It’s easy to underestimate how many decisions — small and large; routine and one-off — go into running a business today. And yet only about one-fifth of companies report their organizations “excel at decision making,” according to a survey from McKinsey & Company. In fact, most respondents believe their organizations use a significant portion of time spent decision-making ineffectively.
It helps to first define what effective decision-making looks like: Decisions that are high quality and fast while also driving better financial returns for the company.
Businesses today take a variety of approaches to decision-making — depending on both situational factors — like time constraints — and the underlying norms enforced by company culture and degree of adherence to hierarchy.
Here are the pros and cons of three such common workplace models for decision making.
Autocratic: The Leader Decides
In certain scenarios, leaders make decisions with little to no consultation from the rest of the team. Although this decision-making model is phasing out as traditional work hierarchies break down, it still plays a role in many workplaces at times.
Pro: The primary advantage of the autocratic approach to decision-making is that it can be fast, depending on the decision-maker’s workload. Certain situations require snap decisions, and consulting the entire team or company would require time for back-and-forth that may exceed the time constraints at hand. Another advantage is that there’ll always be organizational alignment because decisions emerge from a single stakeholder and everyone else must follow.
Con: Another colloquial way to describe the autocratic approach is HiPPO (highest paid person’s opinion). And, as one expert outlines for Forbes, the primary risk of falling back on HiPPO is it often means businesses are missing out on the benefits of collaborative, data-driven decision-making. After all, leaders allow biases to affect their choices.
Collaborative: Teams Must Reach a Consensus
The opposite of autocratic decision making is choice by consensus — which again, has both advantages and disadvantages to consider before implementing.
Pro: Whether leaders ask the group to make a decision collectively in the same room or solicit feedback from each member of the group individually during the course of decision-making, this approach tends to maximize team commitment to the decision. Many organizations go this route when team member buy-in will have a positive or negative effect on the outcome.
Con: This approach, while perhaps the fairest to everyone involved, does tend to take the longest — especially if input is required from dozens of people. There’s also the risk the vote will be relatively split rather than a clear “winner” emerging, which can be frustrating for the group — and may even require a leader to break the tie, anyway.
Rational: Teams/Individuals Use Data to Decide
The rational decision-making model focuses less on who is making the decision and instead focuses on the process of reaching an information-backed decision. The steps are typically as follows:
- 1. Define the problem.
- 2. Research and list potential solutions.
- 3. Define what constitutes “success” and “failure” for those solutions.
- 4. Explore the possible outcomes of each solution.
- 5. Settle on the best solution; test it out.
- 6. Track the results of the test.
- 7. Implement the winner or test another solution.
Pro: Personalized dashboard analytics — complete with interactive visualizations to illustrate key metrics chosen by users rather than prebuilt by analytics teams — empowers front-line workers to make decisions as individuals and groups grounded first and foremost in insights. As the managing director of Harvard Business ReviewAnalytics Services notes, a survey in conjunction with ThoughtSpot revealed that empowering frontline workers to make data-driven decisions has helped organizations boost productivity, enhance employee/customer satisfaction, drive innovation, improve market position and increase profitability in general.
Con: Defining the problem and analyzing results both rely heavily on stakeholders’ access to data insights — so organizations lagging behind legacy analytics tech will have a hard time getting insights into the hands of decision-makers in a timely manner.
Every decision-making model in the workplace has pros and cons; the key is implementing the best fit for the situation, and driving these decisions with data rather than intuition or ego.