The manner in which leaders make decisions creates the difference between managing individuals and leading collaborative and innovative enterprises. Furthermore, their ability to make decisions is the difference between making bad decisions or great decisions. In their book Decisive, Chip Heath and Dan Heath (2013) cite research indicating “four villains of decision making.”
The first villain is “framing the decision too narrowly.” For example, “How should we improve our healthcare delivery service” rather than “What do our patients need from us?”
The second villain of decision making is our tendency to pick a solution and find data that supports our idea. The authors, Heath and Heath, call it “confirmation bias.” They refer to Dan Lovally, professor and decision-making researcher who said, “Confirmation bias is probably the single biggest problem in business, because even the most sophisticated people get it wrong. People go out and they’re collecting the data, and they don’t realize they’re cooking the books.” “When we want something to be true, we will spotlight the things that support it, and then, when we draw conclusions from those spotlighted scenes, we’ll congratulate ourselves on a reasoned decision. Oops!”
When buying or selling a house I used to pick the real estate company with the most appealing signs. More recently, I have avoided confirmation bias by using a decision-making process. Three real estate firms are invited to see the house and design a strategy for marketing and selling the property. The agent who provides a strategy tailored to my house and the local market is awarded the listing. I also include in the decision-making process anyone who is a stakeholder in the project. Houses have sold sooner and at a more satisfying price since changing my process.
The third villain of decision making is “short-term emotion.” Even when we know what we must do our emotional ties will influence our decision. How many times have you seen someone pick their favorite team to win a contest knowing it faces overwhelming odds. Or, how often do we see a political candidate win a contest while offering policy considerations that have failed time and time again in the past. The decision to pick a certain team or candidate is based on how we feel emotionally about the situation. Facts just get in the way! The authors offer a solution. Ask what a stranger coming into the situation would say. Your answer will help cut through the emotional tangles being faced.
The fourth villain of decision making is “overconfidence.” “People think they know more than they do about how the future will unfold.”
Heath and Heath reported a study revealing that when doctors reckoned themselves “completely certain” about a diagnosis, they were wrong 40 percent of the time. When students made estimates that they believed had only a 1 percent chance of being wrong they were actually wrong 27 percent of the time. We are challenged in that our crystal balls seen to have lost their glow and our past performances may not provide the data desired for future decisions.
The ability to make better decisions involves a structure and process that provides for inclusiveness and deliberation. A leader recently observed that he uses all four decision styles based on generational differences. The four alternatives for making business or family decisions include the following:
Leader Directed
The leader makes all decisions, discusses issues, and plans individually with members in his/her office. Information is provided on a “need to know” basis (Figure 9.1).
Figure 9.1 Leader directed model
This decision-making style is prevalent in traditionally managed organizations. These companies manage individuals and overlook the power of developing individuals and leading collaborative work groups. The current emission control violations experienced by Volkswagen have been attributed to a Leader Focused structure of decision making. In fact, recently in a business news report, an observer noted this form of management used by Volkswagen discourages innovation.
There are situations in which this Command decision-making approach should be utilized. It has application when there is an emergency and decisions need to be made quickly or the leader is the only person with the knowledge to make the decision. For example, a storm is coming, and the department needs to evacuate or a client has announced they will be coming the following day to audit how work is performed.
The advantage of using this approach is it is quick and satisfies the manager. The disadvantage is it fails to solicit the input of staff members and creates dependency on the leader. It stifles input, creativity, and initiative among group members. Without participation by work group members, the probability of successful implementation of any initiative is unlikely. In a collaborative culture, the Command style of decision making is typically used approximately 10 percent of the time.
The Superintendent of a production facility had been using this style of decision making for most of his career. He made a presentation in a management meeting regarding how he and his organization had changed. “I got so tired of everyone asking me to get tape from the cabinet for them!” he laughed. “I was ready to retire,” he added. “Now I delegate and they get their own tape. Furthermore, when they leave the plant at night they are not laughing and horsing around like they did in the past. Now, when they leave, they are talking about their work. I have decided not to retire for a few more years and now have supper with my wife,” he said with a smile.
Group Involved
The Group Involved (Figure 9.2) approach to decision making is used to gather facts and data in order to make better informed decisions. It becomes the predominant form of decision making as managers shift from Leader Directed decisions.
Figure 9.2 Group involved model
The manager facilitates group problem solving and improving work processes and service delivery. The manager still makes the final decision after receiving ideas and data from work group members.
For example, before making the decision on clients who are coming the following day for an audit, the manager would call a staff meeting, inform staff of the situation, and solicit their ideas on how to proceed. The manager would then decide on the final action plan and proceed with assistance of staff members. A client began using this approach in staff meetings. He asked his profit center team for ideas to reduce labor and utility costs. After hearing their ideas he agreed, asked them to implement those ideas and report to him as they progressed. The following month his profit center had the lowest budget costs of the 10 profit center groups.
There is a caution when soliciting input from staff. Recently, someone described how their company uses this approach. She and other staff members were asked to recommend a new location for their branch office. The manager made the final decision, disregarding their recommendations and choosing another location. Not only were their ideas not used, they received no feedback about the reasoning for the final decision. This may have been convenient for the manager but was certainly not best for staff or customers.
Be sure to use staff ideas or inform them why their ideas were not used. Trust erodes if staff members offer ideas that are ignored. They will trust and contribute when they see their ideas being used or are given honest reasons for not using those ideas.
The advantage to this approach is it is a fast and flexible way to generates data and facts for more informed decisions. Staff members feel good about being involved and having a voice in how work is performed. The likelihood of successful implementation of ideas and solutions is enhanced as a result. The disadvantage is members feel betrayed if their ideas are not used and will be reluctant to respond to future inquiries.
Group Collaboration
This approach to making decisions is used when decisions affect the whole group and when the group is responsible for creating and implementing concepts they have developed (Figure 9.3). Responsibilities would include improving or reengineering work processes, product quality, new product development, and introduction and problem solving customer/supplier issues. The manager becomes one vote within the work group. Other group members are asked to facilitate brainstorming and decision making. Decisions are typically made using consensus.
Figure 9.3 Group collaboration model
A small business owner used this decision-making style to become more competitive in her market. Over the last few years, her restaurant had lost revenue as other restaurants moved into the area. She invited her crew to meet with her one morning. They brainstormed how to increase revenues and developed a game plan for doing so. This owner chose to be one vote in the final decision and together she with the whole staff implemented their ideas to increase revenue.
Since increasing customer counts had become challenging, the staff decided to focus on increasing the average check of each customer dining in their restaurant. They reorganized into shift teams and along with the owner implemented their ideas for improving services and products. The following month’s revenues (check average) had increased significantly and so did for subsequent months. The owner’s daughter, attending community college, made a presentation on their initiative for a class project and won the first place.
The advantage of this leadership approach is the greater commitment obtained for shared ideas. Higher quality fact-based decisions were made. Higher quality and improved work performance resulted. The disadvantage is the greater amount of time required for making group decisions.
Group Empowered
This method of decision making is used when the work group has the knowledge and information to make decisions. Group Collaboration and Group Empowered are the dominant decision-making processes when developing a collaborative culture for achieving higher levels of success (Figure 9.4).
Figure 9.4 Group empowered model
The leader has developed a creative engine by delegating key responsibilities and decisions to the work group. Design and implementation tasks and decisions are assigned to the group. The group chooses a team leader and becomes fully responsible for hiring new members, correcting behavior, conducting research, and creating new products and services to continually move the organization forward.
The leader becomes a resource provider, buffer, removes obstacles getting in the way of project initiatives, and serves as liaison with senior management. The work and decisions are strategic in nature as products and services designed are defined during the strategic planning process. Many of these same people were engaged in goal setting and task development ensuring all initiatives are aligned with the strategy of your enterprise. Everyone begins with the end in mind!
Delegation is a process in which a leader develops a customer chain from top to bottom of the organization. Each level is the client of the level above and is empowered to exceed the expectations of their internal clients. Those who deal directly with external customers are empowered to make changes in the way work is performed and to enhance products and services.
Delegation has a lot to do with your management philosophy. Some leaders believe that people will only do the minimum to get by while others believe that for the most part people want to do their best and will do so if they know what is expected. For leaders who question the motivation of staff, a concern is usually expressed that should they delegate their department will get out of control and they will risk looking bad to their superiors.
I have found just the opposite to be the case. When I served as Director of Human Resources for a software company, I decided to improve performance within our department. My first action was to become clear with everyone regarding our vision and mission for serving the internal customers of our company. We then began cross-training so that employment knew benefit administration, training knew how to recruit, and benefit administration learned the basics of salary administration. After I felt they were capable of supporting each other and I had seen evidence of their cooperation in our weekly meetings, I decided to try the big test. They were informed that I would be on vacation for two weeks and each was provided signing authority for their area of responsibility. I informed them my desk would be clear when I left and I wanted my desk to be clear when I returned from vacation.
Two weeks later, I returned to work. There was absolutely nothing on my desk. It looked just like it did the day I left. I was horrified. I realized they were becoming self-managing and delegation worked well with them. The result was a total change in my responsibilities to walking around visiting with each executive and attending departmental meetings. I was able to inform our team in our weekly meetings of impending personnel issues and we were prepared to help when asked to do so.
Several benefits resulted from the changes. Our department became more creative and innovative. We reduced recruiting wait times and began providing benefits to our employees that were much less costly but added value to their lives. Additionally, each of us could help a client if our specialist was out of the office which reduced wait times and increased customer satisfaction.
In order to delegate, several factors should be considered. The leader must be prepared to turn over responsibility for decision making and problem solving to the individual or work group. The individual or group should have the skills and knowledge to accept the responsibility, make good decisions, and use problem solving to accomplish their tasks and goals. Many of the leaders I work with tell me their group is not ready because they do not have the knowledge or skills to handle new tasks. Usually, a work group lacks skills and knowledge because the leader is operating in the Directive style and is rewarded by handling everything themselves while appearing very busy. The leader may also believe people will do only the minimum required.
An effective leader determines skill sets required of staff and provides skill development training and cross-training for associates. Staff can then be authorized to accept more responsibility and make more decisions. For example, groups could manage their own budgets, make purchases within defined boundaries, decide on staff assignments, participate in the hiring process, and choosing new group members. Leaders can provide many opportunities to delegate and innovate based on their choice of decision-making styles and assumptions about people.
Engaging those closest to the work keeps the organization moving ahead as new ideas are created, work performance increases and solutions resolve vexing problems.
A plant manager was experiencing excessive material costs. His budget had mushroomed to $250,000 per year. He met with his mechanics and machine operators and assigned supervision of supplies to them. Each group was supplied a storage area for their tools and provided security locks for their supply units. Each unit team developed a material supply budget for the upcoming coming year. The budget totaled $100,000. Throughout the year, the groups supervised their supplies and ordered only as needed. The year-end budget reported total plant material expense of $50,000. These mechanics and machine operators managed to reduce material costs over $200,000 per year. Their leader trusted them and they returned that trust.
A strategy to implement a new service was undertaken by another client. The challenge was to implement a breakfast buffet in every restaurant in their region. A cross-functional team was assembled and empowered to develop an implementation plan and execute the plan. They met regularly and developed a scorecard and goals aligned with their strategy. Over subsequent months, the buffet was implemented one profit center after another until every restaurant in the region offered buffet breakfasts. Of 40 regions, this region was the only region to completely implement the corporate challenge.
The advantage to moving your enterprise into a creative engine is clear. Products and services are typically developed faster and with higher levels of quality as everyone learns from their successes and mistakes (Figure 9.5).
Figure 9.5 Collaborative survey
Plan of Action
Use the chart shown in Figure 9.6 to develop a plan of action for increasing collaboration in your enterprise. After discussing your survey, decide new behaviors that could create a collaborative culture and list those behaviors under the START column. Then, list those behaviors that should be stopped under the column START and behaviors to maintain under CONTINUE.
Figure 9.6 Action plan