#477 from Innovative Leader Volume 9, Number 7

July 2000

Mistakes to Avoid in Decision Making by Donald L. Caruth, Ph.D., SPHR and Gail D. Handlogten, SPHR Dr. Caruth and Ms. Handlogten are principals, Human Resources Management Systems, in Rockwall, Texas (email: caruth@flash.net). They have published Staffing the Contemporary Organization (Quorum Books, Westport, CT, 1997). According to management expert Peter Drucker, managers do not generally spend a great deal oftime making decisions. Decision making is, however, the task that has the most far-reaching consequences. Its imperative that managers recognize decision-making mistakes. Eight of the most common errors follow. Mistake #1: Failure to Recognize a Problem Managers usually operate on a frantic day-to-day basis without recognizing a problem thats before their noses. They seem resigned that things are the way they are because of the system, and someone else must take action. When schedules present obstacles, or operations arent running according to plan, a manager should suspect that a problem exists. They should act to solve the problem. Frequently, managers dont recognize the problem as their responsibility due to lack of experience, or that they recognize the problem carries with it the obligation to do something. Therefore, no recognition equates to no responsibility. Mistake #2: Incorrect Problem Identification Identifying the problem is the next step in effective decision making. This step is also the most difficult because the more obvious consequences from a problem are often mistaken for the actual problem. Managers usually pay most attention to obvious irritations. With their time pressures, they are less likely to dwell on whats behind a problem. Other factors that keep from identifying the main problem include inaccurate perceptions and lack of experience. A decision that fails to deal with the real problem is, in effect, a bad decision because it will most likely produce an unsatisfactory solution. It will also result in further decisions having to be made to solve the problem. Mistake #3: Insufficient Consideration of Alternatives For any problem, there are usually a number of alternative solutions. Failure to think through the alternatives exposes a manager to the risk of overlooking the best decision. Therefore, its essential that a manager should generate ideas--think outside the box--and also consider possible repercussions from each alternative. Investigate beyond the obvious. Reasons for not thinking through alternatives range from the pressures of time to misperceptions. Decisions, when alternatives arent carefully considered, wont be as effective as they should be and, more than likely, will result in someone else having to make another decision at a later time. Mistake #4: Inadequate Evaluation of Risk Every decision should be evaluated in terms of costs and benefits, or in terms of the risks involved and the results to be obtained. Failure to do so often produces high cost, complex solutions where the payoff is minimal. Managers can avoid some risk by seeking lower-risk solutions, reducing risk by training employees, or insuring against risk through insurance or hedging. If the decision maker evaluates risk systematically, theres a good chance that the

decision will be a good one. Mistake #5: Repetitive Decisions Many managers handle the same problem over and over, making decisions in each instance on a case-by-case basis. Recurring problems can be more efficiently and effectively resolved through the development of policies, procedures, rules, regulations and the like. If a manager lacks authority to initiate plans of this nature, he or she should refer the recurrent problem to those who can develop such plans. Situations which cause recurring problems will not, in most cases, go away. Thus, continuing to treat the problem on a case-by-case basis is ineffective and inefficient management. Mistake #6: Unnecessary Decisions Fools rush in where angels fear to tread is an old saying that offers sound advice. Occasionally, the problem confronting a manager is of such a nature that the best action is to do nothing, to simply watch and wait. While few problems are likely to improve on their own, theres always the possibility that they will not further deteriorate. To take action may only subject a manager to unnecessary risk--risk that could be avoided through action in inaction. When the no-action approach is used, a manager must continue to observe the situation and take action if it is merited. Mistake #7: Delayed Decisions Theres no evidence to support the contention that decisions improve with age, that the longer a decision is put off, the higher the quality of the eventual decision. On the other hand, fast--but not snap--decisions have at least two advantages. First, an expeditious decision gives a manager more time to correct a situation should the original decision prove to be wrong. Second, a quick decision allows a manager to move on to other problem areas. Mistake #8: Lack of Follow-up Each implementation should be followed through to see if it is producing the expected result. Not every decision is going to be as effective as first believed. Consequently, a manager must always monitor the situation to determine if things are working according to plan. Many times, decision makers are so relieved to have made a decision, that they wish to forget it, and go on to other things; hence, they neglect effective follow through. When a manager makes a good decision, it often seems that few people notice; on the other hand, a bad decision may be remembered years later. Lunch-time tales frequently include someones poor decision. And such tales may continue, even years after the individual has left. Few managers, and their organizations, can tolerate such fame. Therefore, its essential that you maximize your good, and minimize your poor, decisions.

In this installment of our guide to organizational management we look at managerial decision making... Effective managers are tasked with making decisions ranging from large to small on a daily basis. An effective organization employs managers who are problem-solvers and who can make decisions constantly. It is critical to first prioritize issues and problems based on the issues potential effect on the organization. Those that stand to have the greatest impact should be dealt with first, and all problems need to be addressed in a systematic way prior to a decision being made. Because a first impression is just that, and does not necessarily reflect the entire situation, a manager must avoid jumping to conclusions. Collecting information from more than one source to avoid bias, and completely assessing all pertinent (and verifiable) information prior to rendering a decision is strongly recommended. Collecting information in order to obtain a complete understanding of the issue is only the first step, however. Once the information is available, then it is wise to brainstorm different solutions and possible options in order to get more than one perspective. Such options can start out as wide-ranging, and then can be narrowed down to fit the scope of the problem. Having identified a set of options and solutions, feedback and suggestions on them, along with alternatives, should be sought from consultations with others. For the most part, group decisions (particularly where the group contains people who the end decision will affect) are preferable to those made by individuals as a pool of knowledge, skills and experience can be drawn upon. Tools, techniques and analysis methods (such as: Pareto Analysis; Paired Comparison Analysis; Grid Analysis; PMI; Six Thinking Hats; Starbursting; Decision Trees) can then be applied. These are not conclusive, but they do offer an objective and somewhat scientific approach to decision making. Theyre particularly useful when the decision-makers judgment is liable to be clouded by being too closely involved with the issue at hand. Then comes the time to weigh the pros and cons of a decision. Which option or solution gives most to the organization whilst taking least from it? Few decisions will be as clear cut to hold no drawbacks. Negatives are acceptable though, so long as the positives sufficiently outweigh them.

Article Source: http://EzineArticles.com/2524581

http://managementconsultingcourses.com/Lesson05ManagerialDecisionMaking.pdf http://edis.ifas.ufl.edu/he691

http://ezinearticles.com/?Organizational-Management---Managerial-Decision-Making&id=2524581 http://www.winstonbrill.com/bril001/html/article_index/articles/451-500/article477_body.html http://home.ubalt.edu/ntsbarsh/opre640/opre640.htm http://www.scribd.com/doc/49709534/13/Managerial-Decision-Problems?