What makes a good decision maker – the three ingredients
A 2004-2005 Teradata Report on Enterprise Decision-Making showed that over 70% of the respondents in their survey said that poor decision-making is a serious problem for their business. Other research in the UK conducted by the research agency YouGov for the Investors in People organization highlighted the negative impact that poor decision-making was having on employees. Other research in the area of organizational performance is consistent, with some suggesting that well over half of all decisions fail in some way. Specifically that the outcomes of the decision making process was poor – the ‘wrong’ decision had been taken or simply never implemented. It seems obvious that if decisions can fail for up to half of the time then organizations need to pay very close attention to the quality of their decisions and the people carrying out this role, but to-date, there is not much evidence that they are.
Decision-making is an age old problem that is being compounded today by increasing knowledge, population, complexity, speed and change. The number of decisions being made is increasing as is the pace of change and the number of people in an organization involved in the thousands of day-to-day decisions, from a new product launch to a decision on a new hire that have to be made. Decision-making is an essential requirement of management especially at the senior level and is perhaps the true core competence of leaders … ‘our society has largely neglected the fact that sound judgment and decision making are the crux of many professions’ (Smith et al 2004). The very best leaders appear able to make crucial decisions effortlessly ‘standing on their feet’ drawing on unseen resources of domain knowledge and experience that set them apart from the crowd. How effective managers and staff are in general at making good decisions is a moot point and understanding the process of high performance decision making is becoming critical to organizational success.
Problem-solving and decision-making are closely linked as each requires creativity in identifying, developing then evaluating options from which a course of action needs to be chosen. A problem always denotes that there are options to be chosen from – if there is a known solution then this is a puzzle not a problem. A decision is basically a problem solving process under uncertainty, so the steps or stages of decision making are more or less the same as those for problem solving. There are many n-step problem solving routines to guide decision making but at the heart of the decision making problem are the following three main aspects: how the problem is seen, how alternatives are generated, and how the decision is actioned.
The three key aspects of high level decision making:
- Proactive cognition is a feature of people who actively seek to change the environment and not passively react to it. People strong in this feature scan for opportunities in the world preferring to make choices rather than follow procedures and create novel options by seeing problems differently rather than considering just the obvious.
- Deciding is about making the decision, weighing and chewing over the options and above all considering the risk of alternatives. People who are high in this ability often draw on extensive domain knowledge and experience enabling them to make mental short cuts and come to a decision apparently quickly hiding the deep processes really going on.
- Finally Action Control – making and enacting the choice. The effective planning and scheduling of actions to deliver the decision are examples of behavior of people who are able to ensure that decisions are not postponed, procrastination is avoided and decisions are implemented without delay.
A good decision is the direct result of clear criteria, the scope of the choice to be made together with the risk of each alternative – then taking action. From this perspective a good decision is the outcome of a process of optimally achieving a given objective from a certain starting point. A good decision is a logical one (or at least defensible and traceable) based on the available knowledge to hand that answers a particular organizational problem. Measuring whether or not decision making is good or bad needs to assess both the process and the outcome, the effectiveness and the quality of the decision making, as these are two quite distinct things. Effectiveness is how well the process of decision making is managed and how learning takes place – what caused a poor outcome to occur is fed back into the process. Output quality is to some extent comes well after the decision has been taken and is a reflection whether the right choice was made as well as on how well the choice was placed into action and implemented. There are many examples, particularly in the political world, where there is an assumption that the decision is the same as the implementation. A good decision making process therefore integrates the choice with the implementation and looks at the outcome to ensure learning takes place.
It is this latter point that completes the circle – it is a balanced decision making process that seems to be about right. Consciously attending to all three areas of the decision making process is key. The seeking of ways to control and act on the world, weighing up options carefully thinking about the choice then ensuring implementation takes place are the three key facets of effective decision making and features of high performers. When this balanced process is in place in more organizations perhaps then can the abysmal performance we currently have in this core area be improved.
Royston