Better Decision Making – Part 2

Posted on May 28, 2018 in Blog ,Business Process Improvement ,Industry Discussion by

Navigate management consulting

Part One of our discussion about decisions addressed how managers should approach them. Part Two raises some ideas and questions for further consideration about who should make them: you or someone else.

What is a decision? It’s “the course of action you intend to take when it isn’t obvious what to do.” This means decisions are only needed when you don’t have information that would make the intended action obvious—because if all the desired information is available, the decision would “make itself”. So when you hear “I made the best decision I could based on the information I had”, understand that the exact opposite is true. The decision was made not on what was known but on what was not known. It’s the absence of information that creates the risk in decision‐making.

Business Process Management

Embedded here is a basic case for delegation, which most managers don’t do very well. Most managers make decisions they don’t need to make, ones that could be made better by someone else, someone closer to the situation. That someone doesn’t have all the information either (or no decision would be needed) but they probably have more information than you do and more information is better than less. The fewer the unknowns, the less risky the decision, right?

You may argue that some decisions are too important or too risky to delegate and you’d be right. So here’s how to limit or contain that risk using three factors that measure it.

 

First, the cost: A $500‐decision is less important (risky) than a $5,000 decision whether the dollars are gained or lost. So when delegating, set the limit. For example, an experienced tech should be able to make a decision with opportunity‐cost of a couple hundred dollars. A Project Manager might have a limit of a couple thousand. Now you have defined the worst that could happen if they are wrong—and they probably won’t be.

Next, the people affected: A decision that affects only one person, one department, one client is usually less important (risky) than one which affects many—or all. You can you safely allow an Account Executive or a Department Manager to decide certain things if they are so “fenced in”.

Finally, the impact on policy or precedent: If a single decision means you will have to live with it for a long time, or that it sets precedent to future decisions, or that it violates policy, or that it is difficult to reverse should you discover it’s “wrong”, then it’s more important than a simple delegated decision. Again, it isn’t hard to set these criteria and teach them.

Experience shows that allowing others to make decisions that affect their work within these boundaries has several benefits:

1) You will usually get a “good” (correct) decision from a good employee.

2) You will often get a faster decision (since we don’t have to wait for you).

3) You will develop your people to take on greater responsibility.

4) You will foster ownership of the decision by the person who made it.

5) You will free your time for things only you can decide.

Try it. You will be pleasantly surprised.


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