Business Bites: Decision-making
Constant decision-making can cause stress and be exhausting
Decision-making is simply the process of making a choice. But there are times when this may seem difficult due to the options available to you.
Leaders may struggle with decisions so much so that they suffer exhaustion from having to decide too much – a phenomenon called decision fatigue.
According to the American Medical Association, “Making decisions day in and day out can be exhausting and cause people to feel overwhelmed, anxious or stressed. Decision fatigue is the idea that after making many decisions, your ability to make more and more decisions over the course of a day becomes worse, the more decisions you have to make, the more fatigue you develop and the more difficult it can become.”
Effective decision-making
Effective decision-making can positively influence your business’s future performance. Developing decision-making skills will improve your judgement and help you to make more fact-based decisions, whilst guiding your team along the way.
Firstly, you shouldn’t confuse decision making for leadership. The best use of a leader’s time may involve delegating decision-making to appropriately skilled team members. You should only get involved if doing so would add value to the outcome.
Things to avoid if you are delegating decisions to others is:
• Don’t attempt to make all of the decisions yourself: you’ll likely cause a blockage and slow things down
• Don’t insist on reviewing every decision made by others before it becomes final: you will undermine others
• Don’t allow others to make decisions only to override them later
Delegation needs to truly empower your team. Delegated decisions may be frequent but are low risk and are handled by an individual or working team with input from others. Ensure that responsibility for the decision is firmly in the hands of those closest to the work. This will enhance engagement and accountability.
According to the McKinsey article ‘What is decision making?’, besides delegated decisions there are two other categories of decisions:
1. Big-bet decisions are infrequent but high risk, such as acquisitions. These decisions carry the potential to shape the future of the company, and as a result are generally made by top leaders and the board. Spurring productive debate by assigning someone to argue the case for and against a potential decision can improve big-bet decision making.
2. Cross-cutting decisions, such as pricing, can be frequent and high risk. These are usually made by business unit heads, in cross-functional forums as part of a collaborative process. These types of decisions can be improved by doubling down on process refinement. The ideal process should be one that helps clarify objectives, measures, and targets.
So, what can prevent effective decision making?
There are many factors to consider including:
• Lack of clear, relevant and accurate information to be able to define an issue and inform a decision
• As a result of the above, not identifying the true issue requiring a decision
• Poor communication meaning that others do not understand the decisions being made, the impact on them, and their possible involvement
• Personal bias: allowing personal feelings and thoughts to cloud the situation. This is exacerbated if you do not take input from stakeholders to ensure objectivity. Some people are risk averse and others risk tolerant, so getting inputs from many can help to get a balanced view
• Not identifying and considering all risks at play
What makes decision-making more effective?
• Include many different viewpoints. This is not consensus seeking but ensuring that the right people with the knowledge and skills needed are able to help you broaden your viewpoint
• Decisions are made as close to the ‘action’ as possible. This likely means engaging employees who are involved in the tasks under review – doing the hands-on tasks
• Address the root cause and not the symptoms. You should develop a plan to fix the root cause. Reaching out to people who are closest to the issue at hand, as mentioned above, will help you identify what the root cause is
• Once you have the required information and feedback, you need to make a decision, and it is important that you take accountability for that decision regardless of the outcome
• Balancing the risks and potential benefits of a decision, for example by asking ‘What happens if we do this?’ along with ‘What are the implications of not doing this?’. What are the costs vs. the benefits
• Communicate the context and details of your decision to stakeholders, bearing in mind that they may need different communication styles and regularity
Seven steps to decision-making
According to MindTools (How to make decisions) there are seven steps to decision-making and they are:
1. Investigate the situation in detail
Decisions often fail because key factors are missed or ignored from the outset. So, before you can begin to make a decision, you need to fully understand your situation. Start by considering the decision in the context of the problem it is intended to address. You need to determine whether the stated problem is the real issue, or just a symptom of something deeper.
2. Create a constructive environment
Remember that most decisions will affect other people too, so it helps to create a constructive environment in which to explore the situation together and gain support. This is especially true when you have to rely on other people to implement a decision that you’re responsible for. You’ll need to identify who to include in the process and who will be part of any final decision-making group, which will ideally comprise just five to seven people.
3. Generate good alternatives
Generating a number of different options may seem to make your decision more complicated at first, but the act of coming up with alternatives forces you to dig deeper and to look at the problem from different angles.
4. Explore your options
When you’re satisfied that you have a good selection of realistic alternatives, it’s time to evaluate the feasibility, risks and implications of each one. You’ll also want to examine the ethical impact of each option, and how that might sit with your personal and organisational values.
5. Select the best solution
Once you’ve evaluated the alternatives, the next step is to make your decision.
6. Evaluate your plan
Before you start to implement your decision, take a long, dispassionate look at it to be sure that you have been thorough, and that common errors haven’t crept into the process. Your final decision is only as good as the facts and research you used to make it. Make sure that your information is trustworthy, and that you’ve done your best not to “cherry pick” data. This will help you avoid confirmation bias, a common psychological bias in decision making. Discuss your preliminary conclusions with important stakeholders to enable them to spot flaws, make recommendations, and support your conclusions.
7. Communicate your decision and take action
Once you’ve made your decision, you need to communicate it to everyone affected by it in an engaging, informative and inspiring way. Get them involved in implementing the solution by discussing how and why you arrived at your decision. The more information you provide about risks and projected benefits, the more likely people will be to support it.
Other useful reading
Stansell GT. Decision making by the numbers. Forbes.com
Heaslip E. Five decision making techniques that will help you run a better business. US Chamber of Commerce.