How to make the big decisions in management

Thursday, 1 August 2013 01:43 - - {{hitsCtrl.values.hits}}

Not every major call is of the same breed – and getting acquainted with the four main decision types will enable you to pick the right strategy for make-or-break situations By Ben Willis

Every day, we all make countless decisions. Some of these can be minor – such as what colour socks to wear – and so are relatively inconsequential. In some aspects of life, though, decisions can be harder to make and have far greater implications. In the business world, managers and executives have to make difficult decisions all the time, many of which may mean the difference between their organisation’s success or failure, between prosperity or financial disaster. So what is the process behind making tough decisions? In his book ‘Tough Calls – Making the Right Decisions in Challenging Times,’ businessman Allan Leighton, who has led the Royal Mail and the supermarket chain Asda among other organisations, analyses the different types of tough calls business leaders must typically make, how to make them and how to see them through. There are four main varieties of tough calls leaders must take, says Leighton: 1. The radical decision The first is the “radical decision” – when a company has lost its way and something drastic needs to be done to rescue it. Among the key components of making radical decisions, Leighton picks out the need to make a few big – rather than many small – decisions. “Make too many decisions and chaos will ensue,” he says. When dealing with problems, he also points out that actually making a decision at all is key: “You must always make a decision, even if you are not 100% sure,” he says. “Procrastination is damaging.” 2. The crisis decision The “crisis decision” is required when a problem outside your control arises and requires decisive action to avert disaster. In such instances, Leighton says, “dithering” is not an option: unlike with the radical decision, with crisis decisions there is often very little time to react to the given situation. He also advises facing up to any problem that arises, and not living in denial; quick action is always preferable to an attitude of “let’s see what happens”. 3. The opportunity decision Third on Leighton’s list is the “opportunity decision”. Such decisions arise when a potential opportunity, such as a merger or acquisition, crops up and requires a business leader to decide whether or not to go for it. Making such decisions, he says, is almost the opposite of the crisis decision; whereas with the latter, incisiveness is key, with opportunity decisions a cool, measured approach is preferable. In short, if an opportunity presents itself, don’t get over-excited but work things through methodically. 4. The progress decision The final type of decision Leighton describes is the “progress decision” – the small-scale decisions businesses face every day. These decisions, he says, almost anticipate circumstances before they arise. As such they are among the hardest to make because there may be no immediate reason or time imperative to take them. The difference between making a correct or incorrect progress decision is a subtle one, Leighton says: “The casual ‘Perhaps we should try this’ approach can result in a course of action that is … damaging. The ‘We need to consider this’ approach can result in genuine progress.” Common factors While all these calls require different responses, Leighton says they share some characteristics. One is that good decision-making requires decisiveness: “Once [good decision-makers] have decided what they want to do… they stick with it. They don’t look back.” Nevertheless, sometimes decisions will turn out to be wrong. “No leader I have spoken to has claimed that they get things right 100% of the time,” he says. “All make mistakes.” When to change your mind Leighton says that if you get around 70% of your decisions right “you’re actually doing pretty well”. Of course, this means there will be 30% of instances where leaders don’t make the right call, so leaders must occasionally “backpedal” on decisions they have made. Bad decision-makers, he says, “never change their minds”. Because an initial decision is likely to have cost the person who made it some emotional and mental energy, Leighton adds, going back on that decision is by no means straightforward. Good decision-makers must therefore learn, as much as possible, to remove emotion from the process and to develop “cool objectivity,” he says. See it through Ultimately, good leaders are separated from bad by their ability to steer a steady course when the waters get choppy, says Leighton. He quotes General Lord Dannatt, the former head of the Army. “Pretty much anyone can muddle along when everything is going swimmingly and according to plan,” says Dannatt. “The time that leaders really earn their pay is when the going gets tough. This is when the real qualities of a leader will out… and true leadership gets displayed.” Article courtesy: Professional Manager, a publication of the Chartered Management Institute of UK. This article has been shared with the courtesy of CMI UK Sri Lanka branch from the Professional Manager magazine. CMI UK is the only Chartered professional body for the function of management. For membership please write to [email protected] and the website http://www.managers.org.uk/cmi-sri-lanka for more details.