Making decisions – minor or major, routine or strategic, short-term or long-term – is an integral aspect of running an organisation. Businesses simply wouldn’t function without leaders, as well as other team members, evaluating situations and choosing the most appropriate course of action to help achieve key business objectives. As a result, accurate, considered, timely, and consistent decision making is among the most critical leadership skills.
Despite this, data indicates there is vast room for improvement in the decision-making space. A report by Signal AI states that a staggering 96% of business leaders believe that their decision-making processes could be improved; this is particularly key given the context that the majority of leaders spend upwards of 40 hours a week exclusively on making strategic decisions.
Why is strategic decision-making important?
Ultimately, the decisions made by those in all roles – but particularly individuals in leadership positions – can spell the success or failure of a business. As Bain and Co., a global management consultancy organisation, highlight, there is a 95% correlation between businesses who excel at effective decision-making and those with strong financial performance.
However, the need for better decisions in the workplace goes beyond profit and bottom lines.
A good, strategic decision, that results in a correct course of action, can lead to:
- business innovation, growth, development, resilience, and adaptability
- greater satisfaction, buy-in and confidence among stakeholders
- new opportunities and initiatives
- positive changes in organisational behaviour
- high-performing, productive teams
- better resource allocation
- better risk management
- greater competitive advantage
- clarity of organisational direction
- time, resource and cost-savings.
Each of the above helps contribute towards long-term organisational stability, sustainability, and success.
What does effective decision-making look like?
Among other things, good decision-making is characterised by quality, speed, and effective implementation. Decisions that are poorly considered, slow ‘out-of-the-gates’, or badly executed are meaningless and ineffectual at best or outright dangerous at worst – just think of the healthcare industry as an example.
Decision-making methodologies and processes should be iterative and dynamic. Generally, they involve: clearly defined objectives and goals that align with organisational ambitions; comprehensive information gathering and research that seeks diverse input from key stakeholders; an analytical approach that evaluates all options and assesses potential risks; commitment to take the necessary actions for it to implemented; feedback and reflection to help inform future decisions.
The most effective decision-making is collaborative, data-driven and grounded in its real-world business environment, backed by strategic thinking and assessment, well-communicated, flexible and adaptable, timely, and subject to continuous improvement.
What factors influence decision-making processes at leadership level?
Leadership decision-making processes can be influenced by a complex interplay of internal and external factors:
- Internal factors: These include personal values and ethics, expertise and experience, risk tolerance, cognitive biases, leadership style, and emotional factors.
- External factors: These include organisational culture, economic, political, environmental, and social environment, stakeholder influence, technological advancements, regulatory and legal considerations and constraints, globalisation, and data, information and other useful metrics.
Decision-making models and frameworks can help to dig deeper when important decisions need to be made. For example, leaders might draw on insights from decision tree exercises, cost-benefit analyses, SWOT analyses, and scenario planning and forecasting.
There are also various types of decision-making styles – including directive, analytical, conceptual, and behavioural. The right one, or combination, to select, will depend on the individual situation, leadership style, and intended outcome.
How can business leaders improve their own decision-making ability?
While we now have more data, knowledge, and analytics at our disposal than ever before to help make better-informed choices and arrive at the best decision, it’s still almost impossible to arrive at the best decision every single time. After all, leaders can only make judgements based on the evidence, business insights, and their own experience and instincts in the given moment. It is, however, possible to enhance individual aptitude for making decisions.
There are numerous competencies that support and underpin the making of effective, informed decisions – including creativity, problem-solving, and logical reasoning. Each can be worked on as part of leadership development training, alongside others:
- Emotional intelligence – Being able to regulate one’s own emotions is integral to making clear-headed, strategic, unbiased decisions. Leaders should critically evaluate different viewpoints, and know when to draw on the expertise and perspectives of others.
- Attitude to challenging and uncertain situations – The decision not to act can be a perfectly valid, and considered, course of action. However, uncertainty is quite different – particularly when resources such as time, money, and labour are at stake – and can result in decision paralysis. Business leaders must draw on available data, relevant information, and insights to limit choices and reduce uncertainty.
- Intuition – Drawing on an entire career’s wealth of expertise and experience should not be overlooked when arriving at a final decision. Seasoned leaders – with a track record of capitalising on opportunities, weighing up information, and trusting their instincts – are well-placed to balance intuition with data and dismantle cycles of over-thinking and indecision.
Leaders can also focus on building strong professional networks and industry associations (who can be drawn on for advice, insights and perspectives), cultivating a culture of learning from mistakes and encouraging feedback within their businesses, and investing in continuous learning, development, and training opportunities.
Develop your problem-solving, critical-thinking, and decision-making skills
Eager to develop the essential and wide-ranging skills required for effective leadership? Excel as a transformative leader – and a skilled, impactful decision maker who drives businesses forward – with the University of Lincoln’s online MBA Leadership programme.
If you’re looking to upskill ahead of your next big career move, and require the flexibility and autonomy that comes with an 100%-online programme, we can help. You’ll develop your professional understanding and theoretical expertise across the leadership spectrum, engaging with the latest debates, challenges, and issues facing fast-paced, globalised organisations, and learning how to manage change, complexity, adversity, and diversity.
Through engaging and wide-ranging modules, you’ll explore key components of effective leadership, including workforce planning, innovation and entrepreneurship, strategic decision-making, financial management, change management, marketing, governance and risk management, and more.