The right decision-making strategy for leaders: Do nothing or take action?

Research led by Dr. Philippe van de Calsyede in 2017 discovered that the effects of decision speed depend on the choices leaders make. The researchers concluded the following: “People believe fast decisions are more extreme than slow decisions; in other words, they assume that fast decisions are either extremely selfish or extremely cooperative. People also believe that fast deciders are less moral and less conflicted than slow deciders. Beliefs about decision time depend on whether time can be attributed to self-paced reaction times or external time constraints. When decisions are made under external time constraints, the time has inconsistent or heterogeneous effects on behavioral expectations.” 

Nevertheless, making decisions is a complex process. Let’s go through frameworks that can guide leaders in adjusting their decision-making speed to the complexity of different scenarios.

Effective leaders must be proactive to keep up with the competitive business environment. Let’s review typical business scenarios and possible decision-making strategies depending on the situation.

Routine scenarios is repetitive in nature and require little strategy. The goal in solving routine problems is not to provide a competitive edge but rather to solve the problem as quickly as possible with clear ownership of the decision made. Decision-making for routine scenarios also comes under programmed decision-making. Leaders must create standard operating procedures (SOPs) or other well-defined and documented methods to deal with routine problems.

An example of a routine scenario is when a leader wants to hire part-time employees to handle extra work during busy periods. What would a typical leader do? Review past data to note which months in the last few years have been busy, how many more employees have been needed, and what tasks have needed the most support. Once the past data has been reviewed, the leader can lay down a plan to decide how many part-time employees should they hire on average. Sometimes there can be an increase or decrease in part-time employees needed due to any events, the basic structure can easily be re-adjusted. Therefore, the process can be repeated with little supervision.

However, leaders must keep in mind that sometimes further problems can arise from these routine scenarios. By oversimplifying the problem and giving a predefined response, leaders might overlook new ways in which the problem can be solved.

High-involvement scenarios are those that can pose a major loss when gone wrong. They involve risk-taking and are complex in nature. Decisions made in high-involvement scenarios involve some financial risk (for example, pricing a new product or service), social risk (the decision might not be acceptable to the team), or psychological risk (the wrong decision may cause concern and anxiety).

A common high-involvement scenario is when leaders have to decide whether they should allow their teams to work from home or whether they must be present in the office post-pandemic. Leaders will need time to evaluate the productivity and efficiency of their teams when working from home compared to when working from the office and then decide which option is best.

While making these decisions, it’s worth the time and energy needed to do thorough research and carefully consider alternatives. Leaders must gather extensive information from multiple sources (managers and team leaders), evaluate available technological alternatives to enhance productivity, and invest substantial effort in making the best decision for the workforce.

Policy-making scenarios require the leader to make decisions on:

• Codes of conduct
• Attendance, vacation, and time off policies
• Equal opportunity and non-discrimination policies
• Workplace safety
• Alcohol and drug policies
• Anti-harassment policies
• Privacy policies
• And so on

When a leader is deciding on the organization’s policies, they must keep in mind that not all policy-related decisions will be accepted by the team. For example, a dress code dictates an ethical code of conduct. If the workforce is from diverse backgrounds, then a single dress code for all can lead to disagreements. By gathering feedback from employees, leaders can modify the dress code in a way that is acceptable for everyone.

Leaders need to take time to understand the what and why of the policies they want to implement so the outcome of their decisions is acceptable for all employees and reduces the chances of personal grudges or disagreements.

Some of the challenges that can make policy-related decisions ineffective are when leaders use outdated methods to update employees on new policies rather than make all policies available in one centralized location and ensure that employees have read and understood those most relevant to their department and job function. In order not to unintentionally slow down the decision-making process, leaders must decide in advance how they can ensure that all the policies are easily available for the teams to see as well as maintain a way to make sure they are being followed.

Complex scenarios require leaders to take time to reach a decision, as there may be multiple reasonable choices with unclear causal relationships, requiring extensive consideration. The decision-making process for a complex scenario must include sufficient time and internal support mechanisms to facilitate making a decision that is not predetermined.

Common examples of complex scenarios include budget cuts, project halts, wage freezes, layoffs due to economic crises, or extra workloads. It’s important for leaders to understand that somebody will almost always be upset or have a different point of view after a difficult decision-making process.

While there’s no guarantee that the decision will have the anticipated results, you can take actions, supported by your decision-making strategy, to create and nurture an environment that prepares the team for the expected outcome.