What are managerial level decisions?

Decision-making is an essential business skill that drives organizational performance. A survey of more than 750 companies by management consulting firm Bain found a 95 percent correlation between decision-making effectiveness and financial results. The data also showed companies that excel at making and executing decisions generate returns nearly six percent higher than those of their competitors.

At many organizations, it’s up to managers to make the key decisions that influence business strategy. Research shows, however, that 61 percent of them believe at least half the time they spend doing so is ineffective.

If you want to avoid falling into this demographic, here are five decision-making techniques you can employ to improve your management skills and help your organization succeed.

Decision-Making Techniques for Managers

1. Take a Process-Oriented Approach

One of your primary responsibilities as a manager is to get things done with and through others, which involves leveraging organizational processes to accomplish goals and produce results. According to Harvard Business School Professor Len Schlesinger, who’s featured in the online course Management Essentials, decision-making is one of the processes that can be used to your advantage.

“The majority of people think about making decisions as an event,” Schlesinger says. “It’s very rare to find a single point in time where a ‘decision of significance’ is made and things go forward from there. What we’re really talking about is a process. The role of the manager in overseeing that process is straightforward, yet, at the same time, extraordinarily complex.”

When establishing your decision-making process, your first action should be to frame the issue at hand to ensure the right questions are being asked, and everyone agrees on what needs to be decided. From there, build your team and manage group dynamics to analyze the problem and craft a viable solution. By following a structured, multi-step process, you can achieve the desired outcome.

2. Involve Your Team in the Process

Decision-making doesn’t have to be done in a vacuum. Involve your team members in the process to bring multiple points of view into the conversation and stimulate creative problem-solving.

Research shows team decision-making is highly effective because it pools individuals’ collective knowledge and experience, leading to more innovative solutions and helping to surface and overcome hidden biases among the group.

By considering others’ perspectives on how to approach and surmount a specific challenge, you can become more aware of your own implicit biases and manage your team with a greater level of emotional intelligence.

Related: Emotional Intelligence Skills: What They Are & How to Develop Them

3. Foster a Collaborative Mindset

It’s critical to foster the right mindset early in the decision-making process to ensure your team works collaboratively, not contentiously.

When facing a decision, there are two key mindsets to consider, which are:

• Advocacy: A mindset that views decision-making as a contest. In a group with an advocacy mindset, individuals seek to persuade others, defend their positions, and downplay their weaknesses.
• Inquiry: A mindset that navigates decision-making with collaborative problem-solving. Unlike the persuasion and lobbying approach of advocacy, an inquiry mindset centers on individuals testing and evaluating assumptions by presenting balanced arguments, considering alternatives, and being open to constructive criticism.

“On the surface, advocacy and inquiry approaches look deceptively similar,” says HBS Professor David Garvin in Management Essentials. “Both involve individuals engaged in debates, drawing on data, developing alternatives, and deciding on future directions. But, despite these similarities, inquiry and advocacy produce very different results.”

A recent study by software company Cloverpop found that decisions made and executed by diverse teams deliver 60 percent better results. Strive to instill your team members with an inquiry mindset, so they’re empowered to think critically and feel their points of view are welcomed and valued, rather than discouraged and dismissed.

4. Create and Uphold Psychological Safety

In order for your team members to feel comfortable sharing their diverse perspectives and working collaboratively, it’s crucial to create and maintain an environment of psychological safety.

According to research by Google, psychological safety is the most important dynamic found among high-performing teams.

“Psychological safety is essential—first and foremost—for getting the information and perspectives out,” says HBS Professor Amy Edmondson in Management Essentials. “It’s helpful to be able to talk about what we know and think in an effective and thoughtful way before coming to a final conclusion.”

To help your team feel psychologically safe, be respectful and give fair consideration when listening to everyone’s opinions. When voicing your own point of view, be open and transparent, and adapt your communication style to meet the needs of the group. By actively listening and being attuned to the emotions and attitudes of the team, you can forge a stronger bond of trust with your employees and make them feel more engaged.

Related: 5 Tips for Managing Change in the Workplace

5. Reiterate the Goals and Purpose of the Decision

Throughout the decision-making process, it’s vital to avoid a common management pitfall and not lose sight of the goals and purpose of the decision on the table.

The goals you’re working toward need to be clearly articulated at the outset of the decision-making process—and constantly reiterated throughout—to ensure they’re ultimately achieved.

“It’s easy, as you get into these conversations, to get so immersed in one substantive part of the equation, that you lose track of what the actual purpose is,” Schlesinger says.

Revisiting purpose is especially important when making decisions related to complex initiatives, such as organizational change, to ensure your team feels motivated and aligned, and understands how their contributions tie into larger objectives.

Making Decisions Effectively

Enhancing your decision-making capabilities can be an integral part of your journey to become a better manager and advance your career. In addition to real-world experience, furthering your education by taking a management training course can equip you with the skills and knowledge to enable both your team and organization to thrive.

Do you want to design, direct, and shape organizational processes to your advantage? Explore our eight-week online course Management Essentials, and discover how you can influence the context and environment in which decisions get made at your organization.

The focus of a manager or a business owner is often primarily on doing well (making a profit). Sometimes, though, organizational leaders choose to pursue two big goals at once: doing well, and simultaneously doing good (benefiting society in some way). Why? Generally because they think it’s an important thing to do. The business provides an opportunity to pursue another goal that the founders, owners, or managers are also passionate about. In the case of New Belgium Brewing, the company’s cofounders, Jeff Lebesch and Kim Jordan, were passionate about two things: making great beer and environmental stewardship. So it should come as no surprise that their brewery is dedicated to reducing its environmental footprint. The brewery has created a culture that fosters sustainability in a wide range of ways, such as by giving employees a bicycle on their one-year anniversary as a way to encourage them to ride bicycles to work. The organization is also active in advocacy efforts, such as the “Save the Colorado” (river) campaign, and it works hard to promote responsible decision-making when it comes to environmental issues. In fact, in 1999, following an employee vote, the brewery began to purchase all of its electricity from wind power, even though it was more expensive than electricity from coal-burning power plants (which meant reduced profitability and less money for employee bonuses).

While the brewery still relies primarily on wind power, it also now generates a portion of its electricity onsite—some from rooftop solar panels, and even more from biogas, the methane gas byproduct that is created by microbes in the brewery’s water treatment plant. The company cleans the wastewater generated from beer production, and in doing so it generates the biogas, which is captured and used for energy to help run the brewery.

Brewing is water intensive, so New Belgium works hard to reduce water consumption and to recycle the water that it does use. The company also reduces other types of waste by selling used grain, hops, and yeast to local ranchers for cattle feed. The company, which has been employee owned since 2013, also works with the local utility through a Smart Meter program to reduce their energy consumption at peak times.

All of these efforts at doing good must come at a cost, right? Actually, research shows that companies that are committed to sustainability have superior financial performance, on average, relative to those that are not. In coming up with creative ways to reduce, reuse, and recycle, employees often also find ways to save money (like using biogas). In addition, organizations that strive to do good are often considered attractive and desirable places to work (especially by people who have similar values) and are also valued by the surrounding communities. As a result, employees in those organizations tend to be extremely committed to them, with high levels of engagement, motivation, and productivity. Indeed, it seems clear that the employees at the New Belgium Brewery are passionate about where they work and what they do. This passion generates value for the organization and proves that it is, in fact, possible to do well while having also made the decision to do good. And in the case of New Belgium Brewery, that means working to protect the environment while also making delicious beer.

1. What challenges does New Belgium Brewery face in pursuing environmental goals?
2. Can you think of any other examples of companies that try to “do good” while also doing well?
3. Would you like to work for an organization that is committed to something more than just profitability, even if it meant your salary or bonus would be smaller?

Sources: Karen Crofton, “How New Belgium Brewery leads Colorado’s craft brewers in energy,” GreenBiz, August 1, 2014, https://www.greenbiz.com/. Darren Dahl, “How New Belgium Brewing Has Found Sustainable Success,” Forbes, February 8, 2016, https://www.forbes.com/. Jenny Foust, “New Belgium Brewing Once Again Named Platinum-Level Bicycle Friendly Business by the League of American Bicyclists,” Craft Beer.com, February 18, 2016. Robert G. Eccles, Ioannis Ioannou, & George Serafeim, “The Impact of Corporate Sustainability on Organizational Processes and Performance,” Management Science, 60, 2014, https://doi.org/10.1287/mnsc.2014.1984. New Belgium Brewery Sustainability web page, http://www.newbelgium.com/sustainability, accessed September 18, 2017.