What is the most important decision you have ever made? It might have been choosing your romantic partner, selecting your school, or deciding upon your career. How did you make that decision? Whatever process you applied – consciously or otherwise – to your choice, that decision was informed by your personal values. This is what values-based decision-making or principle-based decision-making is all about; understanding how our precepts and beliefs inform our judgements.

Why is values-based decision-making important?

We might think that our biggest decisions would be based upon pure logic and critical reasoning, but we would be wrong. Just think for a moment; if your spouse or partner asked you why you wanted to be with them, how would you reply? Would you immediately say,

“well I considered the factors, and – following an analytical process – decided that you were the most rational choice of partner, presenting the best statistical chance of a successful union (given the limited alternatives)”?

I doubt that would get a kindly reception.

You are more likely to answer that it is because you love them. But then you must think about the follow-up question of why do you love them? When you explore that question you can see that, knowingly, or otherwise, you have made a values-based decision. The reasons for loving someone are bound up with your principles, beliefs, and passions.

When I first started to think about decision-making, during my time as a bomb disposal officer, I did use to think that decision-making was largely a rational process. It took some near-death experiences for me to realise that the neuroscience of decision-making is much more complicated. Slowly I came to appreciate the important psychology of heuristics and bias, as well as understanding the importance of assumptions and how values underpin our decision-making.

Values, principles, and ethics in decision-making

The book that introduced me to the concept of principle-based decision making was The Seven Habits of Highly Effective People. Stephen Covey points out:

“We are not in control, principles control. We control our actions, but the consequences that flow from these actions are controlled by Principles.”

Stephen R Covey 

So, the fact is that – whether we know it or not – our personal values drive our decision-making and influence the choices we make. But this is not a new discovery and Covey was not alone in this idea. For example, Gandhi said,

“Your values become your destiny.”

Gandhi

And this school of thought goes back much further. The idea of making right judgements is the field of ethics in philosophy. In Western philosophy, it was Socrates, Plato and Aristotle – the so-called founding fathers of ethics – who started this tradition.

Ethical decision-making is not just about choices in medicine (such as when to end care) or complex moral conundrums faced by society (such as assisted suicide). You cannot separate ethics from personal values and our everyday behaviour. As well as the moral code of the society we live in, we all have our own inner sense of morality that informs our actions. The ability to make these choices, according to our values is inextricably tied to our understanding of freedom. Aristotle summed it up this way:

“Freedom is obedience to self-formulated rules.”

Aristotle

How do values influence our choices?

My favourite analogy for personal values is that they are like a compass. The whole point of a magnetic compass is that it points to the North, no matter which way we are facing. Even when we cannot see properly – for example when stuck in fog or deep in a jungle – the compass gives us reliable data about our direction.

Personal values do the same for us. Whatever our circumstances, our values are an inner compass, informing us of whether the direction we are choosing is in line with principles or not.

“I have learned that as long as I hold fast to my beliefs and values – and follow my own moral compass – then the only expectations I need to live up to are my own.”

Michelle Obama

To complete the analogy, it is worth remembering that a compass can be affected by magnetic interference and occasionally not be trusted. In the same way, even our moral compass can be thrown off by cognitive bias. That is why no one aspect of decision-making can be considered without respect to other facets. We must be aware of all the various neural processes if we really want to make good decisions.

Values in decision-making for organisations 

Ray Dalio is an expert in how values affect decision-making in an organisation. In his book, Principles, he shares the values that he has identified and implemented – both in personal and business life. What makes Ray Dalio’s company Bridgewater, so impressive is the way they have built their values into the very fabric of the business.

For many organisations, their company values are just nice-sounding universal values (such as trust or creativity) that have been decided upon by an executive, but with little thought to how these values should truly affect the culture of an organisation. Many employees can barely remember their company values, let alone explain how they should inform their judgements and behaviours. Not so at Bridgewater.

Building a company from the values up

At Bridgewater, not only did they identify the company values, but they also then built organisational processes to reflect those principles, even writing code to embed these principles into automated decision-making. With each decision made these values are tested, the results examined, and the algorithms refined in a constant process of improvement.

This approach, backed up by the transparent way Bridgewater makes choices, empowers people at every level in the business to make decisions. Decision-making is not the preserve of management or the executive suite. At Bridgewater, this empowerment has fuelled effectiveness, growth and profitability.

As Roy Disney, the co-founder of another values-driven company observes,

“It’s not hard to make decisions when you know what your values are.”

Roy Disney

It is worth reflecting upon. What are the principles of your organisation and how do they inform processes? Do the actions and behaviours of employees reflect the core values? Are people empowered to make decisions?

Principle-based leadership

This sort of organisation is led by a leader who understands the importance of values; someone who knows their own principles and lives according to them. We call that integrity; someone who walks the talk, and integrity is one of the most frequently listed essential traits of a leader.

Stephen Covey wrote about this sort of leadership in his other popular book, The Principle-Centred Leader, but this approach to leadership also has a lot in common with servant leadership, transformational leadership and authentic leadership, all of which emphasize leaders of moral principle and purpose.

So how do you start?

So, having seen that understanding personal values is important as they affect our choices, what do we do about it? The first step in making better decisions is to identify the principles that guide you in your judgements. This will help both you and the people you work with. As Ray Dalio points out,

“The most important thing is that you develop your own principles and ideally write them down, especially if you are working with others.”

Ray Dalio

Take a moment to think. Can you write down your top values? Try to think of the top principles that you adhere to. I recommend 5 to 10 as a maximum. If you are a bit stuck then there are various tools, exercises that can help you do this and if you would like some help then read my post on What Are Your Personal Values?