How Leaders Can Make Better Decisions - SHRM

Leaders can make better decisions by choosing a decision-making process and style that fits the situation. HRMagazine|Fall2019 HowLeadersCanMakeBetterDecisions Chooseaprocessandstylethatfitsthesituation. #DawnOnley ByDawnOnley August29,2019 LIKE SAVE PRINT EMAIL   ReusePermissions Membersmaydownloadonecopyofoursampleformsandtemplatesforyourpersonalusewithinyourorganization.Pleasenotethatallsuchformsandpoliciesshouldbereviewedbyyourlegalcounselforcompliancewithapplicablelaw,andshouldbemodifiedtosuityourorganization’sculture,industry,andpractices.Neithermembersnornon-membersmayreproducesuchsamplesinanyotherway(e.g.,torepublishinabookoruseforacommercialpurpose)withoutSHRM’spermission.Torequestpermissionforspecificitems,clickonthe“reusepermissions”buttononthepagewhereyoufindtheitem. 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PageContent​Theaveragepersonmakesthousandsofdecisionseachday,andmostofthemhavelittlelastingimpact. However,decisionsmadebybusinessleaderscandeterminewhetheranorganizationultimatelysucceedsorfails.Aglanceatrecentnewsarticleswillshowplentyofexamplesofpoordecisionsthatsentcompaniesintoadownwardspiral.Infact,there’sa95percentcorrelationbetweencompaniesthatexcelateffectivedecision-makingandthosewithstrongfinancialperformance,accordingtoresearchbyBain&Co.,aglobalmanagementconsultancyinBoston. Intoday’sfast-pacedandcomplexbusinessworld,leadersmustcontinuouslyrefinetheirdecision-makingprocessesandpracticestoensuretheystayontherightpath. “Agoodleaderisopen-mindedandtakesintoconsiderationotherideasandpointsofview,”saysJenniferLeeMagas,vicepresidentofMagasMediaConsultantsinMonroe,Conn.,whohasabackgroundinHRandemploymentlaw.“Havinganarrow-mindedapproachtodecision-makingcanlimityourgrowthasaleader,andyoumaybemissingoutonadecisionthatcouldactuallybenefityouandthecompany.”Becauseeachdecisionisdifferent,leaderswouldbewisetochoosetheappropriatedecision-makingstyleforthesituationathand,saysMarieHansen,SHRM-SCP,deanoftheCollegeofBusinessatHussonUniversityinMaine.“Determiningwhichstyletouseandwhenrequiresanunderstandingofyourauthorityandroleasleader,theexpectationsofyourteam,andthetypesofdecisionstobemade,”Hansensays.“Leaderswhoremaintransparentinthemannerinwhichtheymakedecisionsandwhytheychoosedifferentstyles,dependentonthetypeofdecision,areabletobuildtrustandrespect.”  Fourcommonlyrecognizeddecision-makingstylesare:Directive.Theleaderuseshisorherknowledgeandpastexperiencetoreachadecisionwithoutseekinginformationfromothers.Theadvantageisthatdecisionscanbereachedquickly;thedisadvantageisthattheleadermightnotconsiderthelong-termramifications.Conceptual.Theleaderseeksideasfromteammembers,whichencouragescreativityandinnovation.Thisstyleissuitedforlong-termprojectsandplanning.Analytical.Theleaderreliesondirectobservation,factsanddata.Behavioral.Theleadercollaborateswithothersonoptionsandishighlyinfluencedbytheirfeelingsandopinions.Thedownside:Ifaconsensuscan’tbereached,theleadermustchooseadifferentapproach.KeyStepsIncorporatingaprocessorchecklistcanhelpstrengthenthedecision-makingskillsofC-suiteexecutives. FinancialguruDaveRamsey,authorofEntreLeadership(HowardBooks,2011)whotrainsleadersonbetterdecision-making,saysthekeystepsinclude:Setadeadline.“Procrastinationcanbeavoidedbysettingaself-imposeddeadline,”Ramseysays.Gathermanyoptions.“Qualitydecisionscomefromhavingthemostoptions—findthem,”hesays.“Optionshavethepowertoremovefear.”Determinetheworst-casescenario.“Whenyouemotionallydigesttheabsoluteworst-case,youcanmakethecallwithadegreeofconfidence,”hesays.Followyourguidingvalues.“Whenyouhaveaclearsenseofethics,youcanmakedecisionsmoreeasilyandquickly,”hesays.Understandthatinactionisanoption.Attimes,doingnothingisthebestchoice.“That’sdifferentfrombeingparalyzed,”Ramseysays.“Decidingnottodecideisadecision.” Anotherimportantstepthatleaderssometimesoverlookistoreviewthelegalramificationsoftheirdecisionsbeforetheyrenderthem.“AlotofthelitigationIsee,atleastintheareaofemploymentlaw,arisesfromexecutivesmakingsnapanduninformeddecisions,”saysNanninaAngioni,alaborandemploymentattorneywithKaedianLLPinLosAngeles. Seekinglegaladvicebeforeannouncinglayoffs,forexample,canhelpreducetheriskoflegaltroubles,shesays.TheRoadblocksFearofmakingthewrongchoice,worryingthatthedecisionwon’tbepopular,orbeingunabletodecidealtogetherareafewofthechallengesthatexecutivesencounterwhentheyneedtomakeimportantdecisions.“Fearistheultimatecauseofparalysis,and,justlikethesquirrelthatrunsinfrontofyourcarandcan’tdecidewhathewantstodo,fearwillgetyoukilled,”Ramseysays.“Ofcourse,therewillbetimeswhenyou’reafraid.Justdon’tallowindecisivenessduetofear.”‘Leaderswhoremaintransparentinthemannerinwhichtheymakedecisionsandwhytheychoosedifferentstyles,dependentonthetypeofdecision,areabletobuildtrustandrespect.’MarieHansen,SHRM-SCPSuchdelayscancostanorganization“firsttomarket”positionandhavelastingconsequences,saysLarryMietus,founderofSpeakingofStrategy,aconsultancyinBuffalo,N.Y. “Whenyourheart,brainandguttellyouthatyou’vegotabout80percentofthedatacollected…makeadecision,”headvises.Ontheotherhand,leaderswhoareoverconfidentanddon’tseekotheropinionscancreateproblemsaswell.Whenabusinessleaderoffershisopinionbeforesolicitinginputfromothers,otherteammembersarelikelytobereluctanttoofferdifferentideas.Asaresult,innovationandcreativitycouldbestifled,Mietussays.HeatherIshikawa,seniorvicepresidentofCaliper,ahumancapitalanalyticscompanyinPrinceton,N.J.,warnsthatconfirmationbiascanoccurwhenleadersseekonlyinformationthatconfirmstheirbeliefsanddismissinformationthatdoesnot.Whileinputfromthegroupisaworthygoal,holdingoutforconsensusisoftenabadidea,saysJimHauden,authorofWhatAreYourBlindSpots?Conqueringthe5MisconceptionsthatHoldLeadersBack(McGraw-Hill,2018). “Weshouldn’tneedavote,”Haudensays.“Wewantthewisdomofthegrouptoleadustotherightpath.Whilethedecision-makingprocessdoesculminateinadecision,it’stheartofco-thinkingandsynthesizingtogetherthatyieldsthemostpowerfulresults.”Ofcourse,havingaprocessalonedoesn’tensurethatleaderswillmaketherightdecisions,onesthatwillbenefittheirorganizationsoverthelongrun.“Empathyplaysaprettysignificantroleingooddecision-makingbecauseleadersneedtoactuallycareiftheirdecisionshaveapositiveimpact,”saysHelenMcPherson,founderofMcPhersonConsultingGroupInc.inFortWorth,Texas.TrustYourIntuition Intheend,thebestdecisionsinvolveamixofknowledge,intuitionandawillingnesstotakeabitofrisk—someofwhichhastobedevelopedovertimethroughexperience.Forthisreason,GregGithens,authorofHowtoThinkStrategically(MavenHouse,2019),likensdecision-​­makingtoanartformratherthanaprocess.Leadersneedtodevelopinsight.“Itistheinsightthatallowsthemtoeffectivelycutthroughallthedata-noise,”Githenssays,“sothattheycanrecognizethe‘cruxofthematter’andmakegoodstrategicandtacticaldecisions.”  DawnOnleyisafreelancewriterbasedinFrederick,Md.illustrationbyMichaelMorgensternforHRMagazine. 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