Leadership

Topic 6: Leaders as
Decision Makers
*Effective Decision Making
*A Decision Making Model
*Collaborative Decision Making
*Delegated Decision Making
*Negotiated Decision Making
*Overcoming Barriers To Effective Decision
Making
Effective decisions
*We may describe effective decisions according to the
formula proposed by Mankin and Steele (2006: 76)—
more, better and faster.

*According to Drucker, a decision ‘has not been made’

until the following items are clearly known:
*Who is responsible for executing the decision?
*What is the deadline for the execution?
*Who are the stakeholders for the decision?
Effective Decision Making Processes
Mankins and Steele identify that much of the
dysfunction found in strategic decision making can be
traced back to the following two factors :
*Time factor.
*Practice of conducting strategic planning at the
business unit level.

*Suggests an issues-based model for effective &

strategic decision making (rather than individual
business unit)
Effective Decision Makers
Drucker says that every effective executive adheres to the
following eight crucial practices in fulfilling their role:
*Ask 'what needs to be done?'
*Ask 'what is right for the enterprise?'
*Develop action plans
*Take responsibility for decisions
*Take responsibility for communicating
*Are focused on opportunities rather than problems
*Run productive meetings
*Think and say 'we' rather than ‘I'
DECISION MAKING STYLES
The process model is comprised of four key
phases:

INPUT PROCESSING OUTPUT REVIEW

PHASE PHASE PHASE PHASE
The Input Phase:
*Primary objective : To gain a clearer understanding of
the problem or situation

*Involves two steps:

*Step 1: Identifying the
*Step 2: To determine success criteria for the
problem statement

*Some specific tools that may support this phase:

concept mapping, concept fan, Ishikawa diagrams &
brainstorming
The Processing Phase:
*A solution to the problem is identified
*The steps taken in this phase are to:
*Generate a wide range of options
*Evaluate these options against the success criteria
*Select the best option
*Develop this option into a comprehensive solution
*Critique the solution
*Useful tools supporting this phase are:
The Output Phase:
*Implements the solution developed in the processing
phase

*Begins by translating the solution into an

implementation plan

*Then, executing this plan using standard project

management principles

*Supporting tools include:

The Review Phase:
*Involves reviewing the solution

*This phase gives the decision maker the potential to

develop standard solutions to problems, & to avoid
problems before they occur.

*The review phase involves comparing the results of the

implemented solution with the success criteria
determined during the processing phase.
*This comparison may lead to one of the following
conclusions:
1. The solution was extremely effective and should
be developed into a standard methodology or
decision for future cases.
2. The solution was more or less effective and may be
applied to the next similar problem scenario, with a
number of adjustments indicated by failure against
specific success criteria.
3. The solution was ineffective and should not be
applied in the future.
Eisenhardt, Kahwajy and Bourgeois have observed that
'autocratic leaders who manage through highly centralized
power structures often generate high levels of interpersonal
friction'

*The first alternative is collaborative decision making

*It involves the leader sharing a degree of their formal
decision making power

*Time-consuming process
Allowing relevant stakeholders to vote
on options that have been previously
identified
Differences of
opinion between
stakeholders are
resolved by trading
off interests
Seeks to avoid any trading of interests.
Rather, it works on the basis of all
stakeholders being completely satisfied
with the decision reached
Effective Decision Making Teams
Eisenhardt, Kahwajy and Bourgeois observed that
effective decision making teams:
*Sought as much data as possible regarding decision
*Generated a wide range of options
*Identified common goals
*Employed humour
*Struck the right balance between leader’s power & the
influence of team members
*Sought consensus only where this was a reasonable
prospect
*A leader may share all (or most of) their formal
decision making powers.
*This paradigm offers a number of distinct advantages:
*It allows decisions to be made at a level where a more
intimate knowledge or experience of the decision
making context may be available
*Where the decision in question is routine (and so
relatively straight forward), it frees up the leader to
make more difficult or critical decisions
*It provides the leader with opportunities to develop
subordinates' decision making abilities
This form of delegation is reliant upon mutual trust,
partnership and common understanding in several
areas:
*desired results
*guidelines for performance of the task
*identification of the resources required
*standards for measuring and reporting on
performance
*an agreement to accept the consequences of
success or failure, whatever the result
* Leaders have no formal power over decision making in
negotiations

* Strongly promotes win-win approach

* The three features we will focus on are:

*The enhanced ability to understand the decision making
context and the interests of all parties to a decision.
*The increased potential to form consensus.
*The opportunity to improve implementation of the
decision.
Enhance Understanding of the Context
*Malhotra and Bazerman (2007) identify five types of
information that are critical for reaching an effective
decision and may be discovered in negotiations:
*The reasons why the other party is seeking a particular
form of agreement.
*The constraints experienced by other stakeholders.
*The full list of the other party's demands.
*The common ground you share with the other party.
*Hidden issues that would not come to light in any other
collaborative setting.
Improved Consensus
Sebenius (2001) discusses a number of consensus-
driving activities that may be undertaken in
negotiations:
*Preventing one issue or interest from outweighing all
others.
*Looking for useful differences between the parties'
positions.
*Correcting your own faulty perspective.
More Effective Implementation
Ertel highlights the following key negotiation activities:
*Reaching an agreement or decision , while bearing
in mind the likely state of the relationship one year
into the future
*Helping all stakeholders to prepare for their part in
the implementation
*Ensuring that all parties share responsibility for the
whole of the implementation
The external barriers are well known and largely relate to
some form of resource- or authority-based constraint.
Common examples of these may include:
*short timeframes
*lack of budget
*lack of access to key stakeholders or information
*lack of material or equipment
*staffing shortages or limitations
*bureaucracy and red tape
*ineffective communication in the organisational
structure (such as silos or a steep hierarchy)
*complex or onerous legislative or regulatory regimes.
Mental barriers to Decision Making
Hammond, Keeney and Raiffa (1998) draw on 50 years of
research into heuristics to identify a number of mental
traps that may pose as barriers to effective decision
making.
*Clarity Heuristic
A common example that is frequently cited is the clarity
heuristic, which means we commonly assume that clearer
objects are physically nearer to us, while fuzzier objects
are further away.
* Anchoring Heuristic
The anchoring heuristc means the decision maker is
influenced by the first information they receive.
Subsequent information is overlooked or minimised, and
so a skewed decision results.
*Status Quo Heuristic
The status quo heuristic biases decision makers in favour of
preserving the pre-existing state of affairs.
*Sunk Cost Heuristic
In economic terms, sunk costs are investments of time and
money that are unrecoverable. Sunk costs may have an
interesting effect on decision making, in that they may
dissuade a decision maker from taking up an option that would
otherwise be attractive.
*Confirming Evidence Heuristic
In decision making, it involves a strong bias in favour of
evidence which confirms our existing beliefs or desires, to the
detriment or exclusion of all other evidence.
* The framing heuristic
The way in which a question is framed may tend towards a
certain type of response, and the same is true for decisions.