Making solid decisions is a necessary management skill. Because it is a route to possible failure, many managers are uncomfortable with making decisions, choosing to follow orders from superiors instead. While no person makes the right decision 100 percent of the time, having a strategy that guides management's decision-making fosters confidence in the process and the results of management decisions.
When there is a clear strategy with guidelines directing the process of making decisions, decision making is consistent and "makes sense." It is easier for everyone in an organization to understand decisions and to follow through. There is a logical order to the rationale behind "why things are done the way they are," leading to better planning and consistent focus on the part of staff.
Strategy makes lower and middle management more comfortable with making key decisions, since there is an accepted path they can follow. Managers generally do not like going out on a limb, so having a strategy as a foundation lets a manager feel more at ease making risky decisions with unknown outcomes.
One of the other valuable aspects of a set decision-making strategy is that impulsive decisions based on inaccurate information or an emotional response are avoided. Most of the time, these are the decisions that end up being mistakes or more costly than anticipated. Strategies that require a process that involves more than one person or a specific set of data or reports usually work out best.
There are many different forms of decision-making strategy. Two popular strategies are cost/benefit and "Plus/Minus/Interesting" (PMI). Both strategies involve weighing pros and cons, and both use quantitative information to guide the decision-making process. These are popular because they use an easy-to-follow trail to arrive at a choice. The decision is then easy to justify, regardless of the outcome. Many organizations will research the data and rationale that has had the best results in the past, as well as the best practices of successful competitors, and incorporate them into their strategy.
With a strategy in place, management trainees can be taught how to make decisions that are best for the organization in a way the organization will value. If all managers are making decisions in the same way, the negative impact of management turnover is minimized and new managers can get up to speed more quickly.
- Photo Credit girl thinking image by Marina Bartel from Fotolia.com
Centralized & Decentralized Organizational Structure
In a centralized organizational structure, decision-making authority is concentrated at the top, and only a few people are responsible for making decisions...
Nonfinancial Benefits of Strategic Management
Strategic management is the formalization of management processes in order to achieve strategic goals; it is often implemented in order to increase...
The Advantages & Disadvantages of Group Decision-Making
In startup companies, the chief executive officer typically makes all the big decisions, but as companies grow, managers often make decisions collectively....
Advantages and Disadvantages of Leadership Models
Leadership models are approaches structured to provide effective guidance and decision-making expertise within an organization. Each person has a different style of...
What Is the Autocratic Decision-Making Style?
Autocratic decision-making involves one person making a decision. The decision-maker evaluates possibilities, chooses a plan, and then the organization implements the plan...
How Marginal Benefit & Marginal Cost Effect Buying a Home
Deciding whether to purchase a home is the most important financial decision that most people will make, so it warrants careful consideration...