Posts Tagged decision making
“Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.”
– in “Good to Great” from Jim Collins, American business consultant, author, and lecturer on the subject of company sustainability and growth (born 1958)
Several times a day, managers have to take decisions that will potentially impact or benefit their business, customers or teams… What is the best approach between a top-down decision-making approach and a bottom-up one? What are the various decision-making approaches and which one to favor for which situation? This post introduces the four main decision-making methods that shift the balance of the decision control between the leader and to their teams: the unilateral style, the consultative style, the democratic style and the consensus style. This posts also presents the related best practices on how and when to use those styles, depending on the analysis of some key criteria related to the situation at hands (like urgency, maturity of the team, expertise required, fostering engagement).
Download a one-page executive summary here (PDF or JPEG format): Decision-Making Styles: from Leader to Team
Because, in a business world, most of the decisions that are taken will impact the business itself and potentially, through ripple or direct effect, the team morale and engagement, it is key for managers to define and follow decision-making practices that will ensure that the best possible decisions for the business and for the teams are taken for any given situation and that the team fully supports those decisions once taken.
From our observations, efficient managers have often developed the following decision-making habits:
- They assess first if it is a situation where they need to be involved personally or where they can fully delegate the decision-making process to a trusted employee, relying on the existing reporting structure (in that latter case, it is recommended that the manager trains his employees on the content of this post prior to the decision-making delegation) ,
In case they need to be involved personally in the decision-making process, they know the panel of decision-making types that they can use with their relative benefits and risks,
- They understand which decision-making style to pick through the identification of key factors linked to the situation they want to address (such as existing data and facts at hands, urgency, expertise required, operation frame and constraints, what is negotiable and what is not, potential business impact and team impact…)
- They are aware of the main decision-making biases and other heuristics,
- They communicate clearly to their team on the above before initiating the decision-making process,
- They ensure the support and commitment of all the team members once the decision is taken (regardless of the approach chosen)
- They review periodically, during the execution, the outcomes of the decision and assess the level of divergence between the expected results and the reality, often using a Plan-Do-Check-Act approach. They do not hesitate to recognize possible decision errors early enough and bring the team back at the decision table for necessary adjustments.
- They do not shy away from their responsibilities as team leaders on the outcome of the decision, regardless of the method chosen and the decision itself
In order to help managers navigate this apparent complexity, below is a summary of the four main decision-making styles with their respective descriptions, the recommendation when to use them and their related risks. Those decision-making styles allows the leader or the team to have more or less direct control on the decision itself. Note that the scope covered here is for decisions involving or impacting a full team; process and comments for individual decision-making where a single employee is concerned would obviously differ.
- “Unilateral” or “Directive” decision-making style
- the manager takes the decision unilaterally and communicates it to the team
- this style gives the full control of the decision to the manager and usually leaves no space for negotiation.
- It is frequently used by managers with a “leader control”-oriented leadership style
- When to use:
- to use for emergency cases under time pressure but only when the manager possesses the necessary expertise or experience
- to use on time sensitive issues with a junior team lacking experience or knowledge (or under unstable conditions) and when the business at stake is high
- to use when it is a non-negotiable top-down decision where frame and context cannot be openly shared
- Risks and recommendation:
- beware of the “hero leader” syndrome: the exclusive use of this approach by a manager will not support the team development and will quickly create frustration or disengagement from the team members.
- probability of having team members not committing or supporting the decision is high.
- Therefore, once the decision is taken and case closed, it is recommended that the manager holds a debrief session with the team. Topics to cover are: explanations on how the manager came to that decision, open constructive feedbacks from the team, lessons learned on what worked and what could have been better and the steps for the team to learn how to efficiently contribute to similar situations in the future. Obviously, those recommendations do not apply in case of a non-negotiable top-down decision where individual follow-up meeting would then be more appropriate.
- Prior to announcing his decision – and if not time-sensitive -, the manager can “test” it with his trusted partners (manager, peers, HR…) to see their reactions and help preparing answers to possible objections or to seek inputs on how to generate higher support for the team
- “Consultative” decision-making style
- the manager requests inputs to his team members but takes the ultimate decision
- this style allows the manager to have a strict control on the decision while engaging his team members in the decision-making process by seeking and gathering their views and inputs.
- It is often used by managers with a “leader control”-oriented leadership style but also by managers with an “employee control”-oriented leadership style when put under time pressure to decide.
- When to use:
- to use when the manager needs specific expertise that he does not have to decide
- to use instead of consensus decision-making when time is of an essence
- to use to initiate further engagement of an already experimented team that is though not yet mature enough for a consensus approach
- Risks and recommendation:
- if the manager does not explain clearly that he his the ultimate owner of the decision, he may open the door to long negotiations and debates that will dilute his objective of gathering valuable inputs for a quality decision.
- Quality of inputs may be low if objective and frame are not set clearly (what needs to be decided upon, in which timeframe, what are the constraints – budget, resource… – and related room for negotiation…)
- this style is efficient only if all team members are in a position to bring quality inputs, else the manager may create frustration to the less experimented people from the team who can then get disengaged
- for staff whose inputs seem to have had no influence on the final decision, commitment to support the decision may decrease
- recommendation is consequently, as a first step, to have the manager reminding clearly to the team that he is the owner of the final decision based on the various individual inputs and what the framework for the decision is.
- Also, the final decision will have to be provided in details to the team accompanied with explanations on how each input has helped to model the decision (or the reason why some inputs have been discarded) in order to ensure full support on the execution (individual meeting may be required)
- “Majority vote” or “democratic” decision-making style
- the team members and manager provide several alternatives and the final decision will be based on the result of a vote with pre-defined parameters.
- this method shifts the power balance to the team since the final decision may completely differ from the one proposed by the manager.
- It is mainly used by managers with an “employee control”-oriented leadership style .
- When to use:
- to use with a team large and mature enough to conclude on several quality proposals as the range of possible choices for the vote and to generate active participation among the team members on a specific matter
- Risks and recommendation:
- if the team is not large enough, this method can not apply.
- if the team is not mature enough or has not got the necessary experience, identifying the viable options may take a considerable amount of time and discussions. Also the manager needs to be comfortable with all ideas and with the fact that his own idea may not be picked. If the manager ends-up with poor quality proposals, he may have to fall back to a consultative or directive approach which will result in higher frustration for both the team members and their manager.
- if the voting parameters are unclear (majority percentage, weight of the manager…) result may create frustration and disengagement.
- staff whose idea does not win may have difficulties or feel frustration to work on executing the idea of somebody else.
- if the voting is done openly, followers will be inclined to vote for the same choice as their reference colleague or manager, biasing the result
- Thus, managers applying the majority voting method should first make sure that the team has reached the sufficient maturity to bring on the voting table, in a timely manner, viable options that everyone will be comfortable supporting once the vote is made. The manager should also clarify explicitly the constraints / framework to get the various options designed and proposed. Each participant should be given sufficient time to present his proposal(s) with related benefits and risks and process to select options that will be submitted to vote should be clear.
- Besides, the voting method should be presented in details by the manager in order to avoid any misunderstanding (open or closed vote, required majority, weight on the manager’s vote or not, second vote in case of equality…).
- “Consensus” decision-making styles
- All team members with their manager have to build together a decision that they agree to support without any exception.
- This approach lets the team build and support the decision with almost full autonomy
- It is commonly used by managers with an “employee control”-oriented leadership style leading a team that has reached maturity.
- When to use:
- to use with a mature team of experts to create further commitment and engagement
- Risks and recommendation:
- if the team has not yet reached a sufficient maturity, severe conflicts can arise or debates may go too emotional.
- for sensitive topics, the manager will have to turn into a professional moderator else consensus may never be reached. Discussions and debates may turn hot but have to stay constructive…
- if the manager engages himself too much, he loses the position of neutral moderator which may generate frustration among the contributing team members,
- beware of followers who will simply align to their reference colleague or to the manager view; this can biase the final decision through “false consensus”
- all employees will have to comply and support the decision when consensus is reached although they may have prefered a slightly different option. It is the role of the manager to follow-up and to make sure that the decision remains supported at anytime (including by himself)
- Recommendations for managers are here: to make sure that the decision framework has been clearly set, to dedicate a space to each individual to express and share their views and ideas openly (preventing “talkers” to monopolize the debate, “manipulators” to over-influence the followers and followers to silently align even if not convinced). Debates may be colorful but discussion must remain constructive and respectful of every participant at any time; those basic rules must be reminded prior the opening of the discussion. Note that the support of an external moderator may be required if the manager cannot assume the role of neutral moderator.
- Finally, in case a consensus cannot be reached in a predefined timeframe, it is strongly recommended that the manager has a decision-making fall-back plan ready.
- exercise 1: Look at the key decisions impacting your business and your teams that you have taken over the past months.
- Which decision-making method(s) have you favored? Why?
- To which extend have you shared the decision-making method with the team?
- How far were the decisions supported by the team members?
- What was the type of engagement generated to your team by the approach you’ve used?
- If you had to do it over again, would you use the same approach? If not, what would you do differently and why?
- exercise 2: Which decision-making style would you use in the 3 below cases? Why? What are the risks and how would you tackle them?
- You have just been appointed Head of Sales of your unit, coming from the Client Relationship Management team where you had spent more then 3 years. Your understanding of the local market was one of the factors that had supported your promotion to this role. Your Sales Team is composed of one veteran who has been in the industry for 10 years and selling the solution over the past 5 years, one sales manager who moved into the role last year and who had previously worked for 2 years as pre-sales in another unit of the company, a new grad who joined last year and a new staff who on-boarded less than 6 months back coming from one of your main global competitors. It is now beginning of September and you are requested to present to your executive management by mid-November your next year sales strategy and related execution plan…
- Your European-based company provides non-intrusive biometric sensors combined with easy-to-use health care apps suitable for senior people. Your company has enjoyed a steady growth and has just opened a business unit in Japan where the demographic and technology access seems to offer a promising market. The team is composed of a sizeable sales forces, a small local R&D team in charge of proposing new solutions based on the local market specificities and a Service Desk dealing with client issues. Since the inception of the company, 5 years ago, you have built and been heading the European-based Service Desk but had looked for a career development opportunity outside of Europe. Your track record had put you on the top of the list for a promotion as Japan Head of R&D and Service Desk. And here you are. Because of the language barrier, you could not move experienced staff with you and had to build the team from scratch less than a year ago. Today, your Number One customer calls the Service Desk showing signs of extreme dissatisfaction with the way that some of the menus and data from your app are displayed in Japanese and threatens of cancelling the contract. You remember a very similar case 2 years ago when you had introduced a Russian version of your app. The customer is waiting for a call back in the next 30 minutes…
- You are leading the marketing department of your business unit with a team of three people. So far your company has given large autonomy to each business unit to manage their own marketing process leading though to inconsistent practices across the company. Your team members have all been in the company for more than 3 years showing steady performance, except one staff wo was just recruited 9 months ago based on his track record at one of your largest competitor. You are requested to appoint one team representative to work on a transversal cross-unit project aiming at defining marketing best practices for the company…
- exercise 3: Analyze the last time you had fully delegated a decision to one of your team members.
- Do you have clear criteria defined for a full delegation of decision (type of situation, potential business impact / team impact pre-assessment, identified team members for specific decisions, reporting structure…)?
- Why have you decided to delegate in this specific case?
- How far have you explained the framework and context related to the situation to decide upon (timeframe, budget, resource, information and data at hands…)
- To which extend are the team members you’ve delegated decision authority to familiar with the concepts of this post?
- How have you followed up upon the delegated decision?
- What were the specific challenges?
- What would you do differently next time you delegate a decision?
Obviously, taking wrong decisions can easily bring businesses down or destroy teams’ morale and staff engagement. Developing effective decision-making habits becomes therefore critical for managers. Assuming that the manager in charge has to personally get involved in a decision-making process, his first step should be to identify what is at stake and the context surrounding the situation: timeframe for the decision, possible impact on the business and on the team, specific experience or expertise required, available resources, team maturity, desired level of engagement of team members, risk of unsupported decision, possible decision-making biases. Then the manager should identify the most appropriate decision-making method, considering whether he prefers the team to drive the decision as much as possible or whether he prefers to be the sole owner of the final decision. As sole owner, the directive style has the merit to deliver a quick decision-making process suitable for urgent situation with high business at stake and where expertise is available at the manager level. Alternatively, if specific experience or expertise is required, the consultative approach will efficiently support the manager by helping gathering the necessary inputs from the team, increasing de facto the involvement of the various team members. A Majority-vote style shifts the decision authority balance further to the team who then have to come and vote for a viable option with their manager. Finally, for mature teams, consensus decision-making will very probably bring the highest level of commitment and support. It is though to be noted that each one of those styles presents risks depending on the situation at hands. It is thus the responsibility of the manager to appreciate the benefits and risks of each of those decision-making styles, to keep in any case accountability over the decision agreed upon, regardless of the process used and to request for justifiable adjustments whenever required.
Last Revision: 2015 March 28
“The good-to-great companies did not focus principally on what to do to become great; they focused equally on what NOT to do and what to stop doing.”
– Jim Collins, US business consultant and author (born 1958) in “Good to Great”
The Pareto Principle also known as “the 80-20 rule” or “the law of the vital few” simply stipulates that, in many cases, a minority of causes generates a majority of the effects. Representing your key business data in a simple Pareto Chart and identifying the “vital few” will help you to define the areas where to primarily focus (or not) the time and resources of your organization.
Download a one-page executive summary here (PDF or JPEG format): The 80-20 Rule (Pareto Principle) for tactical decision making
Vilfredo Pareto (1848 – 1923) was an Italian civil engineer, economist and sociologist who had great interest in studying various social distributions such as income and land ownership. After collecting and compiling a large number of data, he has noticed that 80% of the land in Italy was owned by 20% of the population. As Pareto studied other domains, he observed that the same non-linear distribution pattern was persistently reproduced.
This pattern, where a minority of the inputs is responsible of the majority of the outputs, was later called the “Pareto Principle” or “80-20 rule” and has been since then broadly observed in different domains. Note that, in reality, the distribution can obviously be different from a 80-20 joint ratio (As a matter of fact, following Pareto’s initial discovery and conclusion, those figures are commonly used to explain the principle itself).
The minority of the inputs leading to the majority of the results is called the “vital few”, as opposed to the “trivial many”.
In the graph below, also called Pareto Chart, you will see for example the number of client complaints related to a specific product, sorted per decreasing number of complaints, (left-hand side Y-axis) and the cumulative percentage of complaints per product (right-hand side Y-axis). What Pareto principle tells us here is simply that, in order to solve 80% of the client complaints, you need to fix your quality issues with Products A to I also called the “vital few”. Investing your time and resource on improving the quality of the “many trivial”, ie Products J to T, will only reduce the client complaints by 20%…
It is then clear that Pareto principle becomes a simple but nonetheless powerful tool to support your investment decisions (resources, money, time, energy…): focus on the “vital few” and ignore the “many trivial” (that can be eliminated, delegated, postponed till further notice depending on the type of decision you are involved with).
Note though, that it is recommended to use this principle only when a large number of categories and observations data are available. Besides, interpreting the data under a Pareto prism must not prevent you from running a deeper analysis of the situation. What if Product L of the above chart is a strategic product for your company in the coming years whereas Product B is becoming obsolete? Focusing on improving the quality of the “vital few” products will for sure help increasing your client satisfaction on the short-term but what about your mid/long-term investment strategy? Shouldn’t you start now with resources working on enhancing Product L as well?
- case 1 – in a Service Desk management role: how does the Pareto distribution of the incidents raised per customer look like? On which “vital few” customers will you focus first to reduce drastically the number of complaints?
- case 2 – in a Sales or Business management function: draw the Pareto Chart of your organization profit generated per customer. Who are the customers that you will NOT put under a dedicated relationship management program aimed at reinforcing retention in a first stage?
- case 3 – in a Quality Assurance management position: What are the functionalities of your software used 80% of the time by your users? What can you deduct for your QA resources allocation and test automation initiative?
Defining the relevant long-term investment strategy for your organization usually requires an exhaustive, time-consuming analysis and interpretation of a large set of data. Nevertheless, for a short-term tactical allocation of your resources, interpreting your key data under the Pareto principle turns to be an efficient method to set quickly your priorities: identify and focus your effort on the “vital few” items/tasks that will give the majority of the results and disregard the “many trivial” others!
Last Revision: 2015 March 28
“The important thing is not to stop questioning. Curiosity has its own reason for existing.”
– Albert Einstein, US (German-born) physicist (1879 – 1955)
When discussing with your teams or customers, be it unintentionally, due to time constraints, or to hide some precious insights, one is very often given with partial information only. It is therefore recommended to spend time exploring “the below part of the iceberg” using a specific questioning method in order to improve the relevancy of your critical decision calls.
Download a one-page executive summary here (PDF or JPEG format): Uncovering the truth: think iceberg
In the same way that you would not invest your personal saving in stock options without knowing and understanding the performance of the underlying instruments, you do not want to make decisions or commit on critical matters without getting the full picture.
Nevertheless many reasons may prevent your interlocutor from shedding the Hollywood projector light on the reality: time constraint, fear of the management reaction (complaint from an employee), desire to hide information (prospect negotiating a contract), lack of self-awareness (employee in burn-out)…
Grasping the lower level realities of your interlocutor requires times, tact and method. From experience, the best way for exploring the untold is to ask questions following the below criteria:
- ask one question at a time in order not to bring confusion to your interlocutor,
- ask open-ended questions (how/what/why/in what way/to what extend/tell me more about/elaborate…),
- ask probing questions (questions that require detailed answers),
- ask non-leading questions (questions must not direct your interlocutor to specific answers),
- ask questions that focus around the matter of concern and that your interlocutor will connect to (initial topic, answer to the previous question),
- ask unbiased questions (questions that are not based on your assumptions).
The more you ask, the deeper you may have to dive and explore… Take your time.
Obviously, this uncovering exercise will request you to reach initially a certain level of confidence and trust with your interlocutor. This may not come with the first interview, meeting or discussion; therefore try to identify when the time has come to go under-water. You may also think of specific arrangement and behavior to help you break the ice before your deep diving:
- book a time-slot long enough to discuss comfortably without being in a rush (respect though the time constraints of your interlocutor),
- ease the sharing by selecting the appropriate environment: for example, round or oval tables usually support sharing ideas (contrary to squared tables that emphasize opposition or hierarchical position),
- remove any attention-catcher from the environment in order to stay focus while discussing (turn-off your screen, phone, shut the door of your office…); this will strengthen your listening ability and also show greater respect to your interlocutor,
- comfort your interlocutor on the confidentiality of your talk if necessary (and respect it!),
- think of being off-site, around a coffee or at lunch, or at least find a neutral place to break the regular context that may model the behavior and answers of your interlocutor,
- listen more than talk and give enough time your interlocutor to answer,
- acknowledge verbally what has been said before moving to the next question,
- introduce the difficult questions smoothly,
- keep eye-contact in case of face-to-face meeting.
A complementary approach is also to think under which conditions you would be more inclined to share your “secrets” or run uncovered with somebody. What works for you may work for others…
Of course, thank your interlocutor for his time and honesty at the end of the discussion.
- scenario 1 – a recruitment interview: you need to evaluate a candidate on his team working competency. The candidate already told you in generic terms that, in his previous jobs, he has always been considered as an efficient team worker by his superiors (top part of the iceberg). Imagine questions that will allow you to uncover the candidate’s true abilities to work as a team and to foster team spirit.
“Tell me about a time when you disagreed with other team members. How did you resolve the issue?”
“Share with me some initiatives you had taken as a team member to improve the overall team performance.”
And finally you have discovered that not only the candidate was unable to propose and participate to team development activities but that he was also unable to cope constructively with conflict situations within a team…
- scenario 2 – a staff complaint: based on the analysis of your resource planning, you have just adjusted your organization by requesting your team to support a new product suite very similar to the existing one from a technology standpoint. This new task comes on top of their current support tasks but the data supporting this decision are accurate, reliable and shows the necessary bandwidth within the team. Nevertheless, one of your staffs who recently looked overwhelmed by those changes has requested for a one-on-one discussion and tells you: “This new organization cannot work for the team! I will never be able to support this new product when I am already overloaded with a long list of issues to close!” (top part of the iceberg). Which questions would you ask your employee to understand and answer the real concern?
“In what way do you think that our team will not be able to cope with this new assignment?”
“What would you suggest to better balance your workload between solving the current issues and the support activities around the new product?”
After a few round of questions, you have understood that your employee had simply needed a bit of support in reviewing the priorities of his issues regardless of the product suite. You have also discovered that his main concern was to take over the support of a product that he had been told to be very complex where in fact no extra technical knowledge was required…
- scenario 3 – a prospect demand: you are negotiating an important contract with a new prospect in a country where you do not have a local presence. Suddenly, the prospect turns to you and says: “You know, for such a complex solution, we will need a local support team. You will provide us with local support, right?” (top part of the iceberg). Think of questions that will allow you to move from this demand to the real underlying need in order to enable an effective negotiation.
“Would you mind elaborating on your “support” definition?”
“In which areas and to what extend do you see a local presence being more efficient than any other type of support?”
Drilling down on the initial demand, you have finally uncovered the need for a technical service desk that would match the local regulation in terms of support hours and that could speak the local language. You have been able to easily negotiate that your 24×7 multi-lingual centralized support center would perfectly answer this need, as it is already the case for other specific countries.
Poor, wrong or incomplete information almost systematically results in inadequate decisions and answers, regardless of the situation. As a manager, it is your responsibility to make wise choice for your organization and employees in any circumstances. An appropriate questioning method will therefore support your decision-making process by allowing you to drill down and uncover the essence of a concern or of a need.
Last Revision: 2015 March 24