4 Primary Approaches to Decision-Making in the Business World

4 Primary Approaches to Decision-Making in the Business World

Every day, business leaders must make decisions, some of which are extremely difficult. As companies grow, they necessarily become more complex, and the decisions that must be made can become increasingly burdensome. All business leaders have made bad decisions in the past, and these missteps can cripple the decision-making process. However, failing to make a decision in a timely manner often results in even more problems and more unpleasant choices.

To combat this, successful business leaders have protocols for confronting difficult decisions and making the best possible choices at a given time. They know that swift (but not snap) decisions keep their company moving forward. There are several different approaches to decision-making, and making a good decision largely relies on identifying the best approach for a given situation. Below is a rundown of four basic approaches:

  1. Collaborative decisions

Modern workplaces have largely pushed for collaborative leaders rather than commanding ones. Collaboration is also a great way to approach difficult problems. Often, leaders do not know all of the relevant details, so they need to get input from other people on their teams. In the collaborative decision-making process, the leader makes the group meetingfinal call, but only after obtaining information from the other parties involved. Some people call this approach “evidence-based decision-making” because it relies on gathering facts that will inform the final choice.

However, the collaborative decision-making process does have some drawbacks, and it is not always appropriate for every situation. Leaders need to ensure that they haven’t surrounded themselves with “yes men”—they must consult with managers or other executive team members who are able to disagree with them. The process only works when all parties involved make a strong case for their respective point of view. In addition, leaders must sometimes go against the opinions of their team members and be willing to make an executive decision for the good of the company.

  1. Consensus decisions

A consensus decision resembles a collaborative decision in some ways, but takes the idea of democracy further. Typically, leaders will gather their team members and give everyone a vote. The decision that receives the most votes wins, regardless of what the leader wants. This approach only works in certain situations. Generally, business leaders opt for this approach when decisions will affect the team members, but not necessarily the future of the company. For example, when deciding between different benefits packages, it may make sense to let the team decide, rather than making an executive decision.

Another point to consider is that the consensus model largely removes the blame from the leader if the decision proves to be a bad one. For example, if employees chose a benefits package that fails to meet people’s needs, the employees may be less upset knowing they chose it than they would if the leader made the call based solely on some other factor, like cost. Consensus can encourage unity, but it can also drive conflict if no strong majority exists. In addition, consensus decision-making can be inefficient and often does not make sense in a fast-paced business setting. However, leaders can still use it strategically to help foster a more democratic company culture.

  1. Command decisions

When an immediate decision must be made, business leaders must rely on their instincts and issue a command. With command decisions, leaders do not consult their teams and instead make their choice based on their own insight and understanding of the situation. This style is effective for moving the business along quickly and can be suitandtiethe easiest solution when the decision is not incredibly consequential. For example, if a discussion occurs every time new office supplies need to be ordered, the office will not run very efficiently at all. However, business leaders must also prepare themselves to embrace the command style in crisis situations or when making major financial decisions, which can involve making tough sacrifices to keep the company afloat or spur growth.

The best business leaders prepare for the command decision-making process by frequently considering contingencies. When leaders make time to think about what could happen and the best way to respond, they can make a confident decision in the heat of the moment, instead of feeling like they need to assemble a board meeting or conduct extensive research, which could waste valuable time they may not have.

  1. Convenience decisions

The convenience approach to decision-making involves not making a decision at all. When leaders have trusted peers, they may sometimes choose to pass the baton to someone more qualified to respond to a specific situation. Delegation allows leaders to understand the decision-making capacities of their managers or C-suite officers, and also makes the team feel more empowered and trusted. Many times, convenience decision-making is necessary to maintain the leader’s sanity when he or she feels overwhelmed and stretched too thin. Excellent leaders understand that passing the buck is not necessarily a lazy response, but rather a team-building exercise. When managers step up to the responsibility, executive leaders can trust them more in the future, and the managers generally gain more confidence.

Sometimes, delegation is necessary simply to change things up at a company. If the best reason a leader can come up with for a particular decision is “it’s always been that way,” perhaps it’s time to get a fresh perspective on the situation by letting someone else decide.

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