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Guest post by: Douglas Long Become an Author

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Chris Stephenson, a highly successful and well respected CEO who is now a management consultant in Sydney, has recently completed a valuable study on decision making[1].

There is plenty of material available that shows the importance of making good strategic decisions and, in retrospect, it is always easy to nominate “good” or “bad” decisions. Of course, there are also plenty of models around that can work us through a process (usually quite time intensive) designed to ensure we make the “right” decision.

But most of us don’t have the time to work through some complicated decision-making model and, even if we did have the time, the evidence shows that there is still no guarantee that we will make a “good” decision every (or even most of) the time. In fact there is data that shows only about 15% of organisations have the ability to make and implement important decisions effectively.

Stephenson interviewed CEOs and Executives in Australia about their decision making processes. His interest was to find out how we can improve the quality of decision making – in other words, rather than considering decisions that had been made and then deciding were these decisions “good” or “bad”, he wanted to find out those things surrounding the final decision being made so that the probability of a “good” decision improved.

He found that the key factors that resulted in poor quality decisions were:

• No decision-making process – Decisions are made on a case by case basis often by a small sub-group or by the CEO alone mandating a direction without any discussion.
• Lack of transparency – Excluding stakeholders from decision-making, withholding information, side-bar discussions between the CEO and individuals outside of the TMT.
• Low tolerance for diversity and alternate views – A low appreciation of the value of diversity and experience.
• Disrespect – Treating those with different views as disloyal and not team contributors.
• Data – Ignoring data when it didn’t confirm favoured outcomes. Over relying on small data samples when they supported desired outcomes. Pretending everything is OK when it’s not.
• Dominant individuals – A CEO or others dominating the discussion and chiding anyone that offers alternative inputs.
• Self interest – Allowing self interest to be the basis of decision outcomes rather than organisational best interest.
• Emotional factors – Taking decisions on gut instinct without cross-checking against the data. Not appreciating the affect of personal biases on decisions.
• Narcissism – Decisions driven by individuals with an over developed self belief and inability to comprehend other people mattering or themselves being wrong.
• Ego – Decisions driven by one person’s agenda to further themselves.

All business decisions today are made in an environment of increasingly complexity, information overload, reducing lead-times, personal motives, survival and self-serving instincts, and pressure associated with meeting market expectations.

There are 10 things you can do to improve the quality of your decision making:

1. Knowing who is making the decision and their accountability for it

Decisions are made at every level in every organisation. The key thing is to know “who” can make decisions about “what” as well as “when” and “why” they can make them. If your people are unclear as to whether or not they can make a decision; if they are trying to second guess what their supervisors or managers would do; or if they are unclear as to why they need to make the decision, then decision making quality is likely to be poor. Then make sure everyone in the organisation knows who can make decisions about what and when.

Be explicit as to who can make the decision and their accountability for it.



2. Understanding the timeframe

Not every decision needs to be made instantly - but, equally, not every decision has the luxury of time. It is important that everyone understands the time constraints relating to the decisions for which they are accountable.

Be explicit as to what is are “timely” decisions.

3. A robust process

Most organisations have people who will tell you they are not “yes” people – they’ll say “no” if the boss does! If you have these people in your organisation be alert – be very alert!! It is important not to oppose decisions for the sake of opposing, but healthy organisations with a good culture encourage dissent. A lack of dissent can indicate “group think” – which is always unhealthy. If you can’t get people to readily express their concerns and/or alternative opinions and choices, give serious consideration to appointing someone the official “devil’s advocate” who’s prime job is to challenge your thinking.

Ensure your decisions are subject to a robust process with dissenters and contrarians actively encouraged and listened to.

4. Transparency

A CEO of my acquaintance was sacked because the Board discovered that, while everything he said was always the truth, often it wasn’t “the whole truth”. The quality of decision making is improved when “the truth, the whole truth, and nothing but the truth” is presented and there is total transparency as to the how, what, when, where, and why a decision was made.

Ensure total transparency in your decision making processes.

5. Inclusiveness

Be wary of cliques and alliances in your organisation. Where these exist there invariably also exists a temptation to involve only those who are in your clique or alliance because you know where support will be. In one organisation in which I became involved the problems arose because one Divisional CEO had a penchant for recruiting only people from his particular evangelical Christian church. The power of the at-work and out-of-work alliances and friendships of these people restricted discussion by excluding “non Christians” from the decision making process – this lack of inclusiveness almost brought the entire company to bankruptcy.

Ensure inclusiveness.

6. Appreciating diversity

It’s the old story of the bumble bee. I’m told that, by the laws of physics, a bumble bee shouldn’t be able to fly – I understand its body is too big for its wings. As is clear to every person in New Zealand who has seen these big black and gold bees flying around the clover patches, they certainly can fly and they enable the pollination of the clover. Involve people who don’t fit the mould – who don’t conform to what others say should be the case. People from different cultural backgrounds and with different experience can often bring a new way of looking at things and so facilitate better decisions.

Appreciate and ensure diversity.

7. A sense of order

There’s the old story of a man who was asked the reason for his 30 year successful marriage. He replied that there was a clear understanding in relation to decision making and that “I make all the big decisions like what should happen on the national and international scene while my wife makes all the small decisions like what should happen with the finances, the children, and the home.” Perhaps not politically correct in today’s environment but it makes the point that there needs to be a clear sense of order in the decision making process. Both abdication and micro managing are recipes for disaster. Push decision making down to the lowest possible level with clear parameters. Ensure people know who, how, and when to pass things up when close to the edges or beyond the defined parameters for their level of delegation.

Ensure a clear sense of order in the decision making process.

8. Accurate data

There is an old saying that many decisions are made under the PHOG factor – prejudice, hope, optimism, and guesses. While it is true that we seldom have all the data we would like to have for a good decision, there is no excuse for not using the data we do have – and this, most emphatically, includes data that doesn’t support our preferred option. As both a researcher and a Doctoral Supervisor, I know the temptation to exclude data that doesn’t support one’s opinion. Examine all the available data and let that guide your decision – don’t try to fit the available data into your preconceptions.

Ensure accurate data is available, all data is respected, and the totality of the data is used.

9. Mutual respect

Conditional respect is found everywhere. This is where people are treated with respect if they do as we want but are shown little or no respect if they fail to conform. In healthy organisations that have a high probability of making good decisions, unconditional respect exists at and among all levels and areas. In such an environment there is a clear distinction between the person (who is always acceptable and respected) and his or her actions (which may not always be appropriate). In an organisation with a high probability of making good decisions, there is never any room for prejudice, bullying, ostracising, put-downs, sarcasm, and other associated negative activities.

Ensure the organisation has a culture of mutual respect.

10. Active debate on issues with everyone involved having a say

Recently I was called in to help an organisation that had suffered some very serious adverse affects because a junior person was not listened to. A serious issue was being confronted and a junior employee (who had drawn the attention of management to the matter) suggested that an apparently unrelated matter could have contributed. He was ignored and it was pointed out that he lacked either the formal learning or experience to know what he was talking about. It was a classic case of asking the right question out of ignorance – and those with the formal qualifications and experience “knew” he couldn’t be right! Ignoring his contribution cost the company millions of dollars. In organisations with a culture that fosters good decision making, everyone concerned – no matter how junior or “ignorant” – gets listened to and is involved.

Ensure there is strong debate on issues with everyone involved having a say.

Where these 10 things exist throughout the organisation – in other words, this is the organisation’s culture - the quality of decision making improves significantly. An organisation with the right culture gets rid of management ego and all the other negatives that lead to poor decision making.

What decision making culture exists in your business?

As this shows, its not hard to make it positive.

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