions, regulations and charters. When it comes to hazardous production process, this is justified to a certain extent. However, with the development of automation, employees perform fewer and fewer routine operations, while initiative, ability to reflect on their work critically, to analyse the process and offer options for its optimization are more and more demanded from them. Unfortunately, a number of old-school senior managers perceive such employee behaviour as weakening of control over them. If you hear from a senior manager that there are very few good performers today, you are dealing with just this type of manager.

There is a demand in companies with more advanced management style, innovative approaches, where managers want to hear their employees and take their opinions into account when making decisions.

How should an HR officer today be prepared for the way of thinking and behaviour style of the so-called generation Z, who are not interested in just being performers?

Generation Z does not accept strict rules and restrictions. It is difficult to force them to perform routine tasks, to adhere to the established discipline. They strive to come to the result by the shortest way. They are characterized by a clip way of thinking – an ability to perceive and process information in short fragments, without its deep understanding. On the one hand, such thinking meets the demands of the modern world, where instant reaction, an emotion and action are needed, on the other hand, a mosaic and fragmented image is formed, and its brightness and short duration come to the fore. We no longer notice inconsistency and incoherence of information. This leads to incorrect decisions and actions.

A clip way of thinking is characterized by an emotional response, a preference for a visual form of presenting information, and holistic perception. Knowing that in two years, representatives of generation Z will make up 20% of the world's workforce, this needs to be taken into account. Accordingly, training and communication systems in the company should be changed in such a way as to meet new requirements. Messages should be concise. They should be accompanied by visualizations and should arrive at the right time. At the same time, it is important not to forget about critical thinking skills in development programs.

Does it mean that we must constantly think critically?

We cannot constantly think critically. There are not enough brain resources, and there is not enough time. This is especially true for business, where decisions must be taken lightning fast, and new opportunities must be used immediately. We simply have to make many of the decisions intuitively. It is very useful to develop a system of signals – triggers that would trigger and warn you that the situation requires the mobilization of critical abilities. For example, you can study patterns of business manipulation or methods of hidden influence on an interlocutor and learn to recognize them on the fly. In addition, good analytical skills make it easy to build cause-and-effect relations and turn critical thinking on in due time.

There are situations when critical thinking can intervene. If your goal is to establish trusting relationship with an interlocutor, it is necessary to show empathy and eliminate any doubts about his or her sincerity. It is useful to do this in a creative process too, because creating a new thing often requires irrational actions.

How can you develop critical thinking on your own?

The first thing we must learn if we want to think critically is to control our emotions. If you feel that your emotional background in relation to a person or an event is far from neutral, if you feel positive emotions (joy, anticipation) or, conversely, negative ones (fear, anger) – you should know that your ability to think critically is greatly weakened and your reasoning is likely to be insufficiently accurate. We must operate by facts and evidence, so any emotional colouring, whether positive or negative one, will prevent us from thinking with an open mind. In addition, our principles, beliefs, and personal experience might be an additional hindrance.

We must learn to ask questions and clarify a situation. Questions can be varied. It is important not to forget to put questions not only to an interlocutor, but also to yourself. Indeed, critical thinking presupposes an equally impartial view of any standpoint, regardless of who presents it. In addition, it is a recognition of the fact that any perception is subjective, including the perception of a critic shaped by his or her worldview and limited by his or her field of knowledge. A person with undeveloped critical thinking does not question his or her own understanding of the situation and is often unable to change his/her viewpoint. For him/her, any expansion of the context is a threat of losing his/her identity, of losing a stable position in his/her model of the world, that is why he or she can hardly stand any other views and denies them. In addition, he or she is not able to perceive any other points of view easily and with humour. I highly recommend Daniel Kahneman's book on this subject, which I mentioned earlier.

Critical thinking can be developed only by cultivating a habit of performing these actions every time you encounter a challenging situation. Over time, a skill will develop that will help you make optimal decisions.