How to Make Effective Business Decisions and How To Learn From Them

Tough Decisions Ahead Road Sign

Want to be a leader or a manager in the business world? Then you’re going to have to be able to take decisions. More importantly, you want to be able to make decisions that improve productivity and impact positively on the place you work.

There’s often an assumption that “decision making” is an innate skill of natural born leaders but nothing could be further from the truth. While a section of people can work out the decision making process for themselves; many more have to learn how to make decisions.

There are a bunch of factors which influence our decision making and learning to recognize those factors is in itself a critical skill. You might, for example, make a different decision when your job is on the line than when there’s no pressure, you might be tired and rush to make a decision when you’d be better off thinking about it, and so on. No two decisions are exactly the same.

The Basic Business Decision Making Process

When you’re faced with making a decision; you can employ a fairly simple process before you make the decision:

  • Work out what the problem really is
  • Come up with some potential solutions to the problem
  • Evaluate the solutions in light of whether or not they bring you closer to your objectives
  • Make a decision

Work Out What The Problem Really Is

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Before you start making decisions about a problem; it’s best to examine the problem itself. All too often, poor managers and leaders make decisions but about the wrong things.

For example; your team aren’t performing as well as you would like. It’s very easy to assume that the fault lays with the team and thus start on a decision making process regarding motivating or upskilling the team. Training or discipline?

But what if the reason for their lack of productivity has nothing to do with the team? What if it’s down to the heat of the office? Or a shortage of parts for their work? Or any of a hundred other things?

There’s a simple technique to getting to the underlying problem. Ask “Why?” and keep asking it until you’ve reached a point that you can’t go beyond (you may have to hunt for answers to some “why?” questions – you won’t always have the answers to hand).

So, for example, “Why is my team not performing?” might lead you to “The work environment is very dirty and it’s hard to work in.” Then “Why is the work environment very dirty?” might get you to “Because the cleaning staff only comes in on weekends.” That’s a problem that you can address.

Come Up With Potential Solutions

Some problems are easy to fix. If the cleaners don’t come in often enough and you have the budget for it- you can solve the issue pretty easily.

However, others require some deeper thought. Before you make a decision you want to come up with a list of possible solutions. A little brainstorming can go a long way to get this list together.

What if you didn’t have the budget for additional cleaning? You might be able to change the cleaner’s shifts so that they came in mid-week rather than weekends – alleviating some of the issue. You might be able to get your employees to take responsibility for cleaning up as part of their duties. You might need to get involved yourself.

Evaluate the Solutions in Light of Your Objective

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Your objective, in our cleaning example, is to get your staff to be more productive. If you change the cleaner’s shifts – you will gain some productivity benefits but the workplace will still be dirtier than it should be and production will suffer.

On the other hand if you get your employees to assume responsibility for cleaning; you’re going to lose some productive time each day to the cleaning. Will the gains outweigh the losses? Will it be better or worse than changing the cleaner’s shifts? What about the impact on your staff of having to do cleaning as part of their work?

If you take over the job; you might find that productivity surges but at what cost to your ability to manage and lead your team? Cleaning is going to take time away from your other duties.

Weighing up solutions will help you better understand which solution will best achieve your objectives. Then making a decision should be easy.

Making Decisions

Ideally, you don’t want to rush a decision. You want to think through your options and see how they might (or might not) help you achieve your objectives. There’s a reason that we “act in haste” and “repent at leisure”.

However, sometimes the occasion calls for an instant decision. At those points, you use the information you have at hand and make the call. You won’t always make perfect decisions but that’s understood – as long as you make more right decisions that wrong ones – you’ll be respected within the workplace and your people will trust in you.

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The Final Step – Learning From Your Decisions

“Those that don’t learn from history are doomed to repeat it.” This is true of all history not just the stuff in school textbooks. Once you make a decision – you don’t walk away and forget about it.

Instead, you come back and examine the impacts of the decision. Did the decision lead to an improvement or a positive result? Could you have got a better result if you’d done something differently?

If the decision didn’t have the outcome you expected; why not? What should have done instead to get the results you needed?

Learning from your decisions will help you make better decisions in the future. You don’t need to spend too much time worrying about the decision to wear the black shoes or the brown shoes in most cases but when you make a decision which impacts the business and the lives of people within the business – you should reflect on that decision. Then you’ll be writing new histories and not rehashing the mistakes of the past.