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Top 7 decision-making tips for managers

5-minute read

When you manage a business, you are constantly making decisions—often under pressure.  How do you make the best possible decisions, knowing they will have an impact on your company's future?

As a leader, there are strategies you can use to avoid common pitfalls and hone your decision-making skills.  Making better, faster decisions will help you take advantage of business opportunities and avoid pitfalls.

1. Reframe the problem

Backing up is sometimes the best way to move forward. When you are presented with a problem, step back and think about its full context. Try to see the issue from as many perspectives as possible. That will help ensure you are not emphasizing one aspect and neglecting others.

Begin by trying to think of at least 3 different ways of looking at the problem.

2. Make evidence-based decisions

The aim of evidence-based management (EBM) is to use scientific evidence when making decisions, rather than simply trusting one's instincts.  Like most people, you probably tend to use your judgement and to base your decisions on what is familiar.  But experiences that you have had at other companies or in different circumstances may not apply to the situation at hand.

There are simple steps you can take to incorporate evidence into your decision making.

  • Use performance data to support your decisions.  Get the most current and complete data possible.
  • Challenge your gut feelings.  Is there any objective evidence to support them?
  • When a course of action is suggested, find out what it's based on and whether it's supported by data.
  • Determine whether commonly used business strategies have worked in a situation like yours.  Will they apply to your particular case?
  • Check that the business data you come across are current and objective.

3. Challenge the status quo

People tend to choose the status quo over change, to stay in their comfort zone.  But being comfortable with an approach may not be enough to justify it.  Question whether you would choose a course of action if you weren't already following it.  Examine your options as realistically as possible.  Don't overstate the cost or the effort involved in making a change.

For example, if you were starting over, would you use the same marketing tactics to attract customers?  Would you attend the same trade shows?  Would you emphasize web-based marketing, direct mail or a mix?  Don't forget to find supporting data that will help you review your choices objectively.

4. Get an outside perspective...but trust yourself

Make it a habit to ask others for information and opinions.  Be open-minded.  Get a wide range of views, so you can see an issue from as many perspectives as possible.

Employee opinions count

Find ways to encourage information sharing in your company.  Be open to plain talk and foster an atmosphere where people can be direct, even when the truth is unpleasant.  Using performance evaluations is one way to encourage these values.

Deal with problems

If you want to consult others about a problem, be sure to consider it carefully from as many angles as possible before talking to them.  That way, you will avoid being limited by their interpretations and ideas.  Frame the problem in as many ways as you can, and then seek out others to see whether they can add to your understanding of the issue.

5. Develop an eye for risk

It's possible to train yourself to look for all types of risks.  Whenever you make a decision, ask yourself:  If I make the wrong decision, how will I know it?

For example, if you are considering changing your transportation carrier to cut costs, think about how you would determine that you'd made the wrong decision.

  • Your service department would report more customer complaints about delayed orders.
  • You wouldn't see cost savings at the end of the quarter.
  • Administration staff would complain of poor service from the new supplier.
  • The carrier could go out of business, leaving you to find a new supplier.

This type of exercise can help you see the potential pitfalls of a decision and take steps to avoid them.

Even a generally good plan will have costs and potential problems.  Ask for information on how the plan could go wrong.  Play the devil's advocate.  Examine all the evidence, both bad and good.  Don't underestimate the costs and effort required.

6. Let go of past mistakes

People have a tendency to make choices that justify past experiences, even when a previous decision has not worked out as well as they'd planned.  We also tend to spend time and money fixing past problems, when it would be more useful to acknowledge the mistake and move on.

Making sound decisions means taking into account the evidence that is available at the time.  Sometimes the context changes and that decision is no longer valid.  Recognize that you made the best decision possible under the circumstances, and then review the situation to see whether a different decision is now called for.

In your company, take time to recognize employees who make good decisions based on sound evidence.  Don't focus exclusively on outcomes, as that approach can encourage employees to perpetuate mistakes by continuing to try to fix them.

7. Be honest with yourself

Before gathering evidence to make a decision, take time to review your own motivations.  Is your mind already made up?  Are you really gathering evidence objectively, or are you simply looking to confirm an existing idea?

Being aware of your own motivations can help you remain objective and focus on finding the best possible solution for your business.

Be decisive

Briskly proceed through the 7 previous steps and then make a decision.

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