More than 1,200 managers from a variety of global companies were surveyed. They expressed strong frustration with the broken decision-making process, the slow pace of deliberations, and the uneven quality of decisions. Survey respondents say that decisions are not timely and that a majority of the time spent making them is ineffective. This opportunity costs a lot: about 530,000 days of managers’ time wasted each year for a typical Fortune 500 company, equivalent to some $250 million in wages annually.
There are many reasons why people are unhappy with the current situation. These include: not enough debate, complicated processes, too much reliance on agreement, unclear job roles, too much information, and company cultures that do not encourage people to take charge. A healthcare executive told us that he had to sit through the same 90-minute proposal three times on separate committees because no one knew who was authorized to approve the decision. The pharma company took too long to decide whether or not to buy the acquisition target, and so another company got the chance to buy it instead. A chemicals company CEO found himself devoting a lot of time to making hiring decisions four levels down the organization.
The most recent research backs up the importance of this way of approaching decisions, and it also points out some noteworthy practices in each main category of decision that can often result in much more effective outcomes. These practices can sometimes cause disagreement, for instance, or give employees more control, depending on the situation. Companies that make decisions quickly and improve upon areas of interest will succeed in the long run. This success is only possible when the organization as a whole is committed to following through with decisions instead of ignoring them. In many cases, these efforts result in faster decisions. The results of the survey showed that there is a strong relationship between making quick decisions and making good decisions, suggesting that a common belief among executives – that we can either have good decisions or fast ones, but not both – is inaccurate.
The primary responsibility of a manager is to make decisions. Most executives are engaged in some aspect of decision making at any moment in any day, including exchanging information, reviewing data, coming up with ideas, evaluating alternatives, implementing directives, and following up. Managers may be required to make decisions at all levels, but the manner or approach to decision making changes as the manager moves up through an organization. At lower levels, the job is to produce widgets or to solve service issues as they arise. Action is at a premium. When you get to higher levels in this job, you will be responsible for deciding which widgets or services to offer and how to develop them. Managers who want to be successful in their careers and be effective in new roles need to learn new skills and behaviors. This means changing the way they use information and the way they create and evaluate options. Making decisions like a senior executive too soon can prevent a middle manager from advancing quickly. If you act like a first-line supervisor after being promoted to senior management, it can be just as destructive.
Defining Decision Styles
It can be helpful to understand the different ways people make decisions before looking at the patterns that emerge. Different decision styles use information in different ways, and different styles also create different options. Some people like to have a lot of data to look at before making any decisions. Maximizers are people who always want to find the best answer and never rest until they find it. This results in a more informed decision, but it may be slower and less efficient. Other managers prefer to just hear the key facts and then form their own hypotheses which they test as they go. The literature uses the term “satisficers” from behavioral economist Herbert Simon to describe people who are ready to act as soon as they have enough information to meet their requirements.
Some decision makers believe in only pursuing one course of action, while others believe in generating lists of possible options and pursuing multiple courses. People who focus on one thing put their energy into making it happen the way they want it to, while those who focus on multiple things adjust to changing circumstances.
Four Styles of Decision Making
The decisive style is all about getting things done quickly and efficiently. This style values action over deliberation, and consistency is key. The company sticks to its plan and moves on to the next decision. When dealing with others they prefer honesty, being clear, loyalty and short conversations. Time is precious in this mode.
The flexible style focuses on adaptability and being able to quickly change to different situations. If someone is faced with a problem, they will get enough data to choose a plan of action and change course if necessary.
People who think in a hierarchic mode do not make quick decisions, but instead carefully consider all the options. Instead of making decisions based on a limited amount of information, they prefer to have many different sources of information before coming to a conclusion. They also expect other people to give their input on the situation before making a final decision. From a hierarchical perspective, decisions should be made in a way that will ensure their longevity.
The integrative style of problem-solving does not revolve around finding a single ideal solution. They have a tendency to see the big picture and take into account multiple elements that may be related to other situations. In other words, they don’t just make one decision, but multiple decisions that could lead to different outcomes. Integrative decision makers who work with others tend to like having a lot of input and enjoy exploring a variety of viewpoints, including those that conflict with their own, before coming to any sort of conclusion. Integrative decision making is not a one- time event, but a continuous process.
Of course, people don’t fall neatly into little boxes. The appropriate decision style also depends on the situation, so a manager should be able to use all four styles. In an entrepreneurial environment, there may not be enough history or time to permit lengthy analyses and deliberation. When there is a lot of change happening, people tend to use a multi-focus style. When things are more stable, people tend to use a single-focus style.
It turns out that people’s actions don’t always match up with their thoughts; they behave differently when they’re in front of a crowd than when they’re in front of a mirror.
Additionally, studies have shown that managers act differently when they are aware that they are being watched as opposed to when they are not being observed. In executives, call the public mode “leadership style” and the private mode “thinking style.” It turns out that people don’t necessarily lead the way they think. The way you make decisions changes depending on whether you are in front of a group of people or by yourself. No matter what part of the decision making process someone is in, this distinction applies.
Three fixes that make a difference
Big bets—facilitate productive debate
Big decisions can have a big impact on a company’s future. Leaders need to be careful when making these decisions. They often don’t get as much scrutiny as they should.
The dynamic inside many decision meetings doesn’t help. It is as if there is an understanding, without anyone speaking about it, that the meeting should go on like a short play with three acts. In the first act, the proposal is delivered in a snappy PowerPoint presentation that summarizes the relevant information; in the second, a few tough yet perfunctory questions are asked of the presenter and answered well; in the final act, resolution arrives in the form of an undramatic “yes” that may seem preordained. Little substantive discussion takes place.
It is important to explore all possibilities and to try to find evidence that disproves the initial hypothesis. It is important to create a safe environment for this; at first it can be helpful for the most senior participants to ask questions instead of expressing opinions and to actively encourage dissenting views. Product debate is a type of conflict that is necessary for a healthy organization. Senior executives need to dedicate time to creating trust and allowing differing opinions, even if it goes against the organizational hierarchy.
Cross-cutting decisions—understand the power of process
Only 34 percent of respondents said that their organization made good and timely cross-cutting decisions.
There are many reasons cross-cutting decisions go crosswise. Leaders may not have visibility on who is—or should be—involved; silos make it fiendishly hard to see how smaller decisions aggregate into bigger ones; there may be no process at all, or one that’s poorly understood.
The process of making cross-cutting decisions starts with everyone being on the same page about the objectives, measures, targets, and roles. This might mean separating the parts of a meeting that are for making decisions from the parts that are for informing or discussing. If there are any meetings that happen on a regular basis where it is not clear what needs to be decided, those meetings need to be rethought and may need to be stopped altogether.
Delegated decisions—make empowerment real
Delegated decisions are typically made about more specific issues than decisions that have a big impact or that affect multiple areas. They are elements that happen often and are part of regular management. There is a lot of value at stake in this situation, and when the organization’s approach is flawed, it is costly.
The best way to ensure that decisions are executed efficiently is to delegate responsibility to those who are closest to the work. This also enhances engagement and accountability.
Research supports this view. The survey found that employees who felt empowered to make decisions and received sufficient coaching from leaders were 3.2 times more likely to say that their company’s delegated decisions were both high quality and speedy.