It does not take much strength to do things, but it requires great strength to decide on what to do.     ~Elbert Hubbard

"Make a decision, Ellen," her boss said.  "We will support whichever option you choose."  She had three choices:  stay with the existing product line, go with a new supplier, or offer both.  Ellen was overwhelmed and unsure of how to proceed.  She asked her boss, Don, for his help.  He began by asking pointed questions:

"Do we have any contractual obligations?"

"Can we physically handle the new product line?"

"Will the new product line require any investment?"

"Will we gain or lose customers if we change products?"

"Have we made commitments with anyone for the existing line?"

Eventually it was clear.  Ellen chose to add the new line and phase out the old line over a six-month period.  Within three months sales and profits were up by 20 percent.

Decision making in business is not an option.  The daily demands of any long term operation require decisive action in order to thrive in the market place.  Firm decisions in the area of human resources result in a more efficient work force.  Good marketing decisions create demand for products and services.  Sound financial decisions deliver positive bottom line results and protect assets.  Decision making, like any high level skill, requires discipline and a clear focus on short and long term goals.  Successful organizations use a well-developed mission statement and a medium-range (three years) strategic plan as the context for developing a decision-making system.  By creating a framework and a process, they avoid reactive decison-making in favor of a proactive approach.

DEVELOP A FRAMEWORK

There are three components that will support and help guide the decison-making process in any organization:

• Laws and regulations - Local, state, and federal government agencies have become more and more influential on the decisions organizations make.  Tax laws, environmental regulations, and labor laws, to name a few, govern these decisions.  Knowledge of and compliance with governmental regulations is the starting point for creating a solid decision-making framework.  The consequences for violating these regulations (fines, penalties, lawsuits, and even bankruptcy) are too great to ignore.

• Company policies - Properly used company policies also provide objective guidelines for making decisions.  Policies should closely align and support the organization’s stated mission and strategic plan.  To ensure relevancy, policies must be reviewed regularly.  Outdated policies should be discarded or modernized.  New policies should be created as needed.  Once policies are in place it is essential that they remain easily accessible to all members of the work group.  Easy accessibility of policies will help ensure that decisions are not made in an arbitrary or capricious manner, which helps ensure consistency.

• Ethics/morals - The conscience of each individual in the work place is a powerful component in the decision-making framework.  Promises are made and kept, not because of federal law or company policy, but as a result of high moral character.  It is difficult in today’s workplace to recognize and discuss religious beliefs, but without personal ethical standards, handshake agreements would be meaningless.  It is essential to seek out and resolve any conflicts that may exist between an individual’s moral code and company policy.

CREAT A PROCESS

Once a solid framework is in place a four-step process can be used to make decisions.  By using the same process, decisions are easier to reach and are more uniform in purpose and outcome.  Achieving the broad objectives of the three-to-five-year plan becomes more realistic.

Step 1 - Prepare

Acquiring the technical knowledge in advance of making decisions is essential.  The person who uses the software on a daily basis should help make the decision to upgrade.  Company drivers know how well their vehicles perform and can help make purchasing decisions for replacement vehicles.  Decision makers aren’t always the technical "experts," but they must have a working knowledge of the technical details in question.

Step 2 - Monitor

Decision-makers must review the on-going daily operations in detail on a regular basis.  By observing and participating in the daily events they gain a sense of the rhythm and flow of activities and can better predict future conflicts, needs, and opportunities.  Reviewing daily or weekly sales reports, and talking to co-workers and team members daily, will result in fewer surprises and fewer "reactive" decisions.  By involving the entire team, decision-makers will receive more support and cooperation for future decisions.

Step 3 - Modify

Not every decision is a good one.  Sometimes new information becomes available and affects yesterday’s decisions.  In that case the mission and strategic plan are more important than the pride of any individual.  By admitting mistakes, and modifying a previous decision using the organizational framework, profits and assets are protected.  Modifying a decision, occasionally, is not a sign of weakness.  It signals that achieving the organizational goal is paramount and must always take precendence over any one person’s ego.

Step 4 - Review

It is important to review  the decision-making process on a regular basis.  Adjustments to the process can then be made as needed.  Are the reports detailed enough?  Is everyone who is affected being included or represented in the process?  Do past decisions support the mission?  Will the decisions lead to achieving the short and long range objectives?  Can some decisions be decentralized?  By constantly reviewing past decisions the process will be strengthened and streamlined.  Carol Lavin Bernick, Vice Chairman for Alberto Culver, summed it up very well.  Recently she said, "Every decision we make is seen as an opportunity to support or undermine the culture we want."

By using an objective process, Ellen made a good decision when she chose to add the new line and phase out the old line over a six-month period.  With her boss’s help, they created a framework.  They defined the legal, ethical and corporate limitations in a rational, logical manner before choosing the best option.  Within three months of making the decision, sales and profits were up by 20 percent.  By staying grounded in their company’s mission statement, they reinforced the company’s strategic plan for future success.

By systematically using an objective decision-making process, organizations can dramatically increase efficiency, productivity, and profitability.  Morale increases in organizations where decision-makers are confident and reliable.  By creating an open, honest, and firm process, arbitrary decisons can be eliminated.  Using laws, policies and moral codes within an organization whose mission is clearly stated doesn’t guarantee success, but it does guarantee the chance for success.

This article is provided as general information and in not intended to substitute for legal or other professional advice.