Imagine the increased productivity, efficiency, and overall success that would result if all of the employees and managers within your organization would make better decisions on a daily basis. This task is not easy to accomplish without the help and use of best practices.
What’s worrisome is that one study recently cited in Forbes of 500 managers and executives found that “98% fail to apply best practices when making decisions.” In another study of 100 managers cited by the same article, “managers who made decisions using best practices achieved expectations 90% of the time, and 40% of them exceeded expectations.”
However, simply having a few key decision-makers at the top won’t be enough to make a real difference in improving the decision-making of an organization overall. Businesses and organizations need to be smarter and demonstrate higher decision-making quality and processes. This is especially important when considering that greater authority is increasingly placed on frontline management as businesses shift to decentralized decision-making in favor of efficiency.
Here are five best practices your organization’s employees and leaders should keep in mind throughout the decision-making process:
1) Avoid Having Too Many Hands in the Pot
In a perfect world, you’d be able to make decisions on your own. However, that’s not always possible as you may find yourself in a group that is responsible for making decisions for your organization, such as a team or committee. When that happens, it’s important to limit the number of people to a realistic and efficient number of decision-makers.
According to a study by Bain that was cited in Forbes:
“After the 7th person in a decision-making group, each extra member reduces decision effectiveness by 10%.” The ideal and highest-performing group, according to many studies, is considered to include no more than 6 people.
2) Ensure the Right People are in the Right Roles
Almost nothing can make the responsibility of decision-making even more challenging. However, if you have the wrong person in one of the integral roles within the decision-making process, that could certainly make things more difficult for everyone involved.
Additionally, when a group is involved in that process, it’s important to make sure that the right roles are filled and that each role has a clear set of responsibilities. This way each person knows who is responsible for gathering information, giving or collecting feedback, making recommendations, making decisions and providing approvals, so that there is no confusion.
3) Cultivate a Problem-Solving Mindset through Training
Solving problems and making decisions in a constantly-changing professional environment can present a number of challenges. So, when you have individual employees or groups in place to face those challenges, you need to make sure they are prepared to do so as much as possible.
Professional development training for decision-making and problem-solving can help you to ensure that your employees and organizational leaders are equipped to handle those difficulties when they arise. For example, the Decision-Making/Problem-Solving video program offered by Big Think Edge helps organizations to cultivate a problem-solving mindset in employees so they can:
- Overcome cognitive biases,
- Make rational decisions,
- Apply situational strategies, and
- Execute plans of action.
4) Keep Industry and Organizational History in Mind
When things are looking up and everything is going well, it’s easy to become complacent or to overlook potential concerns with the expectation that everything will remain stable and that no calamities will arise. This is when it’s most important to instill a culture of humility within your organization and to encourage decision-makers to review the history of their organization and industry.
Having a historical perspective that enables employees and leaders to establish a strong risk culture in the decision-making process can help them to avoid making poor decisions that will impact themselves, their team, and the organization at large.
This idea is reinforced by former U.S. Treasury Secretary and Big Think expert Timothy Geithner. Using the example of the recent U.S. financial crisis to caution about the dangers of forgetting history and responding with knee-jerk reactions in the decision-making process, Geithner says in another Big Think article:
“The most damaging thing was the power of that simple belief that because the world had been relatively stable, it would be stable in the future… Severe [crises] happen pretty rarely. Again, for the United States, it wasn’t since the Great Depression. [We had] no living memory of that. And in some ways, it’s when you lose the memory of it that you become more vulnerable to it.”
The best way for employees and leaders to deal with uncertainty in the decision-making process is to acknowledge that they lack complete confidence and proceed with caution. This means analyzing the situation from different perspectives and figuring out what potential outcomes can result from making different decisions.
5) Follow a Decision-Making Checklist
One way to deal with inevitable uncertainties is to use a method-based approach such as a decision-making checklist.
Although this may sound ridiculously simple, following a decision-making checklist when faced with a business decision can save you time and increase results. By following this checklist (and not simply understanding the list items), you can work to counteract a range of cognitive biases and mental shortcuts that can hinder our decision-making processes.
According to a Cloverpop checklist cited in a Harvard Business Review (HBR) article, a good seven-step checklist is as follows:
- Draft a list of five existing company goals that would be affected by a decision.
- Based on this list, create a list of at least three realistic alternatives.
- Identify the most important missing information.
- Try to estimate the one-year impact of your decision and write that down as well.
- Create a small team of stakeholders (at least two people but no more than six) to get other perspectives.
- Make a decision as a group and document the reasons how and why the team reached that decision.
- Schedule a follow-up within the same quarter to review what has been learned during that period of time and implement any necessary changes based on that information.
Learn more about how your employees can engage in strong decision-making and problem-solving best practices. Contact Big Think Edge’s team of experts today to request a demo.