Do you think on your toes and dive headfirst without pausing for judgement? Maybe you're hesitant and uncertain when faced with challenges? Or prone to overanalysing every potential outcome? As a leader, how you make decisions will affect every aspect of the business, from employee engagement to shaping business success.
Great leaders are great decision-makers, and sound decision-making creates a culture of accountability. Those who lead with well-considered decisions based on clear criteria can foster team trust and set the organisation's strategic direction, be it bravely entering unchartered markets, adopting new radical technologies, or reallocating precious resources.
There are many foundations to a strong decision-making skillset. From recognising biases to analytical thinking, incorporating these foundational elements into your decision-making processes will boost your ability to make effective decisions that create positive outcomes.
Here, we explore seven ways you can sharpen your decision-making skills with practical application to different scenarios in your leadership life.
1 - Develop emotional intelligence
Have you ever made a decision in the heat of the moment, from a place of bias or out of an emotional reaction? Perhaps it wasn't the best decision for yourself or the organisation, and by taking a step back, gathering more information and considering different perspectives, the outcome may have been different?
By cultivating self-awareness, leaders can recognise how their emotions may influence their decisions and take steps to avoid impulsive or biased choices. In addition, emotionally intelligent leaders better understand their team members and stakeholders' perspectives and needs, facilitating more inclusive and well-rounded decision-making.
According to a study by Chauhan & Chauhan, managers showed that a high level of emotional intelligence could positively contribute towards effective decision-making and, thereby, the role efficacy of managers. The study also showed that senior managers possessed a higher level of emotional intelligence compared to middle or lower levels of management and were more effective in their decision-making roles.
2 - Recognise cognitive bias
Psychologists Amos Tversky and Daniel Kahneman developed the concept of cognitive bias from their 1970s research into why people struggle to reason and judge objectively in certain situations. Cognitive bias is an error in thinking that occurs when people are processing and interpreting information in the world around them and affects their decisions and judgments.
Many common biases can distort thinking in the workplace, from anchoring bias, where you rely heavily on the first piece of evidence you hear, to attention bias, where you only pay attention to some of the inputs, to confirmation bias, where you may favour information that supports your current views.
Overcoming bias can be linked to awareness and asking some pointed questions -
Are you relying on the first piece of information you learn?
Have you placed greater emphasis on the information that comes more quickly and easily?
Are you ignoring any important factors?
Are you simply seeking to validate your beliefs rather than considering alternatives?
Are you overestimating how much people agree with you?
Is one factor overshadowing others that deserve equal consideration?
Are you being overly optimistic?
Are you overestimating the capability of yourself or others?
By recognising cognitive bias's role in decisions and actively seeking to overcome them, leaders are more likely to make more objective and well-considered decisions.
3 - Seek diverse perspectives
A substantial body of evidence supports diversity in the workplace, with those who actively foster diversity outperforming their peers by more than 35% (McKinsey 2020).
One of the reasons for this success is because of the diverse perspectives that result can provide valuable input in decision-making.
When we only have one perspective, known as homogeneity, it can feel comfortable as everyone agrees. Still, differing viewpoints challenge each other and sharpen the performance of leaders and their teams. When perspectives are diverse, it forces a significant focus on facts, the facts may be processed more carefully, and the outcomes tend to be more innovative.
Leaders who treat everyone fairly, encourage different viewpoints, and respect others' opinions are 87% more likely to make better business decisions.
4 - Use decision-making frameworks to process data and evidence
Whether a simple SWOT analysis, cost-benefit analysis, decision tree or Pareto analysis, many different decision-making frameworks and theories can be applied to help determine whether to go for decision A or B.
Leveraging frameworks can provide a structured approach ensuring all relevant factors are considered and weighed appropriately – often providing a more objective view due to the identification and weighting. They can deliver enhanced transparency and clarity through the process and simplify communication with stakeholders, allowing for increased support.
When deciding, review the toolkit of decision-making frameworks available to you and consider their application to support a thorough process.
5 - Develop critical thinking skills
According to a 2019 study into critical thinking as a qualified decision-making tool, critical thinking was deemed an important requirement in making better decisions.
It is understood that critical thinkers make better decisions because they question their understanding of a subject before making a decision. They are aware of decision-makers' tendency toward lazy, superficial thinking and instead, ask questions to illustrate their depth of understanding.
When developing critical thinking skills, seek data and inputs from various sources, question assumptions, practice problem solving and reflect on your thinking.
6 - Consider short and long-term consequences
For those who tend to make short-term decisions, research shows that considering both short and long-term consequences can aid in better decisions overall. The rationale is that short-term decisions are often based on impulse and are not usually considered with the same degree of scrutiny as those who are thinking longer term.
When faced with a decision, challenge yourself to think short and long-term to ensure you give the decision the appropriate level of attention, analysis and detail it deserves.
7 - Practise scenario planning
Scenario planning is a strategic tool that can help you anticipate and prepare for different possible futures. It can help you identify opportunities and risks, test your assumptions, and align your actions with your vision and values.
Research by Phandis, Caplice and Sheffi from MIT showed that scenario planning affects executives' strategic choices and that the key success factor in its effectiveness is carefully crafting scenarios that have been presented through diverse thinking.
To use this method, brainstorm all the potential scenarios that may arise and test their likelihood. Once the scenarios are determined, explore the different ways you may choose to react with carefully considered thinking. These scenarios can be viewed in relation to the decision or as a result of the decision.
Be sure to consider both the short and long-term scenarios to round out the process.
As a leader, it is impossible to always make perfect decisions, even with the most robust tools and frameworks; however, by following these tips, you are more likely to succeed along the way. If a decision doesn't go to plan, consider it a learning opportunity for both you and your team and be open to the career growth that learning provides.
If you are open to new opportunities, contact a recruitment agency like Trojan Recruitment Group and receive advice from the experts in labour-hire, permanent and contract staff.