Good decision making is as important in the working world as it is in the rest of our lives. Every day a number of decisions must be made that determine the direction and efficiency of the organizations we work for. Decisions are made concerning production, marketing, and personnel. Decisions are made affecting costs, sales, and margins. Just as in our personal lives, the key to organizational success is to make good choices. The organization must have effective decision making.
Just who is it that must make good choices within an organization? At first blush, it may seem that only the person at the top, the CEO, the president, or the chairperson needs to be an effective decision maker. If that person makes appropriate strategic decisions, the organization will succeed!
Unfortunately, it is not that easy. There are countless examples throughout history where absolutely brilliant strategic plans went awry because of poor decisions made by those responsible for their implementation. As emperor and leader of "La Grande Armée," Napoleon Bonaparte had a fairly decent strategic plan for his campaign in Belgium. However, due to some poor decision making by his marshals, Napoleon suffered a major defeat at a little place called Waterloo.
Given this, perhaps it is important for the next level of management to be effective decision makers as well. The CFOs, CIOs, vice presidents, assistant chairpersons, and department heads (and marshals of the army) must make good choices when creating the policies and setting the priorities to implement the strategic plan. With all of upper management making effective decisions, the organization is guaranteed to go places!
In fact, success is not even assured when this is true. Effective plans and policies created at the top of the organization can be undone by poor decisions made further down as those plans and policies are put into action. The opposite is also true. Good decisions made by those working where the rubber meets the road can be quickly overwhelmed by poor decisions made further up the line.
The answer, then, is to have effective decision makers throughout an organization. Those lower down the organizational chart will have much better morale and invest more energy in an activity if they have some assurance that their efforts will not be undone by someone higher up. In addition, the success of the person in the corner office is, in large part, simply a reflection of the effective decisions and success of the people who report to them. Effective decision making at every level leads to success.
The organization that has the desired products or services, provided in the proper place, at the correct time, produced at the appropriate cost, and backed by the necessary customer support will be successful. This, of course, is fairly obvious. Any business plan or mission statement worth its salt professes to do just this.
What is not so obvious is how an organization goes about making sure it provides what is desired, proper, correct, appropriate, and necessary. The answer, as we learned in the last section, is to have people making effective decisions at all levels of the organization. But exactly what is an effective decision?
Effective decisions are choices that move an organization closer to an agreed-on set of goals in a timely manner.
An effective decision moves an organization toward its goals in a timely manner. This definition is extremely broad. In fact, this makes a good slogan, but it is too broad to be of much use in day-to-day operations. Using this definition, however, we can define three key ingredients necessary for making effective decisions.
First, there must be a set of goals to work toward.
Second, there must be a way to measure whether a chosen course is moving toward or away from those goals.
Third, there must be information based on those measures provided to the decision maker in a timely manner.
This information serves as both the foundation for the initial decision making and as feedback showing the results of the decision. Defining effective decision making is the easy part. Taking this rather nebulous definition and turning it into concrete business practices requires a bit more work.
Foundation information serves as the basis for making a particular decision as that decision is being made.
Feedback information is used to evaluate the effectiveness of a particular decision after that decision is made.