Good leaders and decision-makers maintain a healthy skepticism of cause-and-effect relationships.
Not because they don’t believe they exist, but because they know how truly rare they are, especially when it comes to explaining behavior, performance, and outcomes.
Smart decision-makers know the social world is far too complex to offer up simple and clean explanations where one variable directly leads to a change in another variable.
When it comes to human connections, it is far more likely that multiple variables or elements conspire to influence how change occurs.
Any time two or more elements or variables tend to change together, either positively or negatively, they are correlated.
Correlations assist in decision-making but require a lot more attention than do causal relationships.
In looking for solutions, understanding how various elements influence one another offers a guide — but not a direct path — for making change or decisions. In many cases, decision-makers can’t explain why elements are related, making conclusions even harder to reach.
For example, the correlation between talent retention and compensation is known to be strong. The more a team member is compensated, the more likely they are to stay in their seat.
However, the relationship between compensation and retention is moderated by several other factors, such as market conditions, other reward and incentive structures, the relational closeness or lack of it with the direct manager, task and assignment diversity, pathways toward promotion, and many other influences.
Yet, leaders are highly tempted to view that relationship as causal. Not because they are lazy, but because they are efficient thinkers. Falsely presuming that compensation and retention are cause-and-effect makes decisions about how to improve or sustain retention so much easier, even though it misses the mark.
In their pursuit of answers, leaders often seek causal explanations for related events even when they don’t exist. Any time leaders observe two things happening together, it is easy to conclude one must be causing the other. Finding cause-and-effect relationships makes fixing problems and creating change so much more straightforward.
The best leaders, however, recognize that confusing correlation with causation leads to flawed conclusions and ineffective solutions, so they guard against it.
They begin the decision-making process with the assumption that whatever is presented as causal is likely not true. And then work from there.
They look for moderating elements that influence the relationship between variables under examination, and just when they believe they have the complete list, they look for more.
In the social world, there are nearly always multiple causes to any effect. Finding the correlates and explaining their relationships is what sound decision-making is all about.
Good leaders never mistake a correlation for a cause.
