OrgDev with Distinction

4 Steps to Effective Decision making

March 03, 2021 Dani Bacon and Garin Rouch Season 1 Episode 3
OrgDev with Distinction
4 Steps to Effective Decision making
Show Notes Transcript Chapter Markers

Today, making decisions has been elevated to an art and a science. There are thousands of academic journals and books on decision making and hundreds of frameworks to choose from.  Many people have made their whole careers out of studying the topic and teaching others how to make better decisions. That’s a lot of resources but most organisations don’t have the time or manpower to make use of them all. While having all those resources is great for every day, it can make it challenging to decide where to start when you need to improve your decision making process. We took on the challenge of distilling everything down into something that would work for almost every organisation — and we've shared it with you in this Podcast. It's highly practical and you apply it in your work immediately.  We'll also be busting some of the myths surrounding decision making

This is one of 4 sessions we're running in this series (Youtube links below):
1: Leadership and remote work - https://www.youtube.com/watch?v=x26Re...
2: Optimising team performance - https://www.youtube.com/watch?v=GJ18v...​ 
3: 4 Steps to Effective Decision Making
4: Wellbeing

Thanks for listening!

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Our professional and highly skilled consultants focus on delivering engaging, results-focused and flexible solutions that help our clients achieve their business objectives.

Find out more at https://distinction.live/how-we-can-help/

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Dani Bacon: This podcast is all about bridging the gap between academic research and practice. It was about finding ways to bring intellectual high quality academic research into everyday practices as they come.

We've done two sessions in the podcast so far. In the first session, we looked at leadership and remote teams. In the second session, we looked at optimizing team performance. Today is all about decision-making. We've also got sessions in the pipeline on wellbeing strategy, and they're all available on YouTube, and very soon, they'll be available on your favorite podcast app. So keep an eye on that coming soon.

My name is Dani. My background is in organization and people change. I spent six years as Director of Investors and People. And then I run my consultancy practice. So I've always been fascinated by watching how decision-making unfolds in organizations. It's such an important part of what makes organizations tick and how they get things done.

But it's really rare to find leaders and teams that have given much thought about how they go about making decisions. Garin, do you want to Introduce yourself?

Garin Rouch: Hi, I'm Garin. I'm an organization development consultant and I work with executives, boards, and teams on governance and decision management, which basically means ensuring that organizations are making the right decision at the right time, by the right people, with the right authority, using the right process. 

I'm completely in agreement with Dani as well. There's something that organizations could do much better if they spent some time and invested some thought and investment at all levels with that as well. And an organization's success is definitely the sum of all the decisions made within an organization. 

Dani Bacon: Absolutely. Thanks, Garin. Aside from personal interest why did we choose to look at decision-making. Well, one paper we read when we were looking through the research for these described organizations as decision factories. So in our non-work life, the number of decisions we have to make has just exploded. 40 years ago, it's estimated the average supermarket had 9,000 different products for us to choose from. 20 years ago that had increased to 30,000. And these days, the majority of us are faced with the choice of millions of different products every day. 

In organizations, it's estimated that in the last 20 years the average manager has experienced more than a 30-fold increase in the number of decisions they're having to make. And I suspect, given the turbulence of particularly the last 12 months, that will have grown exponentially again. 

For most of those day-to-day choices, the risks are small. But when you scale up to decisions being made on a corporate scale, the implications can be really enormous. Also, some recent research by CIPD found that employee satisfaction with their involvement in decision-making in their businesses is significantly and positively related to their overall job satisfaction. So there's a real human reason to involve people in decision-making, but only 50% of employers are currently satisfied with the amount of involvement they've got in decision-making.

Decision-making is really complex and it draws on many different fields of research. In essence, though, to improve our decision-making, we must work on the process we use to make decisions and also be aware of the psychological factors that are at play as we make decisions.

So the point of today's session is to take you through our model of decision-making, highlight some of the factors you need to be aware of and give you some tools you can use in your own work that really help to supercharge decision-making in your organization. As we go through the research, we always turn up myths about the topics we're looking at, and decision-making is no different. So, we've got three for you. 

First, is that decision-making is an intellectual, objective, rational exercise. We might be tempted to think that's true, but it's just not. Actually, social, emotional, and political factors all play a huge part in the decision-making process in an organization. It's estimated that subjective opinions impact over 95% of all decisions that we make, and emotions are those responsible for the decision-making errors that occur. 

There are 185 different non cognitive decision-making biases that can impact us when we're making decisions. We'll take you through some of those today. Not all 185, but we will give you some of the key ones. And even things like the amount of sleep that we get or the time of day we make decisions can have an impact. So anything that suppresses the levels of serotonin, for example, can make us less risk-averse. So if you've had a bad night's sleep, that can really impact how we make decisions. 

Garin Rouch: One of those interesting bits of information is that the most active decision-making forums happen in the morning, and teams that actually meet in the later afternoon are more likely to defer major decisions because they feel tired and their serotonin levels have gone down. 

Dani Bacon: Our second myth was that we turn to experts to help us make decisions. That would feel logically intuitively correct, but actually, it's not true at all. There's some recent research done that said only 32% of leaders turn to experts when they've got decision making. The vast majority prefer to turn elsewhere when they get stuck. 

About 41% of leaders said they will turn to immediate colleagues and friends. Another 41% said they would use family or relatives to help them. Worth bearing that in mind if you're in a decision-making situation in an organization that your leader probably isn't talking to experts. It might be his friend; his next-door neighbour.

Garin Rouch: Yes and I think we've all been there before when senior leaders go home at night having spoken to the team and they are in X position. And they come back the next day having spoken to their partner. And often, their partner often becomes their counsel. Sometimes it's good counsel, but they don't really have the context and the information they're getting is sometimes quite biased from the manager that's sharing it with them as well. 

And that's something that teams really need to be aware of. For those people that are involved in family firms, it can be frustrating for teams because whether the meeting should be decided; it's not necessarily happening there and things are presented as a fait accompli. 

Dani Bacon: Then our third and final myth was that senior managers are best placed to make decisions. Actually, the research has shown that involving middle managers and especially those managers are what they call boundary spanners where they've got close links with suppliers, with customers, or their spending teams. 

If you involve those middle managers, then you end up with superior decisions and strategies. And that's because they've got access to more relevant external information,  because they're close to the people the decisions are affecting, and they're much more likely to know whether the actions and the decision you're proposing are actually operationally possible given the resources and context that the organization is facing. So they were our myths. 

Now it's about to get into the details. So we're taking a slightly different approach this time. The last two podcasts, we gave you a top five. But today, we're going to run you through four phases of our decision-making model. Garin is going to take us through the first phase. Over to you. 

Garin Rouch: Great. Thanks so much, Dani. Just to set the context for this; this is our third podcast that we've done now. And, Dani, you will agree with this; that decision-making, of all the areas that we've researched, has required us to reach the most amount of research because it's difficult to find definitive answers. A lot of decision-making research is based on case studies. And, therefore, with case studies, it's based on the context.

What can happen is that good decisions can create bad outcomes, and bad decisions can create good outcomes. And really, it's making sure that we understand the context first before we start to apply our decision-making methodology. And this is what we wanted to do today; to give you a decision-making framework. Not a method; a framework for you to actually approach decisions. 

So we've got a four-part approach, so it's really simple. The first phase is the what and the why of making the decision. What are we going to decide? Why are we going to decide it? The next bit is the who. So, who is actually involved in decision-making? And that means examining ourselves; our personal approach to decision-making, groups, and considerations around that as well. 

Then we're going to give you some really specific techniques that will help you look at things like applications and whatnot options. And then finally,  the often forgotten part of decisions which is the what next. So we've produced this amazingly high-quality decision; how do we ensure that it's accepted by the people around us and they actually help execute the decision as well?

So let's get into that first one. So, the first thing we would always say is categorize the decision that you have to make. Not all decisions are equal. Some decisions are very straightforward; you can almost set decision-making rules around it and automate it almost if there's that system. Others are much more complex where we don't actually know what's going to happen until we actually make the decision because there are all these variables involved. 

So, what we recommend often for something like this is something called the "Cynefin Framework". It's developed by a thinker called David Snowden. He basically came up with a sense-making framework, and it helps us understand the different problems and decisions that we face. 

Often, what happens is most people decide how they're going to act, and then justify the action. What this does is it encourages you to actually sense what's going on, map the territory, and then decide how you're going to decide around it as well. And I'm not going into too much detail, but it just to give you a high-level view of it. 

You can look at his framework in two halves. The right side is looking at where things are ordered and cause and effect predictability. If I decide this, then this will most likely happen. And so what we can do is we can actually start to take a much more straightforward approach to things.

The bottom right corner is about obvious. So this is where we kind of know exactly what's going to happen. We sense what's happening, we categorize the decision to be made, and we then respond. And we can apply best practice. There is one best way of doing it, and that's where we can set decision rules and automate.

 

The second one on the right-hand side is complicated. We sense it's going to take more analysis to get to the bottom of it and often we'll use subject matter experts. But with that analysis, we're then able to identify our response and we can apply good practice. There's a number of ways of doing it, but we've made sure that we actually apply what seems to work already.

On the left-hand side is where things become un-ordered and cause and effect are unpredictable. So if you make a decision, we're really not sure of the unintended consequences of what it might cause. In the top left one is where we have a complex situation. It's where there's unpredictable, uncertain outcomes, and it requires us to actually rather than sense for us to actually probe what's going on and run safe-to-fail experiments to really find what's going on, find responses as we sense. 

And so our answers to this are often very emergent. We need to get all of their different areas and perspectives and experts in the room, and really come up with a solution there as well. And the bottom left for those of you that were managing during March and April last year will be very aware this is chaotic. It's where we generally don't know what's going on. So, to bring order, we just have to act. And then we sense, and then we respond. 

The way in which we respond is often quite novel. A lot of leaders will make very quick decisions during that time. Interestingly, organizations can either fall into the chaotic area accidentally, and sometimes even intentionally to create chaos to create change. And a good example of organizations doing that is things like hackathons as well. 

So that's the Cynefin method. It's a really useful framework for managers. Managers generally live in a complex and complicated world. 

The other thing you need to think about as you're starting to think of the why when you're making decisions is to, number one, just understand the strategy. Number one is to read it. And it never continues to amaze me how many managers have not read and understood the strategy. When we do strategic alignment training in organizations, we'll often ask 15 managers, "How many of you have actually read the strategy?" And two or three will put their hands up. 

So it's really important to take responsibility and read the business plans of other departments, to read the strategy, and to understand how that influences your decisions;  the level of risk that one should we take, the things that you need to prioritize above other things.

Sometimes strategies aren't very clear. So what we really encourage you to do is to speak with your senior managers, and with your colleagues, and even the most senior of managers, your CEO, and ask questions. And that can really help guide you in terms of where you begin with your decisions and the first steps to take. 

Dani Bacon: The other thing that's kind of organization-specific is around culture. It's not that surprising that cultural context really influences decision-making processes in all sorts of ways; some really obvious and others less so. So the levels of trust that is placed in people, the power and hierarchy structures, your organization's tolerance for risk, whether an organization is focused on the short-term versus the long term, and all those sorts of things can play a part.

But culture can also affect when and how decisions are made and determine the speed at which they're made. Culture determines what information is considered valuable, how information is interpreted, and how people are making sense of events. I think, also in terms of culture, it's also important to recognize that managers will be influenced by previous decisions. So decisions that have been made before they're even involved in the organization and their outcomes, and the extent to which they form part of the memory of the organization. They're likely to be in policies or procedures or rules or in the individual or collective memories of those involved in your current decision-making process. 

So you can find those sorts of things can either help the process or constrain it. It might perpetuate the status quo and people might be reluctant to change things. Culture can also determine whether you're expected as a manager to make decisions independently without consulting others, or whether consulting with others is desired and expected. If your culture is really collaborative, then you might be expected to involve people in decision-making processes in a different way than you're used to.

Garin Rouch: Yes, it's really interesting. You can often tell what kind of culture you have by sitting in the senior leadership team meeting and looking at the decisions that they're making. And often if you have things like an avoidance culture within the organization, you'll see lots of decisions that should have been made at a lower level that find their way into the senior leadership team meeting, And it actually holds the meeting back. Rather than them focusing on the really important strategic issues and prioritizing the organization, they're in the nitty-gritty operational stuff. 

Dani Bacon: The other area to think about is corporate values. Corporate values can evoke mixed responses in people. Some people think they're the most important thing ever; others, a lot less convinced. And certainly, if your values are just a nice list of words on the wall or created as part of a marketing exercise, then I tend to agree they're probably not that important. 

But where an organization has really done the work and really surfaced their core values and they've got this fundamental set of principles that they adhere to, then those values can really act as the North Star and play a really significant role in helping guide decision-making at all levels of the organization. So, if they're really critical values, then they'll provide a framework for making difficult decisions that help when resources are scarce, that help you know how to allocate these resources, or when you're choosing a strategic partner to work with. They'll help you determine who's the most strategic partner.

There's a number of researchers that strongly argue that organisational values really shape the decisions you make, but also the problems that are presented for decision-making. Worth bearing that in mind when you're thinking about the context of  decision-making.

The last part of our "why" of organizational decision-making is all around information. Most decisions involve a mix of opinions of your own and others and facts and sifting through all that data can be a real challenge. But it's also a really important part of the decision-making process. So two kinds of issues really; Information overload is a real problem for organizations. Organizations today have got unlimited amounts of data, sales demographics, economic trends, competitive data, consumer behaviour, data about your people, efficiency measures, finance; the list is endless.

One of the phrases that popped up when we were doing the research was the idea that organizations are drowning in data whilst thirsting for information. We pulled out some research that found that businesses currently analyse less than 7% of the data that they collect. They're also generating data at a much faster rate than any manager could master. And in parallel, the useful life of the data that they're gathering is collapsing as the world around them is changing really quickly. So it's really easy to get data, but it's increasingly difficult to convert that into meaningful information to aid decision-making.

And then at the opposite extreme, you've got organizations experiencing a poverty of information either through lack of data, or more often than not, the lack of time or capability to find and understand the information they need. So we've got just a few tips on how to make the most effective use of data when we're making decisions. And a big part of that has been structured about how you can work with data and information you've got.

First, you have to be clear on the problem you're seeking to solve, or the decision you're trying to make. Then work out what types of information you need to help you make that decision, and try to do that without being side-tracked by the data that's easily available because that can distort what you can find out. 

Make sure you assess the quality of the data you're using. There's always issues with data sources and none of them are perfect. It's important you understand how the data was collected, what it was collected for, when it was collected, but generally, how much trust you can put in the data that you've got. And then lastly, look out for information that's actually opinion disguised as fact. So always ask for the evidence. 

Opinions are really useful inputs into a decision-making process, but you need to know they're opinions and not confuse them with facts. So look out for people saying things like "everyone knows" or "people are saying that" or "I've met several people who" and just be a bit more curious and probe what's being said,

Garin Rouch: There's a real skill in the curation of information that's required for a decision.  I think sometimes what happens is if a decision is being made and the orders given out, some technical specialist doesn’t get some information. There's a lot of information because they don't want to leave the wrong thing out. And so when you do see things like board packs or spreadsheets, it's often piles of more data, which the manager just doesn't have the concentration levels, the time, or focus to go through. 

So it gets lost and then they starts to rely on heuristics. There's a lot of things that can be done where you actually ask for the interpretation of the specialist. And that helps them because it helps them be more commercial or more service-orientated because you're actually asking them to bring some good analysis. And it also can really streamline the process as well.

Dani Bacon: Well, it can. Absolutely. If you're going to involve experts, let them do their job. Let them apply their expert knowledge and the insights from the data from today. Just lastly on information; there's a bias that's important to be aware of and that's confirmation bias. Sometimes we refer to it as anchoring bias, and that describes our underlying tendency to notice, or focus, or give greater credence to evidence or fits with our existing beliefs. 

So once we've got an idea in our head, our brain starts to look for evidence to confirm it. At the same time, it starts filtering out any evidence that's going to go contrary to that. So we form our mental models really rapidly, often on the basis of limited information, but we're really slow to alter them as new facts emerge. It's important to be aware of that. What do we do about it? Well, the first step is just being aware that it's a problem, have discussions with people involved in decision-making about the fact that confirmation bias might emerge, when it's likely to show up, and concentrate really hard to try to establish a neutral fact base. Get several parties to gather the information so you've got an objective data set, and make sure that all the facts get in before you start making decisions. 

Garin Rouch: Oh, that's so powerful, isn't it? If you can go into a decision-making process with, "Okay. Well, this is what we agree with before we go into it," that can make a huge difference going there. 

Dani Bacon: Yeah, it can be so important. So that was our phase one; looking at the context of the what and why and deciding how to decide, categorizing your decision and aligning with organization strategy and taking into account cultural values information. So now we're onto the second part, which is about who needs to be involved. Garin, do you want to take us through that?

Garin Rouch:Yes. I think it's kind of starting with the end in mind with this bit. Often you find decisions falling down, especially when we go into the execution part because stakeholders — and when we say stakeholders, it could be anyone. It could be someone further down the process; it could be people that have authority, or actually, execute on it. They just don't know you've made the decision, or they have information that will actually mean that if that was known at the time, you wouldn't have made that decision.

So, really, it's important when you actually go through that decision-making process, how you do it is to say how you're going to engage with your stakeholders. And really, there's a spectrum from inform over here. So all you're going to do just inform them that you make a decision, educate them about what you're doing. Then it goes over to consult where you start to, specifically, go out to different stakeholder groups, gather information views. 

Then you've got the mid-level where you're actually having dialogue and talking it through and getting a shared understanding before you actually start to lead that decision-making process. So the more collaborative, where you're sort of framing the issues together with your stakeholders and you're actually debating the options together as well, the high-quality solutions you come to.

Then finally, the most collaborative which is partnering, where you're actually working with your stakeholders to frame the issue, select and implement solutions together. What you could argue is that on this side, these are quicker and these take longer. But the execution, strangely, works over this side much more because it just means that you do it once and you do it right and everyone's bought into it as well. So it's really important to think about how you're going to do it. There is a phrase that managers sometimes use. Was it "stop until..."? 

Dani Bacon: "Seek forgiveness, not permission."

Garin Rouch: Yes, that one. It's a very machismo kind of phrase, isn't it? And I guess that it does work if you're in a highly bureaucratic organization, but it's not a heuristic that works in every situation. It's really important to know that people feel included in your decisions. And it's really important that staff feel included in decisions as well. 

Dani Bacon: Yes, absolutely. There's lots of research out there that if you involve your people in decision-making, then you have a happier, more effective workforce. I think going back to that seeking forgiveness not permission; it’s that difference that we've talked about that before - the difference between disruption and skillful disruption? If you run around making lots of decisions, you can create a lot of disruption, but you can also create a lot of damage. If you take a bit of time to think about how you're going to do it, it can be a lot more constructive. 

Garin Rouch: Yes, because we've all been on the receiving end of those things, and it very rarely ends well. And then we're going to look at ourselves as individuals because we do bring our own perspectives in decision making. As Dani would say, 95% of decisions are subjective. So, two researchers, Simon and March,  have argued that humans, when it comes to decisions, actually satisfice. And satisfice basically means to rather than optimize, we actually look for alternatives only to the point where we find an acceptable solution.

So we're not looking for the perfectly optimal solution. And because we have to make so many decisions, an organization of 50,000 people makes 400 million decisions per day. So it's not possible to do that level analysis. So, we employ things like heuristics and rules of thumb to actually make decisions. And most of the time, our shortcuts do serve us well, but what it also leaves us prone to is our cognitive limitations leading to errors in judgment. And smart people can make very poor decisions. 

Often, poor decisions are not due to a lack of intelligence; it's because we've got some form of bias. And these systematic mistakes, often called cognitive biases, are these decision-making traps that we fall into again and again.

The first one is overconfidence bias. Now, Daniel Kahneman, who's a Nobel Prize-winning researcher into this field said if you could eliminate one bias, it would be this one. And it's prevalent for all the population. Around 80% of the population at any one time will exhibit optimistic bias.

What it shows is that even physicians are overly optimistic in their diagnosis. It can show up in terms of how we believe an outcome is going to happen. So, if we think that our product is actually going to be successful, whereas we actually compare it to the number of new products that do actually succeed, you can see there's a massive mismatch. And also, people often believe that they're above average. So that again shows you that we often overestimate our ability. 

The second cognitive bias that we're going to talk about is "the recency effect". It's also known as the availability bias. It's just that we tend to place too much emphasis on information and evidence that is kind of readily available around us right now, or our most recent experience. So if we're on a hot streak, if our sales team are doing really well, we often have that thing of our decisions are good, we don't need to do too much analysis, for example.

A really well-known example of this is, in the 90s, there was an Everest expedition, where two parties, led by two experienced leaders made a go for the summit when they knew that the weather conditions weren't good. But because the tour leaders had experienced a consistent record of good weather in the last few seasons, they actually believed that they could do it.

There's also a little bit of Summit fever, which is another bias that we won’t mention now. It was a belief that that was their experience, whereas mountaineers that had been doing in the 80s had spent years not being able to get to the summit so they were a lot more risk-averse. So it's just making sure that when we look at our data that we go back in time further than maybe the most recent past. 

So what can we do to actually work around those kinds of biases because biases are really hard baked into us? It's very difficult to overcome them. But research has shown that even basic training in probability can make us better forecasters. It's shown that it helps create faster decisions and 40% higher quality decisions and better execution, just by presenting to your team.

Another challenge that managers can have is that they present their ideas with such confidence and such certainty that the team is just like, "Well, I've got some concerns about it, but who am I to challenge that?" So, as a manager, if you can present an idea with probability, like you believe that it's got a 70% probability of working, then that introduces 30% that it might not. 

And that gives your team a really good opportunity to talk those kinds of things through. And that can give you a much richer conversation where you start to raise some constraints around the decision to make sure you don't stray into areas that could potentially make you fail. 

Dani Bacon: Yes. There was some really nice research done by the Rotterdam School of Management where they looked at projects. And they found that projects run by junior managers were more successful than those run by senior managers, and that was attributed to the fact that people were much more willing to share their ideas and challenge the junior managers leading the projects than they were with senior managers: Overconfidence and that willingness to listen to senior people can be a real problem in decision-making. 

Garin Rouch: Yes. There's another research and I can't quote it precisely, and it's just that older people use less evidence to make decisions. And that could be for a variety of reasons, but it often is because you've got that kind of intuition at play. Again, it would be remiss of us not to do a section on this without talking about the role of intuition.

So, it's about understanding that intuition is something that we use a lot in decision-making. So, what is it? It's about pattern recognition and pattern matching based on our past experience. The psychologist, Gary Klein, has done some great research on this, particularly in the military, and looking at how decisions are made and the use of intuition and when it's most effective and when it's least effective. 

Often, the argument is that if you're more experienced, then you should rely on intuition more. If you're less experienced, then your intuition doesn't have so many past experiences to go with. Therefore, there's a greater need for analysis as well. The most important thing with intuition, though, is to show your workings so that your team understands the rationale behind it, and it makes sense to them. So that when you're giving them instructions, they can understand the intent behind it, and they're more likely to follow it rather than thinking, "How on earth did the manager come with that idea over there? How on earth are we going to follow that?"

There's a lot of different things you can do to actually help support that intuition. It does have a role to play. We're not saying it's a bad thing. It's a good thing, but it's good, like in all things, to have balance. 

One good way is to apply disciplined intuition. Again, a little bit of research, which is what's really useful is to actually do the analysis first and then apply the intuition. Then that intuition has got a much more sort of specific container to work in. Another way of doing it is to actually do things like premortem exercises. You probably know this quite well, but it's where when we make a decision, prior to that, we've just worked through, if this decision was to go wrong, why would it have gone wrong? And that can start to help us understand some analysis as well. 

Another really good scholar is Karl Welch, and he came up with a really nice way to explain your intuitions that you have as a manager to your team. He came up with a very simple five-step process which I quite like, which is you go to your team when you've made your intuitive decision, and you share: number one, here's what I think we face. It's your assessment of the situation. 

Number two, here's what I think we should do. So that's what your intuitive thought is. Three, here's why; your rationale. Four, here's what we should keep eye on. So these are things that might be risks to the project. Number five is; okay so that's what I think. Now, talk to me or have a facilitated discussion in pairs amongst yourselves, and then come back to me and tell me am I right? Am I wrong? What do you think the risks are? And that can lead to a much better conversation and rapidly increase the chances of buy-in as well.

Dani Bacon: Lovely. Thanks, Garin. The other thing when you're making decisions in an organization, a lot of the time you're going to be making a decision in a group setting. There's lots of research out there to show that overall, on average, groups tend to make better, more considered decisions than individuals, and the idea that the two heads are better than one is fairly widespread and the research backs up for the most cases. In part, it's about getting more diverse perspectives and ideas and ways of thinking. And also, it just tends to be seen as fair and more democratic if you've used a group to help you make the decision.

But superiority of groups is not a given. It brings with it different risks and challenges and can be an area where many organizations struggle to make it work. That social nature of decision-making means you're adding a huge number of additional variables into the mix. So, yes, you've got 185 cognitive biases out there you need to multiply that by the number of people you've got in your group. So times 6 or 10, or that sort of thing.

So things get much more complex when we're looking at that interactive type of decision-making. And Peter Drucker, back in the 1960s, said, first of all, with decision-making is that you don't make a decision unless there's disagreement. That idea that challenging perspective is good. It's about balancing that so it's constructive disagreement rather than unhealthy conflict that you end up involved in. 

There are some tips for how you make group decision-making more effective. The first step is about how you frame the decision-making process. Cognitive research has shown consistently that how you talk about a decision or a situation or how you frame it can really change how people respond and react to that situation. So, as a manager leading a decision-making process, this gives you a real opportunity. If you frame the decision-making processes as a negotiation, then people are going to go into that process with one what mindset, and it's more likely they're going to try and get their position supported, or go in thinking they need to argue their corner or defend their ideas. 

If you cue up the group on the idea that it's about cohesion, it's about unity, or it's about making the most accurate decision, then people will go into it with a different mindset and they're more likely to take time to explore the information, accept different opinions and make a shared decision more than just trying to fight for their own corner. 

Garin Rouch: Yes. And that sort of talks to prospect theory as well, which is the language that a manager uses to actually frame it has a critical factor. If you frame it as a threat, i.e., the classic burning platform, what you often get is a lot of resources thrown at it but it reduces creativity substantially. So, it's really good for managers to actually frame the problem in multiple ways to give the group a chance to look at it from different perspectives.  

Dani Bacon: Yes, absolutely. And that's the other thing is to pay attention to group dynamics and group processes when you've got group decision-making going on. So, the first step, have you got the right people in the room?

This is a little bit of what we talked about earlier with stakeholders. Make sure you've got the people who need to be involved. It can be a bit tempting to exclude those you know are a difficult person, but then miss a really valuable opportunity to hear their perspective. And if they're going to play any part in rolling out the decision later, involve them earlier than later. 

Garin Rouch: A very outspoken manager once said to me, "It's better to have them peeing out the tent than in the tent" I think that's a metaphor we can all identify with.

Dani Bacon: Absolutely. Second, do people know why they're involved? How often do people get involved in a process or a meeting and they're not really clear why they're there? Just make sure that everybody knows what decision needs to be made and what their contribution to that is. 

And it sounds really obvious, but unspoken differences in understanding can really send your discussions and process off-track before you've even started. The other thing around group dynamics and group processes is an important bias to be aware of. And that's something known as the common knowledge effect — the idea that information that's shared amongst the group will dominate the discussion.

So people spend a lot of time telling each other things they all know. If the information is known by everybody in the room, that will dominate the discussion with so much more time talking about that than the information that might just be held by one person. You need to create a forum where people have that time and space to bring forward the knowledge that only they know. 

Make sure the group really understands that the whole purpose of that discussion is to raise the overall knowledge of the team. Have a leader who's setting up a norm of information sharing, who encourages people to stimulate information exchange, and go through the process. Make sure you lay out all the information before the decision gets made.

The other part of the group process is to have a good dialogue and discussion. I know you've done some research, Garin, about the importance of dialogue in decision-making processes. 

Garin Rouch: Yes, McKinseys have found that when it comes to effective decisions, the biggest contributor of effective decision 53% is dialogue. Information is 8%, but it's that quality of dialogue that makes the critical factor. 

Dani Bacon: Yes, absolutely. So dialogue is not just about getting agreement. It's about encouraging people to participate and creating the pooled share of meaning, which leads to aligned action. So, how things are framed and how they're talked about becomes a significant context for shaping how people think about and respond to a situation. 

On a really simplistic level, the idea of that glass half full, glass half empty. How you frame the situation and how you talk about it generates the reactions, the responses that follow. And in any group, you're going to have multiple realities. 

Everybody's going to have their own story or their own narrative or their own mindset that they're applying to a situation. People are bringing their own histories with the topic and what they've experienced in the past and how they see the present really affect what they say. 

Garin Rouch: Yeah. And if you go full-circle back to the Cynefin model...

Dani Bacon: And I think especially if you're a manager walking into a new situation or you're leading a decision-making process, it's really important to recognize that it's unlikely that this form of decision-making process you're kicking off is the first time this particular issue will have been discussed. You're not going to be starting with a blank slate. You're entering a stream of conversations that have been going on for some time. 

So it's really important to get a sense of those discussions before and during the process. What do people know? And acknowledge the past. It's really important that people feel the past and the history recognized. Obviously, don't let it dominate the debate, but it's really important that people feel that that's been acknowledged. 

Garin Rouch: And some decisions are taboo, like, we've just made a collective unconscious decision to never discuss this. And it's really important to understand what those things are. You need to clean the house and sort these things out, but you need to understand what those things are. 

Dani Bacon: Yes, you do. Bob Marshak talks about this quite nicely. He talks about there's things on the table, so there's things that people feel can or should be discussed. There's things under the table that people know you ought to be talking about but they're reluctant to go there and they're scared to bring it up. And then there's things he describes as over the table, so that's kind of things like dreams, values, and unspoken hopes. So it's a really nice way of looking at it. 

Garin Rouch: As consultants, we're just so acutely aware of this because it can provoke extraordinary actions. That's why we would say, 95%, the predictor of success is preparation for decision-making, isn't it? 

Dani Bacon: Absolutely. And then just one final point, we won't labour it because we talked about it in podcast two, and that's about, are people willing to say what they really think and feel? Have you created psychological safety for that group that are making the decision process? 

So that's given some really good insights into the people-related dynamics around decision-making. Now we want to get practical and give you some tools to help you actually make decisions. Garin, you want to take us through that? 

Garin Rouch: Absolutely. We're going to get super tactical now. What we're going to give you are five explicit techniques to support you during decision-making. Now, it's really important to remember that they are tools. They will not give you the definitive answer, but what they do is that they will contribute to that 53% of dialogue being much more meaningful, much more focused, and much more robust in terms of a process as well. 

So, there's five things that we've kind of agreed so far, which is the five C's of decision making. We've looked at composition; so who should be involved in the decision-making process. We've identified the context; so what type of decision we're going to make. We've looked at communication; so how are we going to use dialogue to come to a conclusion. We've looked at control; as the leader, how you're going to control the process, and who has decision-making rights. And then we've also looked at categorising the decision as well. 

So, in terms of the first tactical thing is something that teams often overlook but can easily remedy. And that's just this very simple thing of generating options. Often I've sat in leadership meetings or team meetings, and someone presents something, and the option, literally is are we going to do it or not? That doesn't lead itself to an expansive conversation, and it often brings group dynamics into play.

If you're the person that you know maybe in the past you’ve disagreed with a few things, but you see holes in it, and the group have got overconfidence bias, it takes a lot for you to actually say that maybe we shouldn't do this because you're just like being seen as a stick in the mud or you're not on the bus, or whatever it is that they want to describe you as. So people censor themselves. 

So we just end up with these decisions that should never have even seen the light of day. Always look, three vendors, four or five, whatever it is, to have choice and to explore, and you can compare like for like as well. And even if you can't get three different vendors to choose from, but at least there's three other options you can have, which is the option to expand. Firstly, to go really big on this decision. Really double down or triple down on your current decision at some point. 

The option to delay; so we are going to do it but we're just not going to do it now, can also be a really rich conversation that creates all the options to just abandon it and to actually explore another avenue. And if you introduce those things, then again, you're really encouraging the team to have a very thought-through conversation around that as well. 

Dani Bacon: The other technique I read about was just consider the next adjacent possibility. So, if you're really struggling to come up with an option, just think what's the next thing in the next square across that we can do if people need something to help them get going with option generation. 

Garin Rouch: 100%.That's a really nice idea Yeah. Simplicity is sometimes key and I really like that. Option number two is work up your options; work them through. Like, what do these actually mean? Because you have to present a new idea to generalists or people that don't have expertise in your domain. It's your job to educate them about what this looks like. What are your assumptions? What's the payback? How does this pay through? 

A really nice tool for this is something called a decision tree. So, if you've got option one and option two, on the screen we're just showing you for a very simple thing. If you're going to take a lease on your office for 12 months or 24 months, and then it's just some very simple calculations that start to work out so that people can actually see, what is the end? What are these two different scenarios work out to be? That makes so much more informed decisions.

I sit in a lot of trustee meetings and trustees have the hardest job in the world. They meet quarterly. They're not experts in the charity. They don't know that much about what's going on, and then they have these decisions: do we do it or not? And there's very little calculation about it. And that's why often governance is seen as a challenge. 

Number three, and really important is to set and evaluate your decision-making criteria. So, if we're in gut feel, we're making these intuitive decisions. This is about bringing to the light of day what are the specific things which we base this decision on? So there's a process to follow.

A tool for doing it, and there's lots of others but this one is a common technique and it works well. I use it a lot with groups in coaching for individuals who have made decisions. And that's the trade-off analysis. You might also know it as the decision matrix analysis. The first thing you do; identify your options. Then you identify your criteria; it could be four, five, six criteria from which you're going to base your decision. And not all criteria are equal. What you do then is you invite the group in to have a really good discussion where then actually give them a weight.

It could be five is the most important; one is least important. And that discussion is really rich because that's you as a group working through it to decide what's most important. And don't go down for consensus where we all agree that everything is five because that's not going to lend itself. You've seen that before, Dani?

Dani Bacon: I have and I think it's particularly true when you've got functional heads, where the criteria already align to their functional responsibilities  and they're kind of trying to argue their case but they're really dodging the important conversation if you let people get away with rating all the criteria as equal. You need to push the group to really challenge themselves and each other on what are the really critical decision-making criteria we need to weigh more heavily.

Garin Rouch: One of the things for managers and this is for a session in the future is to encourage enterprise thinking, not departmental thinking. So then we go through a process of scoring each option across those criteria. You then calculate the weighted scores, and it then gives you an arbitrary number. You can then apply your intuition over the top of that, and then you really start to get into some really good thought in terms of what it looks like.

The fourth one, which is really important, again, this is a real weak spot for a lot of organizations is to actually think of the implications; to really think of the second-order effects of what might happen as a result of this. Often, we've got a pain or anxiety on our desk, and we just want it off, quick decision. But we don't think through what might happen in a month, six months 12 months, 24 months. What's the opportunity cost? What if something else comes along?

So it's really having a framework to do it and a really nice tool for that is the PMI table. PMI stands for plus-minus implications, really simple. You want a table for each option; all the pluses that come from it, all the minuses, and all the implications that you can think of. And the implication can be plus or minus. Then again, score the concepts, calculate the totals, and then that gives you an arbitrary number.

Again, it would have really invited your team into exploring what it looks like as well. And then building on the Cynefin model that we looked at earlier and similar to the agile methodology is the idea of experiment. And this is where we've got complex problems. We genuinely don't know what's going to happen. We launch a product and until the market starts to consume our product or not, we don't know. So, what we do is we actually start to run low-risk, or safe-to-fail experiments.

I think Jim Collins quite nicely put it as "firing bullets then cannonballs". So it's kind of low-risk, low-distraction experiments. And the whole point of management is really mastering this and I think that's something that other fields could really benefit from actually understanding how they do it. For example, Strategyzer is a really nice school of thought. They've got some really nice collateral, and they identified 44 experiments that you can do to make sure that your ideas are feasible, viable, and desirable. And so what it does is it reduces uncertainty before you actually fully commit. 

Dani Bacon: So we've made our decisions, we might think the work is over, but actually, the last phase is probably potentially the most tricky part. So that's implementation. All the effort we put into making decisions and that can be wasted if you don't give enough time to deciding how to roll out your decision. 

So it means that not only do you have to make good decisions, but you have to be able to implement them effectively. And the process we've used to make decisions often has a great impact on whether we can actually do that implementation successfully. 

I was reading the CIPD report on employee engagement that came out last month, and that found that the perceived fairness, consistency, accuracy, and openness in decision-making was really strongly associated with employee commitment and identification to an organization. And that in itself was a predictor of how much discretionary effort employees put into it, but it also includes things such as staff turnover, job satisfaction, employee wellbeing, and attitude. So getting the decision-making process right is so important.

Garin Rouch: It's really powerful stuff, isn't it? You have to get this bit right. It doesn't matter how good your decision is if you get this bit wrong. 

Dani Bacon: You've wasted a lot of effort and a lot of time. For this last section of the webcast, we're going to look at two key elements of decision implementation. The first one is around procedural justice and then the second one's around communicating the decision. 

So, first up, procedural justice. By procedural justice, we mean it's about the fairness and transparency of the process you've used to reach a decision, and you need to pay attention to two things. First up, was the process there and transparent? If people perceive the decision was preordained and think the process was just an exercise in paying lip service to consultation and collaboration, I think we've all been there, then they're much less likely to buy-in the decision that has been reached. 

Then the second thing you need to pay attention to around procedural justice is that people believe the process; that they perceive the process is fair and transparent. There's really limited value in investing time and effort in a fair collaborative decision-making process if people just don't understand how you've got to bounce it or they aren't aware that process has been followed. I think that's especially important.

If your organization has got a history of decision-making that's been perceived as unfair, you have to work so much harder to change people's perceptions of that. If you run a super transparent, super fair process, people will have perceptions about how things have been done in the past and they'll bring that forward. So it's really important as leaders, we're testing for alignment between our views and perceptions of the process and how the people involved in the process and people around the process see it.

At times, leaders think the process was fair but the team members have got a really different idea and that could be quite big. 

So, what are the components of a fair process? We talked about some of them. Make sure you share information equally with everybody involved. Really ramp up the openness and transparency as you go through. Avoid including typical alternatives; people will spot that a mile off. If there's an option in there that's just for show, people will see it so just don't go there. And help people separate advocacy from analysis. Give them time and space to consider the analysis and weigh up the options before they get into championing a position or an idea. 

Recognize that conflict in the decision process and that need for procedural justice and legitimacy are at odds with one another. In fact, you enhance that perception of justice and legitimacy if you give people an opportunity not only to share their views but also debate them with others in an open and transparent environment.

Garin Rouch: And there's a skill there for managers as well to make sure that you do encourage discussion and exchange of views, but you don't have the perception of winners and losers. We are trying to do this for the better good and we're exchanging views. That's quite critical, isn't it?

Dani Bacon: Yes, absolutely. If you can shape that win-win attitude then you're going to make your life a lot easier if everybody comes away feeling heard and feeling their position has been understood and taken into account. Yes, people need to believe that their leaders listen to them and consider their view seriously before taking a decision, even if the decision doesn't go the way people were hoping.

If people really feel they've been listened to and taken seriously, then that can go a long way to helping. Some people care about processes, and not just outcomes when it comes to decision-making. Garin, do you want to talk to us about communicating the decision? 

Garin Rouch: Yeah, and again, this is something that's really straightforward. Managers are very busy and very action-orientated. And often in that firefighting mode, the decision is made, and then you move on from it as well. But there really needs to be some governance around decisions as well and to make sure that... just some very simple thing to think about is frequency.

You've communicated your decision; how are you going to communicate it out? What mediums/channels are you going to use? PDF? Discussion? Townhall? Slide deck? Both audio and video? How often are you going to check in on that meeting and also check in on the people that you've made the decision with to show that it's still important? And how do you actually keep them informed that you're making progress? Are you going to do it a couple of times a year?Are you going to do a quarterly business review? Are you going to do it monthly?

You know I was listening to the CEO of Google and when he has an issue and needs a decision made, he makes people meet daily about it to show that he sees it as being really important. In communication, it's really important to provide the big picture, how it relates to the strategy; to give it meaning, but to give it credibility as well, and to make it meaningful for people to actually be doing this.

Rather than thinking, "Well, that's just your pet project.:" And also, relating it to the strategy and talking about how it aligns to other departmental goals. I think that's really important. And sometimes your decision will make other people's lives more difficult and stop them achieving their goals. And they'll have to put their priorities down in order to do so. 

Let's be realistic here; that is often brushed under the carpet. Someone has to shake the magic time tree and bring some time out of somewhere to actually make this happen. We need to have a really honest, grown-up discussion about this and explain the secrets and how it's going to work with your other manager from the other department and talk about it so that we've agreed this together. 

And what's also really important is, explain the trade-offs in your decision. I see this a lot with organizational restructure. It's like, "This is it. This is going to work." But  no organizational structure is perfect. It's all a trade-off. If you explain to people, "This is what it's going to help and this is what it's going to create negatively. We have to find a way to work with it." That gets a lot more buy-in, rather than people having chats on WhatsApp or Messenger or whatever, talking about how it's not working. You gotta talk about this as well.

Follow up is key; making sure that you've got goals, you're tracking the progress, you're celebrating the success of achievement of milestones. You've got to keep paying attention to it or it will become a fad. Something I see a lot with acquisitions; so much effort goes into the due diligence and the purchase and that's well, and then it comes into the mundane operationalization, and the managers have gone off somewhere else. And these poor people are left with it to actually implement.

The managers got to stay there and stay with it and still make time as well. Put a plan, put a structure in place, make it public, be clear, track progress, ask questions, be accountable, show the accountabilities. And then the other thing as well is feedback and review. Often, if a manager's made a bad decision, they just don't want to talk about it because it looks bad on their career. But everyone talks about it and it is held against you the next time it's done. 

Managers can actually get away with making poor decisions if they learn from it and can actually get more respect and more credibility as well. So have feedback sessions, and also really importantly, review the processes of decision-making. And also, review the options. How did the other options play out? Option B might actually turn out much better. That's okay; we learn from it. That's how organizations get better and better. 

It's really important to remember that decision-making is a muscle. The first time we do it as a team, it's often really clunky, it can be quite tiring as well. We build muscle. We do it every day. We work on it every day, and eventually, we just become much better. It's a competence as well. Again, it's a really critical area. It is overlooked, but it's very easily remedied

Dani Bacon: Lovely. Thanks, Garin. So, that's all four phases of our model. Just a quick recap. Phase one was about the what and the why; so that's all about the context and categorizing the decision. Phase two was about the who. Who needs to be involved and how do we manage the people dynamics. Phase three was about the how;  so what tools can we use to help surface options and weigh them up. And then phase four was what's next; so how to implement and communicate your decision.

As always, we like to leave you with three specific actions. We've given you a lot of information, but if there were three things that we could get you to go away and do straight away, these are the things. Over to you, Garin.

Garin Rouch: Number one is really simple: up front, decide the process. Just be really clear and communicate it and stick to it.

Dani Bacon: Number two is be aware of bias. Be aware that bias might come into play and deliberately explore what biases might pop up and when you might see them. And think through how you might mitigate them and make sure everybody involved in the process knows that bias might play a part.

Garin Rouch: One that I'd go for is to use tools to support you, to generate good conversations. So use it to generate options, use in your decision-making criteria, and use it to explore the implications before you actually make the decision. 

Dani Bacon: Lovely. Thank you. That's the end of our session on decision-making. We'd love to hear your feedback and if you've got any ideas for content for future sessions, then we're all ears and we're willing to look at that. 

Our next session is on wellbeing. If you've watched us on YouTube, then we really appreciate you giving it a like, and if you click on the subscribe bell, you'll get notified when the next session is ready to watch. 

A huge thank you for watching us today. We look forward to seeing you at the next one.

Garin Rouch: Thanks so much.

Dani Bacon: Thank you.

 

Welcome and introductions
Why is decision-making important?
Myths about decision-making
Background to our decision-making process research
What and the why of decision-making
Who needs to be involved in decision-making – stakeholders
How – tools and techniques for decision-making
What next?
Top 3 actions