In every day and practically every action we take, a decision is involved. However, when it comes to management of an organisation, decision-making becomes a critical skill as it would be impacting a lot of individuals in the short and long-term.
It is not just enough to make a decision, decisions must be effective in achieving the goals and objectives or solving the problems they are designed to solve. Effective decision-making is the process through which alternative courses of action are selected and then managed throughout the process of implementation to achieve business objectives.
From this definition, you can realise that effective decisions are not haphazard in nature but actually result from a systematic process, involving clearly defined elements that are handled in a distinct sequence of steps. This is the same definition that Peter Drucker, a renowned leader in business abides by.
For anyone in a leadership position, the ability to make a decision and stick to it is a basic cornerstone of good leadership skills. Since decision-making is an on-going process in every business, whether it is a large or small business, a formal or informal business, this skill is one that must be learnt and honed at every available opportunity.
It is particularly useful in solving problems in an organisation or choosing a specific direction for the business to take. It helps to give structure, form and direction to an organisaiton as it prevents haphazard happenings in the organisaiton. Having critical thinking skills allows one to ascertain the problem and come up with a solution that is beneficial to the company and its employees.
Decision-making is also a critical personal skill to develop. In our personal lives outside of the work environment, we make decisions about what to purchase daily – this is known as consumer decision-making. We make choices about what purchases to do in order to optimise the value of our disposable funds or budget.
Consumer decisions are greatly influenced by personal taste and the objective of the purchase – for example, what brand of toothpaste will I buy if I have sensitive teeth or I am a smoker – the affordability must also be considered as some of the products may be out of reach of the basic consumer.
Personal decision-making concerns the decisions that determine our individual identities – what kind of perfume I want to wear or diet I prefer to subscribe to or vehicle make. The outcomes created from such decisions also affect other people in our lives with whom we have relationships and often also influences their personal decisions. As a result, personal decisions have far-reaching consequences versus consumer decisions. The category also includes what is sometimes referred to as life decisions.
Business decision-making includes decisions that are made to determine business or organisation outcomes and often have far reaching and long-lasting outcomes. Business decisions are often made at a strategic level and daily on an operational level in various departments of an organisations.
At the end of the day, all the decisions made in the business must speak to the organisations strategy and business objectives and goals.
In making decisions, a number of factors come into play; significant factors include past experiences with products or outcomes of a specific decision. This may be a personal or observed experience. A variety of cognitive biases which often occur during a situation when people are expected to interpret information presented to them.
They are also influenced by individual differences, including age and socio-economic status, and a belief in personal relevance of the decision options available. These things all impact the decision-making process and the decisions made.
In order for a leader to be able to make good decisions: they must be able to make an objective evaluation of the circumstances and alternative decisions that can be made to ensure that the objectives in the circumstance are met. They must also be able to objectively use critical-thinking skills to reach useful conclusions.
Leaders that possess good decision-making skills are also able to make effective decisions under pressure and thrive by employing a “problem-solving” attitude, as opposed to a “that’s not my job” approach.
In situations where we see poor decisions being made, in most instances a myriad of factors come into play. Mostly it is about mis-information or information asymmetry – where one party knows more about the situation or circumstance but does not inform the decision-maker at all or in time.
One can also receive adequate information but fail to understand it and so mis-use it and make a poor decision. One may also have insufficient skills to interpret the information and use it adequately to inform the decisions being made – this is common in the case of financial information or technical information.
Another cause of poor decisions is when one simply does not understand that there is a decision that must be made and so does not take any action – that in itself is a poor decision.
A good decision has several characteristics – first and foremost is the impact that they have – it must be a positive impact. Second, a good decision fosters opportunities for most, if not all, stakeholders in the decision or the circumstance – a merger must benefit employees and employers alike.
Good decisions are executable because a decision is the basis for action – one cannot have a decision that cannot be put into motion as it ceases to be a decision but becomes an opinion. Good decisions are also inclusive – they take all aspects and factors into consideration.
As a leader, when you make good decisions you also get to reap several benefits from making good decisions. You may get speedy results and save time, money and energy in the process. The intrinsic benefits of seeing those good results also give you a good sense of achievement and fulfilment which further give one a strong confidence and what is known as reputation capital.
Your professional profile improves and your career advances better based on the proof that you are a leader that produces results through effective decisions.
It, therefore, pays well for any person to acquire good decision-making skills and actually make an effort to study how to make decisions.
Karen Manyati is the director of Zimbabwe Leadership Forum and writes in her personal capacity. She can be reached on [email protected]