Making Decisions as a Manager

By Lon W. Schiffbauer, BA, MBA, PhD, SPHR

I have good news and I have bad news…followed by more good news.

First the good news: all the easy problems have been solved. Humans have been engaging in business for countless centuries, during which time, we have solved all the easy problems. They’re all gone; there’s none left. That’s the good news. The bad news is what’s left are the hard problems, the wicked problems—problems that are difficult to understand or articulate, are continually changing, and have no clear solution.

All too often decisions are made on the spot with very little thought given toward first understanding the situation or considering our options. Even when we do take the time to gather data and analyze the problem, we’re really just looking to validate the decision we’ve already made (known as confirmation bias), not truly assessing the best course of action to take (American Psychological Association, n.d.).

The ability to make sound decisions based on the data available and a lucid reading of the environment is critical to being a successful manager. This means separating emotions, assumptions, and preconceived notions from facts and data, as well as looking beyond the obvious and searching for new and innovative solutions to complex problems.

With this in mind, let’s discuss the steps involved in analyzing a situation and making informed decisions.

And one quick note: throughout this paper I will be using terms such as “situation,” “issue,” “problem,” and “opportunity” interchangeably. This isn’t lazy writing. As John Adams is purported to have said, “Every problem is an opportunity in disguise.” A good manager knows how to approach all situations in the same way, whether problems or opportunities, to maximize value to the organization.

PART I: Analyzing the Situation

Before you can solve a problem or exploit an opportunity, you first need to understand the situation. These four steps will help you do just that:

Step 1: Define the Situation

You can’t make an informed decision if you don’t understand the situation. With this albeit obvious statement in mind, ask yourself the following questions:

  • What is the problem or opportunity?
  • If it’s a problem, what’s the opportunity waiting on the other side? Likewise, if it’s an opportunity, what problems might it create?
  • Why is it important to address this situation? What is it costing you, or what may it deliver on the other side?
  • Do others, especially key stakeholders, consider this important? You’ll need their help and as you work on tackling this issue; do you have their support?
  • What are your assumptions? Consider where your mind immediate goes when considering the situation and ask yourself why it’s going there.
  • What are the unknowns? What information are you missing and where are your potential blind spots?

Step 2: Determine the Root Cause

Quite often we don’t see the problem so much as we see its effects—the results of the problem. If you focus on the results, you may miss the root issue. Here are a few ways you can get at the root cause of the situation:

  • Ask team members and key stakeholders to describe the problem as they see it. We know from the Rashomon effect that different people can describe the same thing in different ways. Often this can be frustrating, but it can also be illuminating. These differing points of view can yield some important insights, so be open to these perspectives. I’ve never met someone, no matter how brilliant, who wasn’t smarter with the benefit of the perspectives of others than they were alone, locked away in their own head. Furthermore, research has shown that group decisions are generally more successful than individual decisions (Bass & Bass, 2008).
  • Drill down to the root cause of the problem, using the Five Whys exercise. The Five Whys exercise is exactly what it sounds like: ask yourself and others why something is happening at least five times, digging deeper and deeper with each layer. For example:
    • Human Resources is getting far too many calls from employees during Open Enrollment.
      • Why?
    • Employees aren’t using the online tools provided to sign up for HR services. Instead, they’re calling or sending emails.
      • Why?
    • Because they can’t find the online tools, and when they do, they’re not very intuitive.
      • Why?
    • Because when we designed the internal company website we didn’t take user experience into account.
      • Why?
    • Because it’s expensive and we don’t usually invest the same level of user experience design to the internal company website as we normally would our external customer-facing website.
      • Why?
    • Because we don’t value our employees as we do our customers.

Now we’re getting to the root of the matter: employees are not valued and supported to the same degree as are the customers. As a result the company’s HR processes are inefficient, frustrating, and costing the company more than they should.

Step 3: Focus on the Most Critical Information

Once you’ve identified the root cause, ask yourself what you wish you knew before you had to make a decision. This will give focus to your data search and direct the questions you ask and from whom. As you do so, bear the following in mind:

  • Once you start gathering the information, be careful that you stay focused on the core issue. Don’t waste time chasing rabbits and looking for information that is merely tangential at best.
  • Leverage your organization learning and find out what has been done in the past in similar situations. Discover what best practices may be out there that have not yet considered.
  • Involve key stakeholders and those who may be affected by your decision. Get their vantage point on the situation. Not only do they likely have information you’ll find helpful but these are the same people who will either accept or reject your decision. You want to make sure they are heard.
  • All throughout this process, don’t get bogged down in the details. Truth is, there are an infinite number of ways you can slice and dice a situation, especially when the environment is opaque and you can’t get all the information you would like. The goal is not to get all the information—a fool’s errand—but rather the best and most correct and relevant information, all while avoiding analysis paralysis.

Step 4: Articulate Possible Courses of Action

At this point it’s time to generate some viable solutions, each detailing the pros and cons of a given course of action, as well as the costs and benefits. As you do this, involve partners, your staff, and key stakeholders in crafting these options. As mentioned earlier, these are the folks who will need to sign off on your decision, so winning their support early on can help pave the way to future adoption of your solution. Brainstorm possible solutions with such tools as the Six Hats and posing hypothetical questions, such as: if we had unlimited resources, or if we didn’t have the technological limitations we do, what would we do? If we were bought and replaced today, what would the new team do? In a famous moment in Intel’s history, Andy Grove was grappling with a problem: should the company double-down it’s emerging semiconductor products or should it stick with memory and find new ways to compete with new low-cost producers coming out of Japan? With this quandary in mind, Grove approached Intel Co-Founder and CEO, Gordon Moore, and asked this provocative question: “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Without hesitating, Moore responded, “He would get us out of memories.” After a moment of numbness, Grove then asked, “Why shouldn’t you and I walk out the door, come back and do it ourselves?” (Grove, 1996, p. 89)

PART II: Making a Decision

Now that you have the information, insights, contextual understanding, and quiver full of possible solutions, you’re now ready to make an informed decision. But don’t be hasty. It may seem like the best course of action is obvious and that all you need to do is communicate your decision, but you’re not actually there yet. Here are six steps you need to take to determine the best possible decision.

Step 1: Establish Clear Goals for Your Decision

What does a good decision look like? What are the desired outcomes? Before you make a decision, you need to clearly understand what you want to get out of it—what success looks like. As you mull this over, consider the following:

  • A good decision isn’t just one that delivers quality or improvement, it’s also one that’s accepted, embraced, and championed by your key stakeholders. Hard as it may be to accept, an 80% solution embraced will beat a 100% solution rejected every time.
  • Understand that there are many factors you’re trying to address with your decision, factors such as:
    • Short- and long-term organizational needs and goals.
    • Cost in time, money, and resources to implement.
    • Impact to current operations.
    • Unintended consequences of the decision.

Make sure you consider the immediate as well as the down-stream ramifications if any decision you make before you pull the trigger.

Step 2: Criteria for the Right Decision

Once you have a good understanding of the goals for your eventual decision and the factors at play, you can then list out the criteria for the decision. Possible criteria can include:

  • Has little to no impact on current operations.
  • Can be implemented in a timely manner with current resources.
  • Is consistent with organizational culture and practices.
  • Is embraced by key stakeholders.
  • Is aligned with the organization’s short- and long-term objectives.

Step 3: Test the Practicality of the Decision

A decision may seem perfectly reasonable in your own mind, but when the rubber meets the road, the course of action may be anything but. Consider taking the following actions:

  • Shop your decision around to those who work on the front lines—those who will be most impacted by changes your decision will introduce. Learn how your decision will affect, improve, or hinder their ability to meet their responsibilities.
  • Clearly detail and map out an implementation plan. It may seem like the best course of action is fairly apparent, but when you look closely at what it would take to plan and implement the direction, the decision may seem less attractive or even viable.

Step 4: Accept Ambiguity

After completing all the steps detailed here, you’ll be reasonably prepared to make your decision. Mind you, this may not mean that that you’ll have all the data you wish you had, or that your degree of confidence will be as high as you might like. This is the nature of managerial decision-making. However, there are some last steps you can follow to reality-check your decision before you pull the trigger.

  • Ask yourself what information is missing, the criticality of this information, and the cost in time and resources in getting it.
  • Determine the cost to the organization in delaying the decision.
  • Map out an implementation process and at what stage you will make the “go/no go” decision.
  • Ask yourself what is the worst thing that could possibly go wrong and put in place a risk mitigation and contingency plan.

Step 5: Get Buy-In from Key Stakeholders

No matter your position in an organization, there are those who you need to please to get a decision off the ground. Even the CEO has a Board of Directors to whom he or she is beholden, so unless you’re higher than a CEO, it’s a good practice to get the buy-in from the key leadership and get some aircover for when the resistors start to push back (and trust me, they will).

Step 6: Make the Decision, and Own It

Communicate your decision with confidence and take responsibility for the outcome. Inevitably, even the best decisions will be challenged from multiple directions. Granted, you involved all your key stakeholders as discussed, but there will always be those who are unhappy with the course of direction you have charted. When this happens, keep the following in mind:

  • When people question or challenge your decision, resist the urge to explain the minutia behind your decision-making process. This will only make you seem defensive and unsure of your decision, or even convey the idea that the decision is still up for debate. The decision is made; it’s now time to work toward making it a success.
  • Demonstrate confidence and resolve. This won’t make your decision any better, but it will help sell the ideas whose support you need to make this a success (Kouzes & Posner, 2003). 
  • If it turns out your decision was wrong, deal with it, don’t try to run from the responsibility or place the blame on someone or something else. Accept responsibility and work toward making it right.

No Guarantees

One last thing to consider: no process, including this one, will guarantee you the best decisions every time. As shown here, there are a lot of factors to consider, both internal and external, not all of which you can fully understand or control. However, processes such as these will substantially move the odds in your favor and ensure that your decisions will at least move the needle for you and the organization in the right direction. Do that consistently and over a long enough period of time and you’ll win

References

American Psychological Association. (n.d.). APA Dictionary of Psychology. American Psychological Association. Retrieved December 31, 2021, from https://dictionary.apa.org/confirmation-bias

Bass, B. M., & Bass, R. (2008). The Bass handbook of leadership: Theory, research, and managerial applications (4th ed.). Free Press.

Gebelein, S.H. (2010). Successful manager’s handbook: Develop yourself, coach others (8th ed.). PDI Ninth House.

Grove, A. S. (1996). Only the paranoid survive: How to exploit the crisis points that challenge every company and career. Currency Doubleday.

Kouzes, J. M., & Posner, B. Z. (2003). The leadership challenge (3rd ed.). John Wiley & Sons.

Lon is an Associate Professor of Business Management at Salt Lake Community College and holds an MBA, a PhD, and is a certified Senior Professional in Human Resources (SPHR). In addition to his academic background, Lon spent close to 30 years working and consulting for such companies as FedEx, Intel, eBay, and PayPal, as well as a variety of small to mid-sized companies around the world.