The facts and fiction of Financial Decision-Making

Kim Stephenson is a Chartered Occupational Psychologist, qualified financial advisor, Associate of the Chartered Insurance Institute, qualified and accredited coach and member of the Special Group in Coaching Psychology, an author and public speaker.

His particular areas of expertise are coaching, financial psychology (he’s author of the book, Taming the Pound) and assessment for selection and development. He runs a website to help people with their attitude to money and runs training for financial advisors, coaches and the public on understanding and dealing with debt, spending and investment. He’s currently writing a unit on “finance for the non financial manager” for an MSc course. He’s in demand as a speaker to insurance and financial groups, as well as within psychology and is a frequent contributor to the national media.

Financial decisions are seen as the most important decisions organisations can make. But how many organisations really understand how decisions are made or what impact factors like personal attitudes, team dynamics and human brain functioning have on the decisions?

How can organisations avoid money being wasted and promising projects being shelved because of decisions that seem like good ideas at the time turned out not to be.

Some of these issues will be discussed and the potential ways around this to allow HR practitioners have their voice heard, with the following being considered: 

• The standard ways to analyse financial decisions within organisations with the particular issues that arise in HR projects and the ways in which these can lead to poor decisions when applying methods designed for specific material projects and projects involving intangibles such as ‘better management’.
• Some ideas of financial modelling with ways to reduce personal biases.
•  The psychology of human decision making as to why views get entrenched so that on occasions logical argument fail and group phenomena such as ‘groupthink’ take over, leading to groups of experienced and proficient people making unwise decisions.

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