Last reviewed 12 August 2015

Judith Tavanyar highlights the flawed art of corporate decision-making

If you have ever worked with a colleague who spent hours consulting others and collecting data without actually ever making a decision based upon the information received, you will know how frustrating that can be. Or conversely, perhaps you have experienced his or her polar opposite — the over-zealous decision-maker who appears to take the biggest decisions entirely alone, based on limited knowledge and absolutely no consultation, and within a split second timeframe — often to disastrous effect.

While these are two extremes on the scale of decision-making at work, whole libraries could be filled with books about the importance of decision-making in professional life. Why then, according to a piece in the Harvard Business Review (HBR)(1) is it that “enormously important decisions made by intelligent, responsible people with the best information and intentions are nevertheless hopelessly flawed at times”?

According to commentators, senior leaders regularly use two “hardwired processes” in the brain to make decisions — referred to as “pattern recognition” and “emotional tagging”, both of which may be reliable in certain circumstances but not in all — resulting in decisions that may at times range from “mildly skewed” to downright foolish.

The HBR report indicates that “pattern recognition” is a “process that integrates information from … different parts of the brain”, and forms assumptions based on prior experiences and judgments. When faced with a new challenge, this is a bit like the brain telling us: “I’ve been here before — what did I do last time that worked?”

The problem with using “pattern recognition” when dealing with situations that appear familiar, is that although our brains may tell us that we understand them, it is possible we do not. Any subsequent decisions made will then be based on flawed interpretations of the current situation based on past experience, which actually may require fresh thinking and a different decision-making approach.

“Emotional tagging”, is described as an important and powerful process by which the brain attaches emotional significance and, therefore, “weight” to the thoughts and experiences our memories bring. What is perhaps most interesting about pattern recognition and emotional tagging is that, not only can both be misleading occasionally, but also both may be entirely hidden influences upon the decision-maker. As a result, the “unconscious bias” they exert is, by definition, impossible for the decision-maker to discern — and thus avoid.

What does this suggest to those of us charged with making “watertight” decisions in professional life as managers and business leaders?

There are now numerous tools based on decision-making theory which propose a range of different decision-making “styles”, any of which may have benefits in a particular situation, but none are likely to be successful in all. The thinking behind these models and questionnaires is that we all have decision-making preferences, based upon personality, experience and other factors. Being aware of them, their strengths and limitations can help broaden and choose the range of decision-making styles we use to adapt to a variety of situations.

One such, the Decision Style Profile(2), proposes five specific approaches to professional decision-making, taking into account a number of “key factors” when facing any challenging, “non-routine” decision. These factors include:

  • availability of time

  • level of agreement about the purpose of the decision

  • the commitment that key stakeholders have to the decision

  • the availability of information to support the decision

  • “problem clarity” — understanding the nature and scope of the decision itself.

The authors of the Profile suggest that many of us revert to our “preferred” or “tried and tested” decision-making style by default, sometimes unconsciously, when facing a challenging decision. When we are simply “deciding in the way we have always decided”, we tend to ignore some important questions, not just about availability of time and information, but also (for example) about whether or not we have framed the problem from different perspectives, by consulting and including other stakeholders.

The Profile presents five decision-making styles, according to the demands of any specific situation, and outlines the value of being aware of the strengths and challenges of our own preferred style, so that we can adjust it to meet the requirements of the decision on hand. Thus, while “Directing” at one end of the scale suggests an entirely autonomous and rapid decision-making approach, “Teaming”, at the other end, is the most consultative approach, involving collaborative group decision-making and an in-depth exploration of all the information to hand.

There are many such tools, all based on the premise of different styles and the importance of reflection, versatility and adaptation of approach. Most also suggest that an open discussion of decision-making styles in your team is a great way to enable team members to understand, and work with, the strengths and weaknesses of his or her own and others’ styles effectively, and also to increase team connection, understanding and, ultimately, performance.

Furthermore, such team discussion can be an excellent way to avoid the time-wasting and destructive tendency to blame and “scapegoat” when it appears — some months down the line — that a decision that originally seemed intelligent and well-considered at the time appears inappropriate, sometimes even catastrophic, with the benefit of hindsight.

Of course we cannot ignore that history in general provides numerous cases of appalling and destructive decision-making, often based on arrant self-interest, intentional cruelty or blind ignorance. But for each of those there are probably hundreds of far less clear-cut examples when a good decision at the time of reckoning in corporate life appears to be a disaster in retrospect — and, of course, the other way around.

So what does all this mean for the time-pressed manager struggling to balance immediate operational decisions with strategic choices that may have implications for months, even years, into the future?

If we accept that, in our rapidly changing world, uncertainty and upheaval are the order of the day — then despite all the assessment tools and approaches available, decision-making can never really be a precise science. Even with the most rigorous and appropriate decision-making process, anyone managing a challenging choice is ultimately taking a risky and courageous step into the unknown.

Let’s learn from our “bad” decisions, whenever and howsoever judged, and continue to apply that learning. Let’s remember to thank those involved in a collaborative decision, to communicate the thinking behind our decisions and the overall purpose, to engage our stakeholders’ interest and keep them motivated and informed. In doing this, sharing our experience about the tough challenges of any decision may be motivational for some: for who is not reassured to know that facing difficult choices is a tough process for anyone, no matter how senior or apparently well-informed they are?

But, the decision made, let’s also move on swiftly and not linger on past mistakes, accepting that, in the longer term, any decision may look different retrospectively. At the same time, reminding ourselves that all choice, whether inept or well-advised, that avoid simply repeating the patterns of the past and dare to break new ground, prepare the way for new ideas: the innovative foundation for an organisation’s future.

References