So how do managers know that chosen decisions are the best ones and avoid falling into the trap of just “making a decision for the sake of it, because any decision is better than none?”
To help managers produce effective decisions there are a few simple rules:
Plan, plan, plan
A common error is reactive decision making - a situation that at best ends with a serendipitous result but more often with a poor outcome. Planning allows for decisions to be made simply, comfortably and in an effective way.
Planning provides benefits to decisions:
- opportunity to establish independent goals through a conscious and directed series of choices
- a standard of measurement of whether there is movement towards or away from a desired result
- finite (often limited) resources can be committed in a structured and orderly way
Do your research but avoid information overload
Information overload can be defined as "a gap between the volume of information and the tools needed to assimilate it”; the more information overload, the worse the quality of decisions made. The overload of information can be related to problems processing and tasking, which impacts decision making.
- There are a number of factors concerning information overload and consideration of these may help focus information collection and processing:
- Personal Information characteristics - qualifications, experiences and attitudes
- Information Characteristics - information quality, quantity and frequency
- Tasks and Process - standardised procedures or methods for gathering information and undertaking work
- Organisational Design - organisation processing capacity and relationship - both of which affect the ability to collect, assimilate and analyse information
- Information Technology - IT management, and general technology that assist with both collection and analysis
Keep decisions rational
It is often considered that people are rational, free to make their own decisions and therefore behave according to the rational choice theory - making decisions by determining the likelihood of a potential outcome, the value of the outcome and then multiplying the two. However, in reality, there are some factors that affect decision making abilities and cause people to make irrational decisions.
Cognitive and personal biases can lead to decisions being affected and it is therefore important to be aware, to understand and to reduce (or eliminate) these.
Some common biases in decision making include:
- Selective search for evidence – the tendency to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions
- Premature termination – the tendency to accept the first alternative that looks like it might work
- Cognitive inertia – the unwillingness to change existing thought patterns in the face of new circumstances
- Selective perception – screening out information considered unimportant
- Wishful thinking – a tendency to want to see things in a positive light
- Recency – the tendency to place more attention on more recent information and either ignore or forget more distant information
- Repetition bias – the willingness to believe what one has been told most often and by the greatest number of different sources
Use a logical approach
Within decision making, managers must consider a structured approach that ensures:
- Objectives are first established
- Objectives are then classified and prioritised by importance
- Alternative actions are developed
- The alternative(s) are evaluated against all the objectives
- The alternative that is able to achieve all the objectives is the tentative decision
- The tentative decision is evaluated for more possible consequences
- The decisive actions are taken together with any additional actions required to prevent any adverse consequences from becoming problems and re-starting both problem analysis and decision making.
Building effective decision making steps
Managers do not work in isolation in decision making and are most effective when working with the team when implementing the logical approach above. This enables a collaborative approach to developing the following steps - increasing awareness of and overcoming any possible social, cognitive and cultural obstacles along the way.
- Establish team ethos - creating and nurturing the relationships, norms, and procedures that will influence how situations are understood and communicated
- Increase group perception - recognising that a situation exists that needs a decision exists
- Interpret - identifying competing explanations for the situation and evaluating the drivers behind those interpretations
- Judgment - sorting various possible actions or responses and determining which is more justifiable
- Motivation - examining the competing commitments and then prioritising and committing to team values/needs over other personal or social values
- Action - following through with action that supports the more justified decision
- Reflect on action
So, does analysis paralysis prevent effective management? It does – but following these rules will help to overcome potential decision making obstacles and prevent this scourge of the well managed organisation.
Written by David Mathieson, a learning consultant at Capita Learning & Development.