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Critical Thinking Means Business
Introduction
When more than 400 senior HR professionals were asked in a survey to name the most
important skill their employees will need in the next five years, critical thinking ranked the
highest – surpassing innovation or the application of information technology.
1
Such a response
reflects how the nature of work – and the skills required – have been changing dramatically.
With globalization and the increased speed of business, employees at every level are facing an
increasingly complex flow of information. Work settings are changing rapidly, and employees
are moving into new roles, often with limited direction. Employees can no longer rely on
others to make key decisions. They often must make them on their own, and quickly.
And the decisions have to be good ones. If they fall short, there may be no time to recover.
Good decisions require focusing on the most relevant information, asking the right questions,
and separating reliable facts from false assumptions – all elements of critical thinking. And yet
too few employees possess these essential skills. A survey of HR professionals conducted by
the Society for Human Resource Management (SHRM) and The Conference Board found that
a full 70 percent of employees with a high school education were deficient in critical thinking
skills. Even among employees with a four-year college education, 9 percent were deficient in
critical thinking skills, 63 percent had adequate skills, and only 28 percent were rated excellent
critical thinkers.
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Many business leaders also come up short. Senior executive-development professionals
report that the competency that next-generation leaders lack the most is strategic thinking,
which hinges on critical thinking skills.
2
Many next-generation leaders also lack the ability to
create a vision or to understand the total enterprise and how the parts work together –
both competencies that are closely tied to critical thinking.
What can be done? Once organizations understand the role of critical thinking in everyday
decision making, they can begin to take steps to develop that skill in their leaders and
employees. This paper describes some possible solutions, including a model for understanding
and developing critical thinking. It also provides trainers with some specific techniques that can
jump-start the process.
Senior executive-development professionals report that the
competency that next-generation leaders lack the most is
strategic thinking, which hinges on critical thinking skills.
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Too Little Critical Thinking = Big Problems
The U.S. Department of Labor has identified critical thinking as the raw material of a number
of key workplace skills, such as problem solving, decision making, organizational planning, and
risk management. There is no lack of examples of what happens when an absence of critical
thinking in business cascades into a complete systems failure.
In 2007, Circuit City fired 3,400 of its highest paid store employees, saying it needed to make
the cuts to remain competitive with Best Buy and other electronics retailers. The employees,
the company said in a statement, had previously been given raises by managers that paid them
“above the market-based salary range for their role,” and would be replaced by workers
making less money.
The move resulted in a storm of public reaction. News stories quoted angry consumers
who vowed to boycott Circuit City for what they considered shabby treatment of successful
employees. Sales of big-ticket items – such as flat-panel televisions – dropped off suddenly
and sharply, forcing the company to revise its revenue estimates downward. Industry
analysts blamed the poor sales on the job cuts, saying that when consumers buy expensive,
complicated electronics, they expect the sales staff to be experienced and knowledgeable.
Shoppers likely were reluctant to take a chance at Circuit City, the analysts said.
3
The company
downplayed the possibility that reduced sales were related to the firings, saying that only two
or three salespeople per store, on average, were cut.
While it is impossible to know exactly what went on in Circuit City’s executive offices, it is
clear the company miscalculated on several fronts. It failed to fully consider what the public
reaction might be, not only to the firings, but to the lack of experienced staff on the sales
floor. It seemed the company was so focused on the bottom line, it failed to look at the larger
picture. These are signs of a breakdown in critical thinking.
A window into the company’s thought process can be found in its suggestion that because few
employees per store were fired, the drop in sales of expensive items was probably not related.
But how many would-be shoppers did encounter inexperienced sales staff, and walked out
emptyhanded? And how many more simply stayed away
from Circuit City altogether because they had seen the
news reports, and did not expect to find knowledgeable
employees? Public perception no doubt played an important
role in the entire affair, something the company – even in
the face of disaster – apparently failed to comprehend.
The firings may even have contributed to the company’s
eventual demise. Circuit City continued to lose ground in
the electronics wars and could not survive the recession.
The chain liquidated all of its stores in 2008 and 2009.
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A failure in critical thinking may have also sabotaged an ambitious plan by UK-based Tesco,
the world’s third-largest retailer, to blanket the West Coast of the U.S. with a chain of small
grocery stores focusing on fresh foods. Prior to opening its first Fresh & Easy stores, Tesco
conducted an extraordinary level of market research, with Tesco executives living in the
homes of American consumers to observe their eating and shopping habits.
However, the Fresh & Easy concept failed to catch fire, and expansion plans for the chain were
scaled back. Tim Mason, the head of Tesco’s U.S. business, said that despite the intensive market
research, the company failed to realize that Americans would not be content with Fresh & Easy’s
“everyday-low-prices” strategy, and wanted to see coupons and other special offers.
A comment Mason made later to
The Times of London
was particularly revealing of the
company’s thought process. “There’s less loyalty in the American market,” Mason said. “A Brit
has to hear it a few times before [they] accept that people make up their minds each week
when they check out the special offers.”
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Mason was suggesting that the marketing executives
had been told of the importance of special offers, but the information didn’t register with
them because it didn’t correspond to the way British people shop. In other words, the
executives apparently were unable to clearly evaluate evidence because of preconceived
notions – a classic example of a lack of critical thinking.
Critical Thinking in the Workplace
Research conducted in recent years by Pearson, as well as by a variety of
independent academics, has shown that people who score well on critical
thinking assessment are also rated by their supervisors as having:
Good analysis and problem-solving skills.
Good judgment and decision making.
Good overall job performance.
The ability to evaluate the quality of information presented.
Creativity.
Job knowledge.
The potential to move up within the organization.
Because it is often difficult to discern such critical thinking skills through a resume or job
interview, many organizations are turning to assessments to help them evaluate candidates.
One of the most widely used assessments in this area is the Watson-Glaser™ Critical Thinking
Appraisal, from Pearson TalentLens. The Watson-Glaser offers a hard-skills appraisal and is
suited for people in professional and managerial positions.
Perhaps not surprisingly, independent research has also found that the higher up the ladder
a position is, the more essential critical thinking becomes. People who are successful in these
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positions tend to be able to learn quickly, process information accurately, and are able to
apply it to decision making. One of the most well-established research findings in industrial
psychology is that cognitive ability is directly related to performance in all jobs.
5
Critical
thinking, one type of cognitive ability, is of particular importance where sophisticated decision
making and judgment are required.
It is not uncommon for organizations to ignore such research findings when they are engaged
in succession planning or top-level executive searches. Organizations often assume that
everyone at the highest corporate levels is bright and a “good thinker,” so they don’t assess
their candidates’ critical thinking capabilities. However, a 2009 study by Ones and Dilchert
found that there is variability in critical thinking ability within groups of executives (as well
as among supervisors and managers).
6
Although executives generally did perform better on
critical thinking tests when compared with other groups, there was a wide range of higher and
lower scores. Simply put, the research found that some top executives are better at critical
thinking than others – and so are likely to be more successful.
It is important to note that research has also found a positive correlation between certain
personality characteristics and job success. Consequently, organizations that include
both critical thinking and personality in their battery of assessments tend to get a more
comprehensive view of a candidate than do organizations that use either personality or critical
thinking assessments alone.
How Critical Thinking Works:
Introduction to the RED Model
ecognize Assumptions
Keys to
CRITICAL
THINKING
valuate Arguments
raw Conclusions
D
E
R
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Fortunately, critical thinking can be taught. Pearson has developed the following RED Model –
Recognize assumptions, Evaluate arguments, Draw conclusions – as a way to view and apply
critical thinking principles when faced with a decision. This model is particularly helpful in
critical-thinking training programs.
R
ecognize Assumptions. This is the ability to separate fact from opinion. It is deceptively
easy to listen to a comment or presentation and assume the information presented is
true even though no evidence was given to back it up. Perhaps the speaker is particularly
credible or trustworthy, or the information makes sense or matches our own view. We just
don’t question it. Noticing and questioning assumptions helps to reveal information gaps or
unfounded logic. Taking it a step further, when we examine assumptions through the eyes
of different people (e.g., the viewpoint of different stakeholders), the end result is a richer
perspective on a topic.
E
valuate Arguments. It is difficult to suspend judgment and systematically walk through
various arguments and information with the impartiality of a Sherlock Holmes. The art of
evaluating arguments entails analyzing information objectively and accurately, questioning
the quality of supporting evidence, and understanding how emotion influences the situation.
Common barriers include confirmation bias, which is the tendency to seek out and agree with
information that is consistent with you own point of view, or allowing emotions – yours or
others – to get in the way of objective evaluation. People may quickly come to a conclusion
simply to avoid conflict. Being able to remain objective and sort through the validity of
different positions helps people draw more accurate conclusions.
D
raw Conclusions. People who possess this skill are able to bring diverse information
together to arrive at conclusions that logically follow from the available evidence, and they
do not inappropriately generalize beyond the evidence. Furthermore, they will change their
position when the evidence warrants doing so. They are often characterized as having “good
judgment” because they typically arrive at a quality decision.
Each of these critical thinking skills fits together in a process that is both fluid and sequential.
When presented with information, people typically alternate between recognizing assumptions
and evaluating arguments. Critical thinking is sequential in that recognizing faulty assumptions
or weak arguments improves the likelihood of reaching an appropriate conclusion.
Although this process is fluid, it is helpful to focus on
each of the RED skills individually when practicing skill
development. With concentrated practice over time,
typically several months, critical thinking skills can be
significantly increased.
RED
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Using the RED Model in Decision Making:
A Case Study
Making Dentists Feel At Eases
A company that sold medical equipment directly to
dentists had what appeared to be a minor, easy-to-solve
problem. The company’s sales representatives reported
that they were having difficulty selling new equipment
because the dentists had a number of technical
questions that went beyond the reps’ knowledge. The
sales staff requested that this technical information
be put on the company’s website, so that it could be
accessed by the dentists.
This seemed like a very reasonable request. Company
executives were familiar with surveys that said dentists
liked to search online for the latest information and
developments in their field. The executives checked with
company customer-service reps, who also reported
that dentists were asking a lot of technical questions
about the new equipment. After studying the issue, the
company redesigned its website, providing a wealth of
technical information about its equipment.
But the changes had no effect whatsoever. Sales of the
new equipment remained sluggish. Dentists continued
to ask sales representatives for additional technical
information – even after they were referred to the
revamped website.
To understand what was happening, several company
executives met informally with dentists whom they
knew were in the market for new equipment. Through
these conversations, the executives learned that the
dentists didn’t feel comfortable during the purchasing
process. What they really wanted, though they didn’t
explicitly ask for it, was to talk to someone at the
company – a peer – who could walk with them through
the entire process, answering their questions honestly
and knowledgably. Essentially, they didn’t want a
salesperson or a website – they wanted a coach.
By examining the
RED
Model, it can be
seen where the company went wrong:
R
ecognize Assumptions: The executives had assumed
the sales staff had an accurate handle on the situation.
But the executives had never asked the reps how deeply
they had probed into the customers’ concerns.
E
valuate Arguments: The executives later recalled
that during a meeting on the issue, a manager had
recommended hiring a retired, highly regarded dentist
who could help the customers on a peer-to-peer level.
The suggestion had been quickly dismissed because of
the cost. Others at the meeting noted that updating the
website would be far cheaper. The executives also later
remembered that while surveys did show that dentists
like to get information online, the surveys also revealed
that dentists don’t fully trust the information unless they
can verify it with someone they trust – such as a peer.
The executives realized that they had chosen to focus
on the portion of the research that suggested a
cheaper solution.
D
raw Conclusions: The executives had taken the
evidence they possessed – the dentists’ technical
questions – at face value, without considering that
people do not always clearly ask for what they want.
Had the company executives recognized their operating
assumptions – and questioned them one by one; had
they fairly evaluated alternative arguments and points
of view; and had they dispassionately analyzed the
information available before drawing any conclusions;
they may have been able to quickly identify and address
the underlying issue. As is often the case, there wasn’t
an isolated breakdown in critical thinking here. There
was a systemic, cascading failure.
By examining the RED Model, it can be seen where the company went wrong.
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For Trainers - Developing Critical Thinkers and Problem
Solvers Using the RED Model: A Sample Training Program
If companies are to remain competitive in
today’s business environment, they need
to incorporate critical thinking into all
aspects of their organization, including their
training programs.
Here’s how an effective critical thinking training
program could be structured:
1.
Educate employees on the key components of
critical thinking (the RED model), making clear
the essential role of each component within
the workplace.
2.
Demonstrate how the RED model can be used
to improve understanding of the topic at hand.
A few approaches to accomplish this include:
•
Ask the employee to provide an actual
problem that he or she is facing in the
workplace. The employee leverages the
RED model to identify any assumptions that
are inhibiting the decision-making process.
The model is also used to identify other
viewpoints/key stakeholders that need to
be included, and to evaluate the various
arguments and viewpoints.
•
Provide a sample case study that students
can work through with a focus on applying
the RED model.
3.
Encourage trainers to incorporate the RED
model into their overall curriculum.
4.
Reinforce critical thinking post-training by
encouraging different viewpoints, raising
challenging questions and playing the
devil’s advocate.
While working through the
problem
or case study, ask employees these
key questions.
R
ecognize Assumptions – Separating fact from opinion.
•
What is the key issue/problem
that you are trying to resolve?
•
What information do you have about this issue?
•
What are your ideas and assumptions
that support your strategy or plan?
•
Is there solid evidence to support
those assumptions, and what might
be some gaps in your reasoning?
•
Who are the key stakeholders and
what are their viewpoints?
•
What other ideas should be explored,
and what else do you need to know?
E
valuate Arguments - Analyzing information objectively
and accurately, questioning the quality of supporting
evidence, and understanding how emotion influences
the situation.
•
What are the pros and cons of the
solution that you are proposing?
•
What are your biases? Is there someone
who has a different opinion than yours
that you could run your ideas by?
•
What impact will your decision have
on others? How will you handle this?
•
Who would disagree with your proposed solution?
What is the rationale that supports their viewpoint?
•
What key points, models and/or perspectives
do you need to keep in mind as you evaluate
the options?
•
What will be the impact of your decision?
D
raw Conclusions – Bringing diverse information
together to arrive at conclusions that logically follow
from the available evidence.
•
After evaluating all of the facts,
what is the best possible conclusion?
•
What specific evidence is driving your conclusion?
•
Is there new evidence that would impact
your decision?
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Conclusion
Critical thinking is the lifeblood of the most essential workplace skills, including problem
solving, decision making, good judgment, and sound analysis. Organizations that can attract,
retain, and develop the best critical thinkers have a significant and measurable competitive
advantage in the business world.
Yet business suffers from a severe shortage of critical thinkers. Too few employees come
to their jobs with these skills, and too few have the opportunity to develop them in the
workplace. The good news, however, is that critical thinking can be taught, and applied directly
to on-the-job problems and decisions. The easy-to-use RED model is a breakthrough in
approaching what until now has been a mostly abstract and elusive concept. The RED model
lays out a path for understanding how critical thinking works, and for developing each of the
essential skills.
The return on investment (ROI) for critical thinking training tends to be extremely high. One
company reported 17 times ROI. And as a whole, participants in an onsite Critical Thinking
Boot Camp workshop reported 74 percent of employees actually applying the new skills.
Other research has shown that when training moves a $60,000-a-year manager or professional
from average to superior, the ROI is $28,000 annually. At that rate, training 25 managers or
professionals in critical thinking would yield $720,000 a year.
At the same time, tools are available for organizations to assess and develop critical thinking
skills in prospective job candidates, high potential employees, and those being considered in
succession planning. The value of this cannot be overestimated.
Critical thinking, perhaps more than any other business skill set, can make the difference
between success and failure. Fortunately, these skills are not out of reach – they are readily
available to employees at all levels. Once gained, critical thinking skills last a lifetime, and
become a powerful asset for organizations seeking a competitive edge.
CRITICAL
THINKING
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References
1
Are They Really Ready to Work? Employers Perspectives on the Basic Knowledge and Applied
Skills of New Entrants to the 21st Century US Workforce
(2006). Study conducted by The
Conference Board, Partnership for 21st Century Skills, Corporate Voices for Working
Families, and the Society for Human Resource Management.
2
Hagemann, B. and Chartrand, J.M. (2009).
2009 Trends in Executive development: A
Benchmark
Report
(Technical Report). Oklahoma City: Executive Development Associates.
3
“
Circuit City’s Job Cuts Backfiring, Analysts Say
,” Washington Post, May 2, 2007.
4
“
Tesco Admits: We Got it Wrong in the US
,” The Times of London, February 22, 2009
5
Schmidt, F. L. and Hunter, J. E. (1998).
The validity and utility of selection methods in personnel
psychology: Practical and theoretical implications of 85 years of research findings
. Psychological
Bulletin, 124 (2), 262-274.
6
Ones, D.S. and Dilchert, S. (2009)
How special are executives? How special should executive
selection be? Observations and recommendations
. Industrial and Organizational Psychology,
2 (2009), 163–170.
9
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Learn more about our critical thinking assessment & training
solutions at
ThinkWatson.com
About Us
TalentLens, a Pearson business, publishes scientific assessments that are used
globally to hire and develop the 21st century workforce.
Our instruments measure
critical thinking, problem solving, and a range of job skills to deliver data-driven
insights that inform and clarify an organization’s human capital decisions. Learn more
at TalentLens.com or call 888.298.6227.
We are part of the Assessment & Information group within Pearson.
Pearson’s other primary businesses include the Financial Times Group and
the Penguin Group.
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