Research in the areas of judgment and decision making over the last few decades indicates that additional knowledge about common threats to good judgment, together with processes and tools for making good judgments, can improve the professional judgment abilities of both new and seasoned professionals. The research also confirms that professional judgment in the context of teams or groups is crucial because many important judgments are made in groups.
In learning about group judgments and decisions, three key themes should be kept in mind. First, the same judgment process, such as that illustrated in the KPMG Professional Judgment Framework (available at the KPMG University Connection) applies to both individual and group judgments. Second, it is important to be aware of the judgment traps and biases, and to take steps to mitigate them in group settings. Third, successful group leaders manage group judgment processes by properly structuring the group’s interaction and by effectively managing conflict.
With the movement in financial reporting toward more principles-based standards and more fair value measurements, exercising good professional judgment is increasingly important. It is clear that professionals will be required to apply more and better professional judgment on a consistent basis. As the accompanying exhibit shows, the more critical the judgment, the more rigorous the process and the more time it will take to make good judgments.
