Decision-making skills have always been my go-to in all aspects of my life. From deciding what time I’ll wake up every morning to making choices about which activities and plans to prioritize for the day, my ability to make the best choices will directly affect how productive I’ll be each day. In business, a leader’s decision-making skills are just as crucial in ensuring the business is always on the right track.

The most useful element for small business owners is their personal decision-making skills. These include innovation, analytical thinking, persistence, and collaboration. Top-tier skills will set you apart from the rest and establish you as a reliable, trustworthy, and competent leader. 

Let’s take a closer look at why your decision-making skills as a leader are crucial to ensuring that your business thrives, grows, and achieves its goals. We’ll discuss why making good decisions is pivotal to your success and how bad decisions can bring your organization down. I’ll also give valuable tips on how you can enhance your decision-making process,  including pointers on some of the best tools and techniques to utilize. 

Why Good Decision-Making Skills Are Crucial To Your Success 

Top-tier decision-making skills are crucial for small-business owners because these are what the entire organization lean on for virtually every aspect of business operations. Effectively managing a team takes a lot of adroitness, experience, and know-how. To top it all off, you need to learn how to masterfully juggle various tasks and responsibilities so you can ensure that operations are seamless and your team is always functional and efficient. 

Some people think leaders mainly have to focus on the executive aspect of the business. This includes consequential, critical tasks, such as:

• Ensuring that corporate policies are observed
• Overseeing financial activities, budgets, and reports
• Setting and reviewing company goals
• Drafting and approving plans of action
• Reviewing progress reports
• Delegating responsibilities throughout the team

However, highly functional leaders do more than just these. They also make sure they maintain control of all facets of the business even though they’re all for task delegation, responsibility sharing, and transparent leadership. Effective leaders know that if they focus solely on executive tasks, their influence and authority in the team might be compromised, and they might start losing control over how the team journeys toward the set goals. 

Leaders must have a hand in the various day-to-day activities of the team so they know exactly where the business is, how it got there, where they’re headed, and what their plan is to get to the goals. Superior decision-making skills are some of the best tools for leaders to ensure their business continually thrives. 

Consequences of Bad Decisions

Bad decisions can have disastrous consequences for the business. One wrong move can spell the difference between success and failure. Poor decision-making can result in:

• Inefficient allocation of company resources. This can eventually lead to financial losses for the business. 
• Low employee morale. Your employees may start feeling unhappy with their jobs if they perceive your decisions to be biased, insensitive, and non-inclusive.
• Low productivity. Low morale leads to poor engagement, reduced work efficiency,  and low productivity. 
• Increased employee turnover. Your employees will start looking for greener pastures if they’re unhappy about your leadership style and if they feel undervalued. 
• Lost opportunities. You will miss out on many growth opportunities if you have poor decision-making skills. 
• Damaged business reputation. You can hurt your company’s image and damage your prospects for expansion if you keep making bad decisions. The impact can reverberate beyond the walls of the workplace and paint a bad picture for your organization. 

Impact of Good Decision-Making Skills in Leadership

Excellent decision-making skills set good leaders apart from the rest. It’s what gives quality to their leadership career and can push them to reach even greater heights. 

I remember a story shared by a friend about an ex-colleague, Paul, who was a “favorite” leader in their company. Most of the workforce wanted to be part of his team because he was known to be easy-going, fun to work with, considerate, and gregarious. Paul’s team always seemed so happy and in high spirits.

Unfortunately, a crisis struck the company, and leaders were expected, naturally, to take the helm and lead their teams through the difficulties and challenges. Sales were down, even the most loyal of clients were nowhere to be found, and the company was looking at downsizing.  This was when inferior leaders were weeded out from the pack.

Paul’s jovial spirits and pep talks did little to salvage his team. What they needed was a determined, strategic leader who could implement drastic yet well-calculated decisions. Paul wasn’t capable of that — his brand of leadership was all about fostering camaraderie, trust, and teamwork. 

Regrettably for him and his team, optimism and cheerfulness weren’t enough to save them — most of them were let go by the company, including Paul who was extremely taken aback since he thought his popularity in the organization was a big advantage. 

Benefits of Good Decision-Making

Good decision-making can mean the difference between an organization’s success or failure. When leaders are equipped with excellent decision-making skills, they can help facilitate positive changes, stability, and growth.

Here are some other benefits you can expect from good decision-making:

• Saves time. Good decisions keep you from redoing, revising, and revisiting the decision-making process. Good decisions generate positive results and typically provide lasting solutions to problems. 
• Better use of resources. Resources and funds will be put to good use and maximized for the benefit of the business through superior decision-making skills. Additionally, wastage will be avoided, as well as unnecessary spending and misuse of resources and funds. 
• Higher productivity. Good decisions address the company’s issues and concerns in efficient and effective ways. You can expect improvement in productivity and company performance when good decisions are accurately implemented. 
• Better brand of leadership. Leaders who are reliable in making sound, strategic decisions earn the reputation of being responsible, efficient, and trustworthy. 
• Stronger engagement and commitment. You will earn a higher level of commitment from your employees when they know you can be counted on to make well-informed, inclusive, and rational decisions, more so if you include them in the decision-making process. Transparency in decision-making will make your employees feel that you’re invested in them and you see them as allies in business. 
• Helps prevent conflict. Including your team members in the decision-making process should be done mindfully. You mustn’t go all on transparency but be keen on exerting your authority as a leader. This is a great way to promote teamwork while preventing and managing conflicts within your team. 

Useful Decision-Making Techniques for Small Business Owners

Making rational, inclusive, and effective decisions for your team is the cornerstone of competent leadership. As a leader, you make decisions practically every day for your business — from mundane, daily chores to pivotal, executive resolutions. Each choice you make reflects on your organization and contributes significantly to its advancement or decline. 

Decision-making involves these basic steps:

1. Identify the problem or goal. Clearly define the decision you need to make. Identify the parameters and ensure your team understands each of them. 
2. Gather relevant information. Collect internal and external data pertinent to the situation at hand and the goals you want to achieve. Do extensive research because the information you gather can uncover details you missed and help you make the best possible choices for the business. 
3. Identify promising alternatives. Draft several plans of action that can potentially get you to your goals. Be specific about the steps involved in each alternative solution so you can get a clear picture of what it entails. 
4. Evaluate your alternatives. Weigh the pros and cons of each alternative solution. Imagine what would happen if you implement each of the alternatives and then rank them according to viability.
5. Make your choice. Select the best solution for your business. You can also combine the alternatives available, so you reap more benefits. Your choice here will most likely be the alternative solutions that ranked high in Step 4. 
6. Take action. Start implementing the plans of action related to your solution of choice. Delegate tasks and closely monitor the progress so you can make adjustments when necessary. 
7. Review your decision. Evaluate the short-term and long-term consequences of your decision. Determine whether or not it’s truly capable of resolving the issues you identified in Step 1. Don’t hesitate to abort the decision you made if it turns out to be not as efficient as you had hoped. Repeat any of the previous steps to arrive at a new and better decision.

Below are some great techniques you’ll find most useful when making decisions for your business:

1. Decision Matrix

A decision matrix is a grid composed of figures and information that can help you analyze the options available to you. It can also help you easily compare your options and determine their viability by weighing the variables involved. 

This quantitative approach to decision-making takes weighing pros and cons to the next level by allowing you to weigh and rank variables (typically through 0-5 rankings) related to a situation through a visual representation that gives you a comprehensive view of the entire scenario. 

The decision matrix is typically applied in situations with binary options that have several variables attached to them. For instance:

• Should you hire new employees or not?
• Is it time to go with another supplier, or should you hold out?
• Will moving the office to a new location be more advantageous for your growing team, or will staying put be more practical?

In all these scenarios, you are faced with 2 options, but each option carries with it distinct factors that contribute to how viable each of the options would be. For example, if you’re on the fence about hiring new employees, you’re probably considering factors such as hiring costs, additional payroll expenses, employee workload distribution, and employee efficiency. 

Here is an example of a decision matrix where we used a 0-5 ranking for the variables (with 0 being the most detrimental to the business and 5 being the most advantageous):

In the table above, it is evident that maintaining the status quo (not hiring new employees) may be the best option for the business since it earned 28 more points versus the other option (hiring new employees). Although new hires will help improve efficiency and workload distribution, the heavy weight of hiring and onboarding costs plus additional payroll expenses tells you that maintaining the status quo would be your best bet for now. 

2. Decision Tree

A decision tree is a framework or flowchart that explores potential solutions to a given problem and all their possible outcomes. You can also incorporate costs, risks, and potential issues to be encountered. It is a great tool to utilize if you want to ensure your decisions are logical, well-thought-out, and comprehensive. 

Decision trees provide you with a bird’s-eye view of all the options available to you so you can get a clearer picture of what you’ll be getting yourself into if you go for any of the alternative solutions you came up with. 

With the advent of artificial intelligence in the field of business, we’re seeing more and more software platforms capable of aiding leaders in the decision-making process. Consider any of these decision tree tools:

• Cloverpop
• Lucidchart
• Creately
• MindMeister
• GitMind

3. Pareto Analysis

Also referred to as the “80/20 rule,” this decision-making technique allows leaders to determine which alternative solution will have the most significant impact on the business. It was first conceptualized in 1906 by Italian economist Vilfredo Pareto (he noted that 80% of the land in his country was owned by just 20% of the people there) and later developed by Romanian-American business theorist Joseph Juran. 

The Pareto Analysis essentially describes unequal distribution. For instance, in the workplace setting, you might find that 80% of the decisions made during a team meeting were executed within just 20% of the actual duration of the meeting; or 80% of your success as a team can be attributed to just 20% of all your efforts. 

When making decisions, you can use the 80/20 rule by adopting the mindset that about 80% of the problems you encounter in business can be traced back to 20% of the causes. Here are a few simple steps:

1. Clearly identify the problem.
2. Determine the causes of the problem.
3. Rank the causes according to the level of adverse effects they have on the company.
4. Organize the causes into groups based on their intrinsic similarities.
5. Develop plans of action for your team, focusing first on those that ranked highest to boost your chances of quickly solving the problem.  

4. SWOT Analysis

SWOT is an acronym that stands for:

• Strengths
• Weaknesses
• Opportunities
• Threats

It is a simple, straightforward decision-making technique that allows you to clearly see the characteristics, potential, and consequences of proposed solutions. Strengths and weaknesses are typically internal organizational factors, while opportunities and threats are external, thus providing you with a holistic approach toward making the best decision for your business. 

A SWOT analysis will become more effective if you involve your team in the process because this exposes you to different perspectives relating to the 4 factors (SWOT) involved in the proposed solutions.

5. Visualization 

Visualization is the process of presenting information in a graphical, more visual representation to help make concepts easier to understand. Through proper visualization, patterns can be quickly identified, conclusions can be swiftly drawn, and actionable solutions may be directly formulated. Essentially, visualization helps tell the entire story as concisely and precisely as possible.

Here are some tools you can use for effective visualization:

• Cartograms
• Gannt charts (project schedules)
• Histograms
• Pie charts
• Tree diagrams
• Network graphs

Final Thoughts

Your own decision-making skills can help take the business to greater heights or cause it to plummet toward stagnancy and failure. As a leader, you must invest in your abilities, know-how, and experiences to ensure you’re always fully equipped to face whatever challenges may lie ahead. 

We, at Sancus Leadership can help you optimize your decision-making skills and train you to always come up with and identify the most opportune solutions to address your business’ needs. Schedule a demo with us today and take the first step toward sharpening those critical leadership skills!

My 12 years in the military taught me that the adage “Two heads are better than one” rings true in many scenarios, particularly in those crucial moments where outcomes can spell the difference between life and death. In the business setting, these critical moments are best seen in decision-making tasks where a bad choice can instantly ruin an otherwise thriving organization. Group decision-making is a smarter, safer way to keep the business growing.  

Make decisions in a small group by being open, honest, and inclusive toward your team members. Encourage them to share their insights without prejudice and be constructive in handling conflicts. Make sure to brainstorm all alternatives before arriving at a rational, comprehensive decision as a team. 

Let’s talk about what small group decision-making is all about and what its benefits are over the traditional method where the leaders take charge of the entire process. I will then walk you through the basic steps of group decision-making where I’ve included some tips on how you can arrive at the best, most beneficial decisions as a team.

Decision-Making in a Small Group

Many leaders are skeptical and critical about involving their team members in decision-making, and it is quite unsurprising because this idea goes against the conventional image we have of strong leaders. Traditionally, leaders are seen as imposing, self-assured individuals, highly skilled and knowledgeable about practically every aspect of the business. That’s why they’ve earned their lofty position in the company after all.

Are you one of them? Are you on the fence about sharing responsibilities with your team members because you feel that it might compromise your authority and power in the organization?  

Consequences of Individual Decision-Making

Carrying the burden of decision-making solely on your shoulders can take a toll on your physical and mental well-being. Stress and anxiety will eventually catch up with you one day, and you’ll find yourself dealing with so many health issues.

Chronic stress and anxiety affect almost all systems of the body — cardiovascular, respiratory, musculoskeletal, gastrointestinal, endocrinal, nervous, and reproductive systems, and even your mental wellness. 

Here are some of the health issues you might be at risk for:

• Muscle tension and pain
• Muscle atrophy
• Tension and migraine headaches
• Shortness of breath
• Asthma attacks
• Increased heart rate
• Elevated blood pressure (which can lead to a heart attack or stroke)
• Inflamed arteries
• Heart disease
• Diabetes
• Obesity
• Reproductive disorders 
• Poor immunity
• Panic attacks
• Chronic fatigue
• Depression

Apart from these, you also run the risk of making one-sided, irrelevant decisions because your personal biases and limited perspectives will greatly influence your mindset and choices. These can lead to your team losing their confidence and trust in you, followed by reduced employee engagement, poor productivity, and a potential increase in employee turnover rates. 

Benefits of Group Decision-Making

Making decisions as a group has many advantages. As long as you, as the leader, are capable of effectively facilitating small group decision-making, your organization will reap many benefits you otherwise wouldn’t get to enjoy if you adamantly clung to more traditional ways.

Here are some of the benefits of group decision-making:

• Diverse perspectives. Each individual’s unique background, skill set, and experiences can contribute to a more well-rounded, inclusive, and informed decision.
• Builds buy-in from your team members. The team will be more accepting and willing to cooperate in the implementation of new plans or changes in the organization because they were involved in the entire process. They will feel more invested in their decisions’ outcomes.
• Encourages ownership. Whether outcomes are good or bad, your team members will develop a sense of accountability for the decisions you arrived at as a group.
• Fosters collaboration. By sharing their ideas with the group and engaging in healthy debate, team members can build stronger ties, establish teamwork, and cultivate trust among themselves and toward their leader. 

How To Make Decisions in a Small Group

Involving your team in making crucial decisions for the business will open you up to new possibilities you may not even think of considering if you were to do this arduous task alone. 

Here are some tips on how you can get started on making better decisions as a group:

1. Define the Problem

As a leader, it is essential to be transparent and honest with your team members. You must clearly communicate the problems or issues at hand and define what the objectives and goals are in finding the best solutions for them. Remind your team members about the value of arriving at an equitable decision that will benefit the company the most.

Set your standards early on for determining whether a potential solution is feasible or not. This is essential in ensuring that pertinent points are met, the needs of the people involved are catered to, and the team is able to efficiently move forward toward the succeeding steps.

2. Gather Information

This stage is where you’ll most appreciate group decision-making because you’ll see how each individual’s unique perspective will play a significant role in expanding your horizons when it comes to formulating diverse alternatives and plans of action. 

Gather as many insights and relevant information as you can about the issues surrounding the problem. Encourage each team member to participate and never negate nor undermine any point of view, regardless of how ludicrous it may seem to you. Remember that sometimes, the best solutions are derived from the most creative and unconventional ideas. Promote inclusivity by recognizing the contribution of each team member. 

3. Brainstorm

Break down each of the alternatives you and your team members came up with and evaluate which ones meet your set standards the most. Remember, you may be the leader of the team, but you have to know how to strike the right balance between authoritativeness and being obliging. A flexible leadership style that adapts to the needs of your team and adjusts to varying scenarios will be best.

Encourage healthy discourse by asking open-ended questions to promote constructive conversations and relevant feedback. Invite your team members to air out any assumptions, criticisms, or doubts about certain aspects of each of the alternatives, 

Weigh the pros and cons of each option being discussed. If conflicts arise — which is almost inevitable in any healthy debate — be quick to manage them so the team retains the camaraderie, teamwork, and trust they’ve already established. Conflict resolution is crucial in maintaining a synergistic workflow within the team. 

4. Make a Team Decision

When it comes to finally selecting your choice among the available alternatives, there are 3 main strategies you can implement:

• Take the average. Discuss among yourselves and determine the middle ground —the alternative that best suits everyone’s expectations. Some say this is all about playing it safe, but depending on your risk tolerance level, it’s a great way to start, especially if you’re not accustomed to team decision-making yet.
• Majority vote. Why not put it up for a vote? This is a democratic way of arriving at a final decision, one which is preferred by the majority of the team. 
• Exert your authority. Depending on your leadership style, you might want to have the last say when it comes to making the final decision. If you go this route, remember to keep everyone’s input in mind, rather than just relying on your own perspective, so you have better chances of arriving at a well-rounded, rational, and optimal decision for the team. 

7. Invest in Decision-Making Tools

Decision intelligence is fast becoming a go-to for more and more leaders these days when it comes to making logical decisions with their teams. These handy, reliable business tools are capable of streamlining the decision-making process and ensuring that the most suitable, perceptive, and beneficial alternatives are presented to you. 

Here are some of the most popular decision-making tools in the market today:

• CloverPop
• Decisimo
• OmniFocus
• iThoughts for iPad
• Cerebra

Key Takeaways

Making group decisions sometimes seems complicated because of the diversity of personalities, skills, and backgrounds you’ll have to deal with. But think of it this way — this sense of variety and complexity will expose you to possibilities that may otherwise be untapped.

If you’re one of those leaders on the fence about group decision-making, we at Sancus Leadership are eager to help. We’ll demonstrate the value of making choices as a team while walking you through best practices that will undoubtedly make a difference in how you lead your team. Book us a call today so we can get started!

We make hundreds of decisions each day — from something as simple as what to have for breakfast to something as impactful as the budget allocation for the month. In business, making the best decisions is a surefire way to effectively lead your company toward stability and expose it to more opportunities for growth. This is why a leader’s decision-making skills are crucial to the success of any business. 

Train yourself to make better decisions by engaging in outdoor and decision-making training since these compel you to think on your feet and be more strategic when making choices. You can also train with a coach or go for simulations to gain more concrete experience in making business decisions. 

Let’s dive deeper into why leaders need to enhance their decision-making skills, starting with some misconceptions about decision-making and the truths behind them. We will also discuss the merits of being reliable in making the best decisions for your company. I will then walk you through some pointers on how to train yourself to make better decisions through decision-making training, coaching, outdoor training, and simulations. 

Why Making the Best Decisions is Crucial in Business

As a leader, making the best decisions is crucial in business because your choices can spell the difference between failure and success. Risks are inherent in managing a business, but you must learn to be more critical, strategic, calculating, and purposeful when plotting courses of action for your organization. 

Common Misconceptions About Making Decisions

Many people find it difficult, even daunting, to make decisions. It’s perfectly understandable in business since making choices can mean the difference between success and failure. However, decision-making is part and parcel of your job as a leader. 

Most of the negativities attached to decision-making stem from misconceptions about making decisions. Let’s discuss some of them:

1. Being a Good Decision-Maker Is an Intrinsic Trait

Making the best decisions may seem to come naturally to some people, and you may be daunted by the idea that this is an inherent leadership trait, something you feel you don’t naturally possess. Remember, decision-making can be learned — it’s all about understanding the fundamentals, adequate application of your learnings, and learning from your mistakes. 

Some leaders address this false notion by delegating decision-making tasks to people they deem worthy of such heavy responsibilities. However, restricting yourself from reaching your full potential by believing in this misconception will jeopardize your business. 

It would be like fully entrusting your child to the care of a nanny. Soon enough, you’ll lose control over how that child develops, and you might even realize that your original visions are no longer coming into play.

2. Decisions Are Final

Some people think decisions are etched in stone — you must see it through to the end once you’ve made your final choice. However, the best leaders leave some wiggle room when making decisions. You can always change your mind or adjust to the situation if your intention isn’t precisely as anticipated. 

Keep in mind that decisions aren’t linear — the process is circular. You must come around to ensure things are going smoothly and to check if there are adjustments to be made. Not doing so and being stubborn about your choice can endanger your business. Good leaders are adaptable and always willing to recalibrate depending on current circumstances. 

3. Decision-Making Is All About Trusting Your Instincts

This idea may have worked for you countless times in the past, but it isn’t reliable, especially in the business setting where one wrong move might ruin your company. Instead of always trusting your gut, collect as much information as possible and gather feedback and insights from relevant people to gain various perspectives and boost your chances of making better choices.

Leaving the fate of an entire organization to chance is not something a smart leader would do. When leading a team, you must prepare, plan, and implement your ideas rationally, purposefully, and conscientiously. 

It’s like riding a bus. Would you get on one if you knew that the driver is inexperienced and has several road accidents under his belt? I’m willing to bet you’ll gladly wait a few extra minutes for the next bus to arrive. Putting your safety in jeopardy and merely crossing your fingers as you hop onto that bus isn’t something a sensible person would do. 

Benefits of Making Better Decisions

Making better decisions will undoubtedly do wonders for your business. Here are some benefits you may enjoy once you focus more on how to make smarter choices:

• You’ll become better at solving problems with all the experience you gain.
• Your employees and peers will trust and respect you more as a leader.
• You’ll have fewer regrets.
• More organizational goals will be realized. 
• You’ll enjoy a higher sense of accomplishment.
• You can spend more time on other equally important business matters.
• You can expect higher engagement, motivational levels, and productivity from your team. 

How To Train Yourself To Make Better Decisions

Training yourself to make better decisions is a great way to invest in yourself and enhance your leadership brand. Here are some tips on how you can work toward becoming a better decision-maker:

1. Decision-Making Training

Decision-making training can enhance your leadership skills in effectively managing your business. Your critical thinking, risk assessment, and problem-solving competencies will be sharpened and tested so you become better equipped to handle even the most challenging situations in the workplace. 

Here are some aspects generally addressed in decision-making training:

• How to make intelligent daily choices in the workplace. No matter how seemingly trivial, each decision can have a lasting impact on the organization.
• How to make high-value decisions. This is where top-tier leadership skills are needed because they often define your business, set the pace for its growth, and direct it toward realizing set goals. 
• How to rationally analyze decisions. Making better choices isn’t the be-all and end-all of decision-making. Leaders must also learn how to assess their choices to determine if they’re still relevant, need to make adjustments, or if it would be wiser to abandon the idea altogether. 

2. Coaching

Working with a coach and being open to new strategies and styles can help you make better decisions for your business. An excellent coach will help polish your decision-making attitude and share nifty techniques with you. 

Let’s take a closer look at what you can gain from spending time with a decision coach:

• A better understanding of the science behind decision-making. Our brain functions affect the way we make choices. A good choice will increase your awareness of this aspect so you can gain better control of your biases and predispositions. 
• Stimulate your creativity. The coaching process takes you away from the all-too-familiar atmosphere of your workplace and may help you gain fresher perspectives on the various issues you encounter in the organization. 
• Provide structure to your decision-making process. A great coach will introduce you to various decision-making tools that can help simplify and accelerate your decision-making process. 

3. Outdoor Training

Would you have guessed that the wild outdoors can be an excellent training ground for better decision-making? Experiential training can help sharpen your most crucial leadership skills, so you become better equipped to make the best decisions for your business. 

Some of the most exciting activities to engage in are:

• Biking
• Hiking
• Mountain climbing
• Skiing
• Whitewater rafting 
• Camping

Here are some ways these outdoor activities can help enhance your decision-making skills:

• Increased self-awareness
• Improved risk acumen
• Enhanced problem-solving and critical-thinking skills
• Improved communication skills
• Higher self-confidence
• Improved creativity and innovation

At Sancus Leadership, we design tailor-fitted outdoor activities that will sharpen your competencies in decision-making. We’ll also guide you through the process of translating your learnings and experiences from the wild to the boardroom. When you’re ready to see the impact experiential training can have on your leadership style, book us a free leadership call, and we’ll gladly discuss the details with you. 

4. Simulations

A deeper involvement in the organization’s various processes can help you develop a firmer grasp of the multiple issues and concerns it faces every day. Simulations are one way to do so without putting too much risk on the business’ welfare and stability. 

Similar to how pilots, surgeons, and military personnel are trained through scenario replications and mock-ups, business leaders can also utilize simulations to enhance their decision-making skills. 
Business simulations offer an interactive approach to learning that compels participants to apply their learnings in a virtually risk-free environment. Here, they can freely experiment with various strategies, use a trial-and-error method, or formulate innovative tactics. Simulations also provide safer venues for learning from mistakes.

We make decisions every day in our lives, whether as mundane as which shirt to wear or as consequential as which architect to go with for house renovations. In the context of managing a business, the decisions we make become even more far-reaching because they can potentially affect everyone around us. That’s why we should take advantage of any support available to us, especially business leaders who carry the weight of an entire company on their shoulders. 

The most popular decision-making tools in business include decision trees, decision matrices, SWOT diagrams, Ishikawa diagrams, and force field analyses. These help you dissect relevant factors influencing your choices so you can make more accurate evaluations and arrive at the best decisions. 

Let’s take a closer look at some of the most popular decision-making tools utilized in business and what they can do to help simplify and accelerate the decision-making process. I will guide you through the basic steps of putting them to good use. We will also discuss common misconceptions about decision-making, tips on choosing the best tools, as well as the pros and cons of using decision-making tools with your team. 

Are Decision-Making Tools Really Useful?

Decision-making tools help leaders find the best solutions for their organizations’ various issues and problems. They help in analyzing the alternatives available and highlighting factors that must be considered. The best decision-making tools can also simplify the process by making relevant information more accessible and comprehensible. 

Common Misconceptions On Decision-Making

Decision-making can mean the difference between a business’ failure and success. Good decisions can propel an organization faster toward its goals. On the other hand, bad decisions can hold it back and may even cause it to regress. 

Having the right mindset about making better decisions for your business is crucial. Here are some of the most common misconceptions about decision-making and what you have to keep in mind to make things work:

1. The leader makes all decisions for the business. Some leaders assume that, because of their position in the organization, they’re in charge of making all decisions, from the most routine tasks to the most consequential ones. This sometimes leads to biased decisions. Group decision-making is a great way to ensure inclusive, relevant decisions that align with the company’s shared goals. 
2. All decisions must be made as quickly as possible. You should never waste time dilly-dallying with decision-making, but the speed with which decisions are made doesn’t always imply efficiency. Sometimes, you have to sit back to see the bigger picture and spend some time analyzing the situation so you can arrive at the best decisions. Making decisions too fast may lead to regret later on. 
3. Decision-making is all about facts. The best decisions are always well-informed and logical, but there are instances when trusting your gut is effective. Randomness in decision-making and intuitive reactions can produce controlled random decisions that promote creativity and innovation. 
4. Decision-making is a linear process. Many leaders think their decision-making responsibilities are done once a decision has been made. In reality, decision-making is circular because you need to go back and assess the situation, gather feedback, and evaluate if the decision is indeed good for the business. Circling around also means you’re willing to make changes when necessary. 

Cons of Using Decision-Making Tools in Business

Utilizing decision-making tools to help you make better choices for your business comes with some drawbacks. Here are some aspects you must be conscious of to avoid falling into the pitfalls when using these practical business allies:

• Tendency to allow personal biases to affect the decision-making process. You might feel inclined to structure data in ways that support or promote your own ideas and perspectives. 
• Relying entirely on decision-making tools to make choices for you. Although they are dependable in providing sound solutions for even the most pressing problems, at the end of the day, your critical thinking and problem-solving skills must be effectively utilized to arrive at the best solutions for your business’ needs. 

Benefits of Utilizing Decision-Making Tools in Business

Here are some of the benefits you can enjoy with a great decision-making tool up your sleeve:

• Access to the most relevant solution alternatives that can potentially solve problems encountered in the workplace
• A comparative view of the costs and risks involved with each alternative
• Sound forecasts on potential outcomes for each alternative
• Provides an objective approach to weighing risks
• Well-informed, rational decisions
• Relevant choices that reflect your organization’s goals
• Visual representations provide a clearer and more concise explanation of the factors involved in decision-making
• Faster decision-making

Tips on Choosing the Right Decision-Making Tools 

Choosing the right decision-making tool for your business is a decision in itself. There are many types of tools to choose from. A particular model or software may work extremely well for one company but  may not be as useful in your organization. 

The key is to find one (or a handful) that will work best for your company’s unique needs, profile, expectations, and goals. Here are some tips to help you make the right choices:

1. Consider the type of dilemma you’re facing. Different tools are best suited for different kinds of issues encountered in the workplace. Clearly define the problem so you know exactly what needs to be done to efficiently address it. 

2. Don’t be afraid to experiment with the different types of decision-making tools available. This is a great way to evaluate just how effectively a tool can address your needs. Look into the additional resources and time required, as well as the added expenses to be incurred by your company

3. Ask for help from professionals. As a leader, it’s essential to invest in your own skills. We, at Sancus Leadership, can help enhance your proficiency in decision-making and navigate your way through the ins and outs of various decision-making tools. When you’re ready to take your brand of leadership up a notch, schedule a demo with us, and we’ll show you the way toward making accurate decisions faster! 

The Most Popular Decision-Making Tools in Business

Here are some of the most popular decision-making tools utilized by leaders to help make the decision-making process simpler and faster:

1. Decision Trees

A decision tree is a diagram that helps you visualize the potential outcomes of various alternative solutions available for a specific problem. It clearly shows you the essential details attached to each probable solution, such as the risks, costs, and possible consequences. A decision tree helps you hone in on the best course of action for the problem at hand. 

Decision trees are made up of branches and nodes that represent various courses of action. You can follow these simple steps:

1. Identify the root node. Clearly state the problem or the decision that needs to be made. 
2. Create the branches. Identify specific actions you can employ to possibly address the situation. Make sure each course of action has its own branch.
3. Keep expanding the branches. Work on each branch until you reach an endpoint where there are no more decisions or alternatives related to all the courses of action. What are the pros and cons of this branch? What are the risks involved with each step?
4. It’s time to evaluate. Assess each of the branches closely and figure out which of them presents the most ideal course of action for the problem at hand. Ideally, you should opt for the branch that offers the most benefits and the least amount of risks. 

2. Decision Matrices

A decision matrix (also called a Pugh Matrix) provides a quantitative approach to evaluating your alternative solutions to an identified problem. A list of weighted criteria is used to weigh the options and establish which of these is the best route to take for the business. 

Here’s how to make a decision matrix:

1. Identify the problem. Clearly define the problem and what type of decision needs to be made to solve it. 
2. Come up with criteria. Brainstorm the criteria you’ll use for evaluating the options. Is cost a huge factor in this decision? Are you willing to sacrifice quality over cost? Is employee retention a primary concern? 
3. Rate each criterion. Weigh them according to the impact they have on the final decision, usually from a scale of 1-5, with 1 being the least impactful and 5 having the most impact on the final decision. 
4. Fill in the grid. Draw a grid and write the criteria and their corresponding weights as labels on the horizontal part of the grid. Your proposed solutions go on the vertical part. 
5. Rate your alternative solutions. Rate your solutions based on the scale used for weighing each criterion. 
6. Compute the final scores. Multiply each of the ratings by the weight of the corresponding criteria. Generally, the proposed solution with the highest score indicates the best course of action for the specified problem. 

3. SWOT Diagrams

SWOT is an acronym for:

• Strengths 
• Weaknesses
• Opportunities
• Threats

Leaders use it for analyzing the internal (strengths and weaknesses) and external (opportunities and threats) factors related to the different alternative solutions they have for a particular problem. It provides an opportunity for you to break down the factors affecting your organization and effectively classify them so you can better understand how to handle or maximize them.

A SWOT analysis will rarely give you a specific solution to a problem, but the results from your analysis will be significant when you move on to actually making your final choice. 

4. Ishikawa Diagrams 

Also known as a Fishbone diagram, the Ishikawa diagram helps you get down to the bottom of the situation you’re dealing with. It assists you in finding the root cause of the issues presented so you can move forward with a deeper understanding of how to solve the problem. Addressing the root cause produces better results than dealing with just the symptoms.

The Ishikawa Diagram highlights cause-and-effect scenarios. Here’s how to go about it:

1. Identify the “head” of the fish. Clearly define the problem at hand. Be specific about details, such as the timeline and circumstances involved. Then, draw an arrow 
2. Draw an arrow behind the head. The arrow should aim toward the head, representing the fish’s “backbone.”
3. Draw the fish’s “ribs.” List the factors affecting the problem by drawing them on diagonal lines connecting to the backbone. You may end up with both simple and intricate “ribs” because the contributing factors may significantly vary. The goal is to get a deeper understanding of each factor.

6. Force Field Analyses

A force field analysis will help you in analyzing the benefits and drawbacks of specific factors, so you know whether or not a specific course of action is worth pursuing. You assign values to these factors and determine whether they’re a “driving force” or a “restraining force” in the given scenario.

Here’s a simple guide to conducting a force field analysis:

1. Describe the proposed change. Identify the objectives and describe the elements involved. 
2. List the driving forces. Make a list of the factors that support the proposed change and place them on the left side of the diagram. 
3. List the restraining forces. Make a list of the factors that oppose the proposed change and place them on the right side of the diagram.
4. Rate the factors. Using a scale of 1-5, with 1 being the least impactful and 5 having the most impact, rate each of the factors. 
5. Tally the scores. Add up the scores on each side of the diagram. 

Generally, if the driving forces score higher than the restraining forces, you can take it as a sign that pushing through with the proposed change will be beneficial for your business. On the other hand, if the restraining forces score higher, you can think of ways to strengthen the driving forces and weaken the restraining forces, or you can abandon the proposal altogether and think of better ways to address the situation. 

Key Takeaways

Decision-making tools can be useful resources for leaders in making well-informed, comprehensive, and relevant decisions for the business. They can help you identify and assess alternative solutions to specific problems so you can reach the best possible decision. 
Choosing the right type of decision-making tool for the various problems you encounter at work is also crucial since each of them has its unique strengths and flaws. However, more importantly, you, as the leader, must invest in your own skills so you’re always equipped to make the best decisions for your business, with or without these decision-making tools.

When starting out in entrepreneurship, I constantly looked back at my experiences as a team leader in Explosive Ordnance Disposal. Back then, decisions had to be made accurately, strategically, and comprehensively, especially since they often meant the difference between life and death. Today, in the relatively safer world of business, I still have to make the best decisions to ensure my company’s growth and success.

The best decision-making tools provide you with simpler, more efficient ways to determine the best business solutions in varying situations. For instance, a decision tree, force field analysis, and strategy map offer unique perspectives in providing solutions for different concerns. 

In this article, we will talk about the different decision-making tools you can use when making important decisions for your business and how they can help simplify and accelerate the process for you and your team. We will also discuss their drawbacks, benefits, and the common pitfalls you must avoid when utilizing these tools. 

Impact of Decision-Making Tools on Your Business

Decision-making tools are great resources for leaders and their teams who want to make better decisions for their organization. They can help you identify and analyze relevant information, compare various alternatives, and make the most informed, comprehensive, and suitable decision. 

Biggest Mistakes When Using Decision-Making Tools

Decision-making tools aim to help leaders through the process of making choices for the business to boost their chances of always choosing the best alternatives. However, sometimes, when decision-making tools aren’t wisely and efficiently utilized, they can defeat the purpose for which they were employed in the first place.

Here are some of the common pitfalls you must avoid:

1. Losing Track of the Main Objective

When using decision-making tools, especially if it is a novel concept to the team, you may quickly lose track of the primary objective — the main problem being addressed. You might get wrapped up or distracted by the details of your chosen tool and may end up wasting time discussing issues not entirely pertinent to your goals.  

It’s similar to what happened to a friend of mine when she was painting a garden scene on canvas that someone had commissioned her to do. She became so intent on painting a cluster of yellow tulips that she completely lost track of time and exerted all her energy on this minute detail of the painting. 

She ended up having to ask for an extension on the deadline simply because she got so wrapped up in the tulips that she practically had no time left for other equally important details, such as the pond, trees, ducks, and sky.

When using decision-making tools in business, the key is to start by clearly defining your goals and making regular checks and analyses to ensure everyone is still on the right track. Revisiting your goals encourages the team to always move synergistically in the same direction. 

2. Too Little Debate

You might think utilizing a reliable decision-making tool can take the place of healthy debates and vigorous discussions. Remember, you should never rely too much on decision intelligence, especially when your organization’s future is on the line. The danger with not engaging in stimulating conversations with your team is you wouldn’t get to explore as many alternatives as possible in providing solutions for problems at hand. 

It’s like investing in security systems for your home. Just because you have a smart lock in place doesn’t mean you’ll no longer ensure that doors are securely locked every night before you go to bed. In the first place, your smart locks won’t work if your doors aren’t securely shut. 

In business, explore all possible options before relying on decision-making tools. They are there to guide and structure your decision-making process, never to make decisions for you.

3. Not Investing In Your Decision-Making Skills

Decision-making tools won’t really be worth much if they aren’t efficiently utilized and the information provided isn’t accurate, transparent, and relevant. In the hands of an inefficient leader, any decision-making tool may virtually be worthless. 

Investing in your own skills ensures the perspectives and data provided by decision-making tools will be effectively utilized. Your leadership competencies will come into play when making the best decisions for your business. Remember, even the best decision-making tool cannot be a reliable substitute for your own critical thinking and problem-solving skills as a leader. 

Sancus Leadership believes in training leaders and arming them with the best skills to effectively lead their teams toward growth and success. Book us a free leadership call when you’re ready to take your leadership brand up a notch. We’ll begin by sharpening your decision-making, problem-solving, and risk-assessment competencies so your organization can quickly reach its goals.  

Downsides of Using Decision-Making Tools

When using decision-making tools, it’s crucial to be aware of the downsides linked to them so you don’t fall prey to these common snags:

1. Letting Cognitive Biases Rule

You may often find your cognitive biases getting in the way of accurate and equitable decision-making. These blind spots affect the way we think and approach various situations we find ourselves in. Here are some of them:

• Confirmation bias: This happens when you strive to gather information to support your initial convictions. The tendency is you’ll ignore any information that contradicts your beliefs, hence promoting flawed, skewed decisions. 
• Bandwagon effect: Rather than formulating their own evaluations and convictions, some people might jump on the bandwagon and go with whatever the majority supports. 
• Availability heuristic: This can happen when you choose to oppose or support a specific course of action simply because you recall previous instances when such decisions proved right or wrong, even if the circumstances are entirely different. This may result in poor choices and missed opportunities. 

2. Choosing the Wrong Decision-Making Tool

There is always a risk of choosing inappropriate decision-making tools when making various decisions for your business. This may result in costly mistakes, especially since some decision-making tools entail investments, and delays may force you to incur avoidable expenses. 

Remember, decision-making tools are designed for specific purposes, so it’s crucial that you select the most suitable one that can most efficiently address your unique needs in any given situation. 

Merits of Using Decision-Making Tools

Decision-making tools enhance the process by providing easier, faster, and more reliable ways to make smart choices for your benefit. Let’s take a closer look at some of the benefits of utilizing one in your decision-making processes in the workplace: 

1. They Convey Information More Accurately 

Decision-making tools help you visualize scenarios more objectively and precisely. They can aid in promoting transparency in group decision-making by making it easier for you to convey information to your team, and include them in the decision-making process. Everyone’s insights and perspectives can be clearly expressed and communicated through various decision tools. 

Having a decision-making tool up your sleeve is similar to holding a menu while deciding what to order at a restaurant. A menu clearly describes each dish so you know exactly what you’re getting. On the other hand, not having one will make you feel as if you’re groping blindly in the dark, hoping that what you end up with is at least similar to what you originally had in mind. 

2. They Help You See the Bigger Picture

Decision-making tools can help you break down the various factors involved in each alternative you’re considering so you can make informed choices. They can aid you in identifying and assessing the strengths and weaknesses of each course of action, as well as the internal and external opportunities and risks involved. 

This way, you’ll have a deeper understanding of the impact each potential solution can have on your business. You’ll be better equipped to utilize a more comprehensive approach to decision-making where you can essentially leave no leaf unturned when making decisions for your organization’s growth and success. 

The Best Decision-Making Tools

There are many decision-making tools to choose from, each of which can cater to your business’ varying needs. Remember, different situations require different strategies, and a specific decision-making tool that has previously worked wonders for your team may not necessarily be the best route to take in a different scenario. 

Here are some of the best decision-making tools to choose from:

1. Decision Tree 

Decision trees are visualization tools that will help you identify the best course of action among your available alternatives. This tool can be your handy ally when there are multiple solutions worth considering.

The tree’s branches represent potential outcomes for various courses of action. You can keep extending them until you get to a point where there are no more minor decisions left to make. This way, you exhaust all possible opportunities and consider all potential risks related to each alternative. This boosts your chances of arriving at the most advantageous decision for the business. 

2. Decision Matrix

A decision matrix is a chart that displays various criteria relating to the alternative solutions you’re considering and the rank scores of each. It will help you compare and evaluate each alternative objectively and consistently to make the best possible choice. 

Business leaders ideally use this tool when they can’t decide between 2 most promising solutions. A decision matrix can provide head-to-head comparative data so you can more easily weigh each factor and determine which alternative best suits your defined needs. 

3. Force Field Analysis

A force field analysis will help you weigh the pros and cons of specific courses of action so you can make a well-informed decision on which particular route to take in a given situation. This decision-making tool is excellent in cases where an organization is faced with opportunities for change and development. 

This decision-making tool requires you to identify and analyze the forces related to the proposed changes, including restraining forces (factors supporting the status quo) and driving forces (factors supporting the proposed changes). The elements may include any of the following:

• Workforce
• Regulations
• Company values
• Needs
• Set goals
• Resources available 

The factors are scored based on how strong (or weak) the impact is on the team. After assigning scores, you can then decide whether or not to push through with the proposed change. You can also devise tactics to weaken the restraining forces or strengthen the driving forces to help make the proposed change more favorable for the business. 

4. Ratio Analysis

A ratio analysis is a valuable decision-making tool that helps you analyze your organization’s financial performance by determining strengths and weaknesses, and identifying growth opportunities. You can effectively utilize it before making investment decisions for the business. 

Ratios are mathematical expressions between 2 factors. A ratio can be meaningful in business if it describes an economically sound relationship. For instance, a ratio analysis can be used to express the direct connection between a product’s cost and its sale price. 

There are different types of ratios to help you make decisions for your organization. Here are some of them: 

• Liquidity Ratio: This expresses the organization’s ability to cover its current expenses. It describes the relationship between your company’s current assets and current liabilities. 
• Debt-Equity Ratio: This describes the relationship between the company’s debts and equities and can determine long-term financial stability. 
• Proprietary Ratio: This describes the relationship between proprietary funds and the company’s total assets to give you a glimpse of your business’ overall financial situation. 

5. Break-Even Analysis

A break-even analysis is a great tool to use when pricing and costs are significant factors in your decision-making process. For instance, if you’re in the car industry, it can tell you how many units you need to sell to pay for the cost of continuing your business. 

Determining the break-even point — the point where costs equal revenue — is instrumental in identifying your margin of safety. Beyond that, you can enjoy profits and allocate your budget for other less pressing business concerns. 

A break-even analysis can be used to decide on some of these pertinent business issues:

• Which supplier to go for
• Pricing schemes for your products and services
• Investment budget for new equipment and supplies
• Cost reduction efforts 

6. Strategy Map

A strategy map is a diagram that offers a visual representation of your organization’s objectives and how you’re planning to go about realizing them. This decision-making tool will help you interconnect the goals and formulate sound strategies so the entire team can understand the various courses of action at a glance. 
Strategy maps will also aid in determining and assessing the progress made so leaders can ensure everyone is always on the same page. It can also help prioritize tasks so the organization realizes the most important goals.