In the popular film review podcast Pop Culture Happy Hour, contributor Glen Wheldon highlighted certain moments in films where the audience can almost “feel the meetings”. The final film product, after being picked over, debated and rethought countless times, feels inconsistent and insincere.
The question for business leaders is, what decision-making policies produce the best results?
Does it relate to the number of people involved, the knowledge of those people, or their position within the company?
A fascinating global survey, released in 2009, highlighted a number of influences on decision-making processes. Awareness and implementation of these may well provide a guide to good decision-making for today’s business leaders.
This is perhaps the most important aspect of good decision-making, especially in a large company. An entire team can be responsible for implementing a decision but ultimately one individual has to be held accountable for the team’s success or failure.
Making a specific person accountable also reduces the chances of a ‘blame game’ six months down the line, once it becomes clear that no one actually followed up on the decision and implemented it.
In the era of remote working, serviced offices, hot-desking and coworking, this issue becomes even more important. A clear chain of accountability becomes vital when you have employees working in different locations, who may not be communicating with each other on a daily or even weekly basis.
A 2014 Princeton study found that as groups get larger, they become increasingly likely to make an incorrect decision. In groups of five to 20 people the decisions tended to be accurate, but as the groups grew larger is become more and more difficult for accurate information to be disseminated.
There is one simple way to combat this: assign key decision-makers. The same study concluded that the issue wasn’t specifically with the amount of people in the room, it was with the number of people responsible for making the final decision
Another interesting finding from the 2009 survey mentioned above was that the individual responsible for initiating the discussion should not be the one who makes the final decision on a course of action.
The survey found that if the same person initiates and approves a decision then the results are invariably worse.
Perhaps an unsurprising factor that contributes towards successful decision-making is the presence of a strategic planning process within the company.
A strategic planning process might be composed of a mission statement, an understanding of the company’s essential values and a SWOT (Strengths, weaknesses, opportunities and threats) analysis – all of which can help a company make better and more informed decisions.
Avoiding data overload
Big decisions can prompt big PowerPoint presentations, and thick folders full of statistics, data and complex mathematical algorithms, which do not always make for fascinating reading.
Management consultancy firm Bain & Company has developed a structured strategy for decision-making. One important aspect of its approach is establishing the facts. Not every tiny piece of information, only the facts that are vital to understanding the decision that has to be made.
In a world overwhelmed with data, the ability to pinpoint and extract the most relevant information can made the difference between an informed decision and a stab in the dark.
Making good decisions can be a huge challenge for businesses, with a mountain of data and high stakes to take into account. Each individual company has to navigate its own way through the decision-making process.