Decision making refers to making choices among alternative courses of action—which may also include inaction. While it can be argued that management is decision making, half of the decisions made by managers within organizations ultimately fail. Therefore, increasing effectiveness in decision making is an important part of maximizing your effectiveness at work. This chapter will help you understand how to make decisions alone or in a group while avoiding common decision-making pitfalls.
Individuals throughout organizations use the information they gather to make a wide range of decisions. These decisions may affect the lives of others and change the course of an organization. For example, the decisions made by executives and consulting firms for Enron ultimately resulted in a $60 billion loss for investors, thousands of employees without jobs, and the loss of all employee retirement funds. But Sherron Watkins, a former Enron employee and now-famous whistleblower, uncovered the accounting problems and tried to enact change. Similarly, the decision made by firms to trade in mortgage-backed securities is having negative consequences for the entire economy in the United States. All parties involved in such outcomes made a decision, and everyone is now living with the consequences of those decisions.
Decision-making is at the core of organizational effectiveness.
Taken together, these 12 holistic steps of effective organizational decision-making provide a helpful framework for enhancing decision-making across all relevant dimensions.
- Understand the purpose and nature of the required decision(s).
- Use relevant and available data and inputs.
- Involve the right people at the right times.
- Establish and adhere to pertinent decision-making procedures.
- Clarify roles and responsibilities of all decision-making participants.
- Foster an environment that encourages participants to share opinions and embrace healthy debate.
- Ensure decision(s) made aligns with organizational purpose, culture and values.
- Develop a plan of action.
- Forecast the likely impact of the decision(s) and plan for contingencies.
- Communicate the decision(s) to the right audiences.
- Ensure follow-through.
- Apply lessons learned to future decisions.
How to Make Decisions?
In real-life business situations, decisions can often fail because the best alternatives are not clear at the outset, or key factors are not considered as part of the process. To stop this happening, you need to bring problem-solving and decision-making strategies together to clarify your understanding.
A logical and ordered process can help you to do this by making sure that you address all of the critical elements needed for a successful outcome.
Working through this process systematically will reduce the likelihood of overlooking important factors. Our seven-step approach takes this into account:
- Create a constructive environment.
- Investigate the situation in detail.
- Generate good alternatives.
- Explore your options.
- Select the best solution.
- Evaluate your plan.
- Communicate your decision, and take action.
I personally recommended a book” for making decisions, and approach challenges.” It’s called “Principles” by Ray Dalio, the New York Times bestselling author.
Inside the “Principles” you’ll learn:
In Principles, Dalio shares what he’s learned over the course of his remarkable career. He argues that life, management, economics, and investing can all be systemized into rules and understood like machines. The book’s hundreds of practical lessons, which are built around his cornerstones of “radical truth” and “radical transparency,” include Dalio laying out the most effective ways for individuals and organizations to make decisions, approach challenges, and build strong teams. He also describes the innovative tools the firm uses to bring an ideal meritocracy to life, such as creating “baseball cards” for all employees that distill their strengths and weaknesses, and employing computerized decision-making systems to make believability-weighted decisions. While the book brims with novel ideas for organizations and institutions, Principles also offers a clear, straightforward approach to decision-making that Dalio believes anyone can apply, no matter what they’re seeking to achieve.
Disorder holding you back? Well, this manual may be the most important book that you ever read. The power is in your hands! Being organized is the key to succeeding in both your personal and professional life. Whatever your clutter is, “Principles” will be your go-to resource for learning how to make decisions, and approach challenges.
I’m loving the things I’m learning through “making decisions, and approaching challenges”. What are some other benefits you’ve experienced? Drop me a line below!