Every decision has an optimal decision-making approach

Most profit losses in a business occur because the people working together fail to convert the ideas needing action into immediate action for one of two reasons:

1. They are unclear about how the decision will be made, so no decision gets made.
2. They do a poor job of following through on the decisions that are made.

The decision-maker solves the first obstacle to making the best decision by communicating upfront which of the four most common ways of making decisions they will be using.

The decision-makers challenge is how much involvement they want from the people affected by their decision. Each decision-making approach represents a different degree of involvement.  Increased involvement brings the benefit of increased commitment along with the curse of decreased decision-making efficiency.

Command – the person with authority decides without involving others.

• Command decisions are made with no involvement whatsoever from others. Often they are influenced by outside forces that place demands on the accountable person requiring them to deal immediately with the demands of the circumstances or where more involvement adds nothing.
• It is not a subordinate’s job in command decisions to decide what to do; the subordinate’s job is to decide how to make it work.
• Best used when the person making the command decision is trusted to make a good decision.
• When faced with a potential command decision, consider the following:

1. As a general rule, if people can make choices, allow them to do so. Don’t tie their hands without reason.
2. Recognize which elements are flexible. Find out where you have degrees of freedom and then allow others to choose within these boundaries.
3. Explain why when handing down an order by articulating the reason behind the demand. Knowing why helps make what a lot easier to do and to live with.
4. Don’t pass out orders like candy. We face enough command decisions from constraints placed on us by outside forces that we don’t need someone on a power trip making up new ones.

Consult – input is gathered from those impacted, and then the person with authority decides.

• Consulting is a process whereby decision makers invite others to influence them before they make their final choice.
• Consulting can be an efficient way to gain ideas and support without bogging down the decision-making process through idea gathering, evaluating options, making a choice, and then informing the broader population.
• The most common problem with consulting decisions is people’s misperception that their input gives them a say on the decision. You prevent this by being sure before people start contributing that they understand that you are consulting with them does not mean that eventually the decision will be made by consensus.
• Consulting should be used when:

1. Many people will be affected
2. You can gather information relatively easily
3. People care about the decision
4. There are many options, some of them controversial

• When consulting, don’t pretend. If you have already made up your mind, don’t go through the charade of involving people, only to do what you wanted to do all along.
• When you are only going to involve a sample of the people who will be affected, let others know who these people are so others can talk to them before you.
• Report your decision. Whether you take their advice or not, those who share their perspective deserve to know what you decide and why.  Don’t keep your decision a secret because you are afraid you will offend people – they will learn soon enough.

Vote – the person with authority for the decision allows the decision to be made by majority rule.

• Voting is best suited to situations where efficiency is the highest value, and you are selecting from some good options.
• When facing several decent options, voting is a great time-saver but should never be used when team members strongly favor specific options. In these cases, consensus decision-making is a better option.
• Only take a vote when you know that the losers don’t care all that much. Otherwise, you may be fighting the battle for a long time after the decision has been made.
• The vote is effective when you need to reduce the number of good choices to select from then use consensus to select from the narrowed field.
• Votes should never replace thorough analysis and healthy dialogue, especially when everyone cares greatly about an issue. It is never the time to stop and call for a vote when people have trouble choosing.

Consensus – everyone agrees and then fully supports the final decision.

• Consensus means you talk until everyone honestly agrees to one decision.
• This method can produce tremendous unity and high-quality decisions. If misapplied, it can also be a horrible waste of time.
• Consensus should only be used with high-stakes and complex issues or issues where everyone absolutely must support the final choice.
• The consensus method is used on decisions where everyone is affected, everyone cares, and several options are not equally liked.
• During consensus decision-making, everyone needs to meet honestly and openly to discuss the possible options. Then they jointly make a decision that each person agrees to support.
• Don’t force consensus onto everything, especially in situations that don’t deserve the time and attention needed to reach a consensus or that can’t be solved unanimously.

When choosing among the four primary methods of decision-making, consider the following questions:

1. Who cares? Determine who genuinely wants to be involved in the decision, along with those who will be affected.  These are your candidates for involvement.  Don’t involve people who don’t care.
2. Who knows? Identify who has the expertise you need to make the best decision.  Encourage these people to take part.  Try not to involve people who contribute no new information.
3. Who must agree? Think of those whose cooperation you might need in the form of authority or influence in any decisions you might make.  It is better to involve these people than to surprise them and then suffer their open resistance.
4. How many people is it worth involving? Your goal should be to involve the fewest number of people while still considering the quality of the decision and the support that people will give it.  Ask: “do we have enough people to make a good choice?   Will others have to be involved to gain their commitment?”

The majority of great actions that lead to higher profits and greater cash reserves in the bank are preceded by a great decision.  You improve your odds of making the best decision when you are clear going into the decision-making process on whether you will use a command, consult, vote, or consensus approach to making the needed decision.

Click here to learn how to solve the second most common failure to convert a decision into action.