Symptoms of poor judgment may be obvious, such as going coatless during a snowstorm. Regrettable choices sometimes require more analysis before the conclusions are clear, like the executive who bases employee layoffs and plant closings on questionable statistics. Lousy judgment calls are defined as a lack of common sense that typically involves other people, strategies or crises, according to findings published in the Harvard Business Review. Weak reasoning often shows itself through a series of steps instead of just one isolated episode.
Forget about rotten luck and unfortunate timing. Bad judgment in the business world hinges on failure to follow standard steps, according to professors Noel M. Tichy and Warren G. Bennis in their online article titled "Making Judgment Calls" published in the Harvard Business Review. A person prepares before making any decision. He then explains his choice to the other stakeholders before putting his plans in motion. Along the way, he makes adjustments and learns from the experience. Skipping over any of these steps leads to poor conclusions.
Poor reasoning sometimes leaves a perception of stepping around codes of conduct. For example, allegations of illegal insider trading surrounded Berkshire Hathaway, Inc. when it purchased Cleveland-based Lubrizol Corp., according to Bloomberg news service. Berkshire Hathaway manager David Sokol recommended that his organization purchase Lubrizol, which manufactures engine lubricants. Sokol later admitted to privately buying 96,060 shares of Lubrizol shortly before working on the deal between his employer and its acquisition target. Critics say Sokol demonstrated poor judgment by jeopardizing his career with an obvious conflict of interest.
Hiring decisions go awry when a candidate brings a stellar quality to a new job that ends up becoming a huge detractor, the Harvard Business Review suggests. For example, Hewlett-Packard welcomed new Chief Executive Officer Carly Fiorina, only to fire her and name a replacement who ended up implementing her same strategic changes. Critics say Fiorina's lack of judgment stemmed from her sales background that did not adequately prepare her for a CEO position. Observers also question HP's judgment in choosing a prominent salesperson for such a high leadership role.
Unwise choices that lead to risky behaviors can be indications of physical ailments, such as dementia. This type of impaired judgment leaves a person unable to understand the consequences to his behaviors, according to the online Dementia Guide. A dementia sufferer might enter someone's car by mistake but not recognize that he is seated inside a stranger's vehicle. Or, he may tell a family member that he is walking to a nearby store and then head outdoors in his pajamas. These behaviors sometimes represent early stages of Alzheimer's disease.