6 Steps to Better Decision Making
24 December 19
Managers make numerous decisions each day. Many will be relatively trivial but some will be important with adverse consequences if the decision is poor. Occasionally, managers will make decisions that have a major long term impact across the organisation.
But how many managers are trained to make good decisions? In my experience, very few. In 30 years of work, none of my employers ever gave training or guidance on how to make good decisions. Given the importance of getting decisions right, that’s a poor state of affairs.
Here are our six steps to better decision making. Think of it as the mini-training session you never had!
1. Remove the emotions
Emotions rarely have a positive impact on decision making. They can arise from various factors such as the subject matter, people involved and implications of the decision. You might have a strong moral view on the subject, be fearful for the consequences of the decision on others or anxious about getting it wrong.
Whatever their source, good decision makers will be aware of them and have tactics for putting them to one side so rational thinking is at the fore.
2. Gather the facts
First ask two questions.
- What is the problem we are trying to solve?
- What is the outcome we want to achieve.
If you are clear about the answers to these questions, then pull together all the relevant facts.
Often the situation won’t be quite as it first appears and there may be different perspectives and accounts to consider.
Take care at this stage to distinguish the relevant from the irrelevant and facts from hearsay or speculation. Where analysis is required, ensure the methodology and outcomes are accurate.
A good way to approach gathering facts is to think of four different sources.
- Professional expertise – get the views of your professional colleagues and, where appropriate, subject matter experts.
- Stakeholders – who has an interest in the decision and what are their perspectives.
- Organisation data – identify the relevant organisation information that helps with the decision making
- Research and evidence – what does the evidence say about the subject.
Gathering data from multiple sources is likely to lead to better informed decision making and is more reliable than relying on experience and professional instinct.
Sometimes a quick decision is needed and there’s not time to gather detailed facts and information. However, take as much time as you are able to gather sufficient facts to make an informed decision.
3. Weigh up the evidence
Once the relevant facts are gathered, assess their reliability and weight them against each other. Strip out any that rely on dubious assumptions, hearsay or speculation.
Then rank the facts according to their reliability. Watch out for your own interests or preferences influencing this ranking – more on this later.
Some factors to consider when ranking the facts are as follows.
- Decisions based on the aggregated professional experience of many people are more accurate than those of one person.
- Professional judgements based on hard data or statistical models are more accurate than judgements based on individual experience.
- Knowledge derived from scientific research is more accurate than the opinions of experts.
- A decision based on the combination of critically appraised evidence from multiple sources yields better outcomes than a decision based on a single source of evidence.
4. Generate options
What are the range of options that are most likely to solve the problem and achieve the desired outcome, based on the assessment of the facts? Test the options using methods such as risk versus reward, cost benefit analysis or set criteria.
Risk is an important element in decision making on several levels. A good way to think about risk is to distinguish risk appetite from the actual decision risk.
Risk appetite is the amount of risk an individual or group is willing to take. The appetite may be instinctive (how much risk am I emotionally comfortable with) or as a result of analysis (how much money can we afford to lose). Is there a gap between the instinctive and calculated risk appetites of the individuals and the group? Is this playing into the decision making?
What is the actual risk presented by the decision options? It should sit within the calculated risk appetite of the organisation.
Be wary of factors such as confirmation bias, heuristics and groupthink that may be at play.
Confirmation bias is where an individual seeks evidence to support their line of thinking. It is better to look for evidence that conflicts with the preferred decision and if you can’t find any, you might be onto something.
Heuristics are simple, efficient rules, learned by evolutionary processes, that have been proposed to explain how people make decisions, come to judgments, and solve problems typically when facing complex problems or incomplete information. These rules work well under most circumstances, but in certain cases can lead to systematic errors or cognitive biases. In short, if you are relying on intuition, a rule of thumb, an educated guess or common sense, go back and double check.
Groupthink is a psychological phenomenon in which people strive for consensus within a group. In many cases, people will set aside their own personal beliefs or adopt the opinion of the rest of the group. It is usually better to have a diversity of views even if it gives rise to conflict.
Generating options can be challenging, particular where the issues are complex, ambiguous, uncertain or some combination of these. There are many methods that can be helpful such as brainstorming or appreciative inquiry. Some of methods developed by Liberating Structures, such as wise crowds and critical uncertainties, are particularly helpful.
Once the options are tested using your chosen methodology, prioritise into a short list of the ones most likely to solve the problem and deliver the desired outcome
5. Select the best option
The next step is to make the decision. If one option is clearly better than the rest, the choice will be obvious. However, if there are several competing options, there are plenty of tools that will help you decide between them.
Decision matrix analysis is a good method to assess against set criteria. Where criteria need to be weighted, use paired comparison analysis.
For group decisions, there are a variety of useful tools depending on the group context, such as multi voting or the Delphi Technique.
6. Action and reflect
Once you’ve made your decision, you need to communicate it to everyone affected in an engaging 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 your decision.
If people point out a flaw in your process as a result, have the humility to welcome their input and review your plans appropriately – it’s much better to do this now, cheaply, than having to do it expensively (and embarrassingly) if your plans have failed.
Take time to review and reflect both on the decision making process and the progress of the decision itself. Evaluating the outcome of a decision has been found to improve both organisational learning and
performance, especially in novel and non-routine situations.
*Read more on decision making at the Centre for Evidence Based Management and Mindtools. Materials from both of these sources have been used in the writing of this article.