Managerial Decision Making Process

Note One: I am talking about strategic decisions – as opposed to tactical decisions that executives make every day, where the effect on the organization is relatively minor. On the contrary, a strategic decision has a considerable impact on the performance of the company.

Note Two: I am talking about a managerial decision making process as a tool for executives – together with their corresponding teams – to help them make the best possible strategic decision every time. We define a team as a group of people made up by the boss and her direct reports within an organizational context.

Decision quality:

In today’s global market where there are too many variables for one single top executive to consider in order to make the best possible strategic decision, it is mandatory to consider as many beliefs, perspectives, concepts, etc., as possible.

Hence, the quality of a strategic decision depends on the diversity of ideas considered to make such decision.

However, the more ideas and perspectives are considered to make a strategic decision, the more conflict is likely to emerge in the managerial decision making process.

Execution effectiveness:

If the people in charge of executing the decision made commit themselves to such decision, the execution is more likely to be effective.

On the contrary, if the people in charge of executing the decision made do not commit themselves to such decision, the execution is less likely to be effective.

Decision quality:

Candor feeds the richness and diversity of ideas. There is more diversity of ideas if candor is part of the culture of the people in charge of making the strategic decision. However, if candor is not part of the culture, it is less likely that there will be diversity of ides, and as a consequence of this, the quality of the strategic decision is likely to be poorer.

Execution effectiveness:

Three ingredients feed commitment:

When people clearly understand all these three dimensions of the decision making process, they are more likely to commit to the decision made.

And vice versa, when team members don’t understand the why of the decision, the process by which the decision was made, and the decision itself, they are less likely to commit themselves to the decision made.

Nevertheless, the more conflict there is (because of the diversity of ideas), the less likely it is that people will clearly understand the decision made, which will in turn reduce the commitment to whatever it is decided.

Photo courtesy of Jordigraells

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For clarity sake, let's recapitulate:

Decision making success depends on both decision quality and execution effectiveness.

Decision quality depends on diversity of ideas.
Execution effectiveness depends on commitment.

Diversity of ideas depends on candor.
Commitment depends on clear understanding.

On one hand, more diversity of ideas increases the likelihood that there will be conflict; on the other, conflict decreases the likelihood that there will be understanding – and commitment.

So how do you resolve this dilemma?

You resolve this dilemma by making a distinction: You must distinguish between affective conflict and cognitive conflict.

Affective conflict is personal and destructive – it doesn’t lead anywhere.

Cognitive conflict is rational and constructive (it lives in the world of ideas, it is not personal). Cognitive conflict helps you seed breakthrough ideas – it facilitates both candor (diversity of ideas to improve the quality of the decision) and clarity of understanding (to build commitment to the decision made).

You, as the boss of your direct reports – especially if you are the CEO – you must do two things simultaneously in your managerial decision making process:

First:

If you want your team to take the best possible decision, you must earnestly nourish cognitive conflict within your team – you must make sure everybody speaks up, particularly if there are disagreements within your team.

Second:

You must make sure the conflict that takes place within your team doesn’t become affective conflict; and if it ever does – which is likely to happen – make sure people genuinely apologize to each other, and then move on.

Note: Before you use this decision making process, and for the health of your own team (you and your direct reports), make sure everybody understands both: the benefits of this managerial decision making process, and the ground rules. Ground rules refer to the agreements your team must make before your team uses this decision making model. For example: what exactly will your team do when cognitive conflict becomes affective conflict? Etc. Ground rules are extremely important.

TRUST

Candor and cognitive conflict are key elements of this managerial decision making process. But how do you facilitate engaging cognitive conflict and the creation of legitimate candor within the culture of your team?

Trust is the foundation of both – without it, your team won’t ever enjoy frankness or constructive conflict. Without trust, your team won’t ever be a high performing team – trust is an indispensable ingredient for organizational performance. It’s that simple.

And … how do you create trust inside your team’s culture?

The answer my friend is inside yourself as the boss of your direct reports – the answer is found within your own behaviors:

You must be authentic, you must have integrity, and you must be humble. If you haven’t done so, please read the three essential leadership characteristics web page to understand what they are within an organizational context, their direct relationship with your team’s results, and their impact on organizational performance.

Authenticity, integrity, humility, trust, frankness, etc., don’t have anything to do with the touchy-feely world. On the contrary, they are specific, observable, and effective behaviors that have everything to do with organizational results, with your company’s performance, and with the bottom line.

Managerial Decision Making Process

To keep on learning about management skills, go back to the previous page (or click here ), and continue reading in a sequential order.

If you would like your organization to learn about this managerial decision making process through my speaking or consulting services, please click on this link.

This decision making model was inspired by these two authors:

Michael A. Roberto, “Managing for Conflict and Consensus: Why Great Leaders don’t take Yes for an Answer” (Wharton School Publishing, Upper Saddle River, NJ: 2005).

Patrick Lencioni, “The Five Dysfunctions of a Team” (Jossey-Bass, San Francisco, CA: 2002).