Decision Centricity


This is a simple example of the power of the RKT (Revised Kepner Tregoe) method of decision integrity.


APPOINTING A NEW AGENT

Background

Brightside Industries had been represented in Bentrovia for the past three years by Old Agent LLC, which is a small firm with only four employees. It had been reasonably successful but a recently appointed senior Brightside trader – Billy Bent – demanded that the agreement should be cancelled and that Dodgy Deals – which he said was successfully working with a Chinese competitor – should be appointed in its place.


Billy Bent Has to Use His Influence

Unbeknown to his colleagues, Mr Bent’s enthusiasm was based on the fact that while working for his previous employer he had shared in Dodgy Deals’ commissions and was now looking to do the same with Brightside.

Mr Bent knew that:
  • The beneficial owner of Dodgy Deals is a Politically Exposed Person (PEP) although her interest has been deeply concealed by a convoluted arrangement of offshore companies and special entity vehicles;
  • Dodgy Deals is paying bribes to FPOs (Foreign Public Officials)  on behalf of its Chinese principal;
  • It had been dismissed by Brightside’s American competitor for paying bribes and was currently under investigation for corruption;
  • Dodgy Deals had no office in Bentrovia and no experience in the sector concerned.
  • Its main Client had given notice of termination;
  • It had inadequate financial backing and an appalling credit history.
Mr Bent knew that to get his recommendation accepted, it would be necessary to conceal all of the above. He was sure he could do it!


Sammy Smart is Conned

Brightside’s Head Trader – Sammy Smart – had not been happy about changing agents and formed a small working group (consisting of himself, Mr Bent and a trader called Norman Nice) to examine five candidates and come to a decision. This did not please Mr Bent and he went immediately on the attack, making false allegations against two of the candidates, which resulted in their immediate disqualification.


Billy Bent Gets to Work

The three remaining candidates submitted application forms. Dodgy Deals lied about its beneficial owner, the current investigation in America and concealed its previous relationship with Billy Bent. The other applications were truthful.

But Mr Bent knew that:
  • Eight years ago Red Herring LLC had been convicted in Bentrovia of dumping toxic waste in the Oil Minister’s goldfish pond.
  • Blue Sky Enterprises Inc., which is incorporated in the Cayman Islands, insisted that its commissions must be paid to a numbered offshore account. (The owner explained and provided documentation to show that the reason for this was to avoid a penal divorce settlement with his ex-wife).
Mr Bent exaggerated these and other supposed failings and argued that they were disqualifying red flags and that Dodgy Deals should be appointed without further delay.


Sammy Smart Tries His Best

Mr Smart produced a list of criteria he thought might be relevant for selecting the new agent. He asked the other members of the team to complete a matrix, showing the needs (which are absolute necessities) and wants (which are desireable and on a scale of 1 from not important to 100 very important, bordering on a need) based on the attributes of Brightside’s most successful agents. Billy Bent had gone ballistic and said they should ‘stick to the facts’ and that relying on attributes of agents in other countries was ‘not appropriate14’.

The initial responses of needs and suggesting weights for wants were as shown in Table 1
 
Attribute Needs and Wants
Sammy Smart Billy Bent Norman Nice
Totally honest application form and supporting documents Need 50 Need
Not subject to any criminal or regulatory investigation Need 50 100
No undisclosed criminal convictions (Company or closely associated
persons)
Need Need Need
Not included on any banned organisation or sanctions list such as FATF
or PEP
Need 50 Need
Strength of the business case and potential income Need 100 100
Office and track record in Bentrovia 100 50 100
No potential conflict of interest (through working with a competitor) 70 20 50
No history of business failures 70 30 100
Services never terminated by a reputable competitor 50 20 100
Matched the attributes of other successful agents 100 0 90
Table 1: The Initial Criteria


Billy Bent insisted that the division between needs and wants was ‘academic mumbo jumbo’ and that that they should specify a factor for any criminal conviction during the past 10 years (realising that Red Herring would score badly on this point) and for offshore payments (making the case worse for Blue Sky Enterprises LLC).


The Consensus Matrix

After much argument the consensus evaluation matrix was agreed as shown in Table 2:
 
Factor Final Scoring Needs and Weighting of Wants
Smart Bent Nice Agreed
Totally honest application form and supporting documents Need 50 Need 100
Not subject to a criminal or regulatory investigation Need 50 100 100
No undisclosed criminal convictions (company or closely associated persons) Need Need Need 100
Not included on any banned organisation or sanctions list, nor a PEP Need 50 Need 100
Strength of the business case and potential income 100 100 100 100
Office and track record in Bentrovia 100 50 100 80
No potential conflict of interest (by working for a
competitor)
70 20 50 60
No history of business failures 70 70 100 70
Does not require payment offshore 50 Need 50 70
No criminal convictions in past 10 years 20 Need 50 60
Table 2: The Agreed Matrix


With the benefit of hindsight (although it should have been detected at the time) Billy Bent had manipulated the scoring – getitng rid of needs which would have disqualified Dodgy Deals - to make sure that if the adverse data on Dodgy Deals was discovered during a due diligence review, they should still win.


Billy Bent Wins the Game

The final scoring was as shown in Table 3.
 
Appraiser Candidate
Dodgy Deals Red Herring Blue Sky Variation Low to High
Sammy Smart 56,480 63,100 59,000 11.72%
Billy Bent 75,600 56,100 53,300 41.83%
Norman Nice 60,800 65,800 63,600 8.22%
Average 64,293 61,667 58,633 9.65%
Variation (High: Low) 33.85% 17.30% 19.34%  
Table 3: The Final Scoring

It resulted in Dodgy Deals having the highest average score from three appraisers and it was appointed.

 


Clues and Lessons

As the above example shows, crooked decisions may be exposed by15:

  • Creating a need for a decision when one was not necessary
  • Refusing to answer questions and going on the attack
  • Manipulation of the initial needs, wants and scoring criteria (the dishonest participant will usually add or remove attributes to support a perverted decision or to substitute low scoring wants in place of needs);
  • Unjustified exclusion of suitable candidates for no or unsubstantiated reasons;
  • Massive variations in scoring between the individual appraisers, either in totals or for individual attributes;
  • Perverted decisions being highlighted by variations between high and low scores. In this case Mr Bent’s variation was 41.83 per cent against an average of 9.65 per cent.
Managers are advised to pay more attention to personal behaviour than they currently do and follow their instincts. If things don’t feel right, watch out”

14 Anyone using the words "appropriate" or "inappropriate"  should be shot.

15 Blank Excel templates for evaluating most types of decisions can be downloaded from www.cobasco.com

© Copyright 2017 Cobasco Group LtdWeb Design By Toolkit Websites