Skip to main content
Article

How Leaders Can Master the Four Influences of Effective Decision Making

and

As a leader, you must make complex decisions every day that requires you to navigate risk and uncertainty, devise solutions and weigh options – all of which have the potential to disrupt or improve productivity, impact the business’s bottom line, and influence consumer purchasing habits.

Your humanity can have a positive influence on how you make decisions – but you can’t escape other psychological influences that can cause you to struggle with your choices or make decisions that don’t have the desired impact.

By understanding more about how humans make decisions – and the common underlying influences – you can better prepare for the next decision you will need to make when the time comes.

Imagine yourself as the decision-making leader in this scenario:

Your global consumer-focused company has been through tremendous change and transformation over the last few years. The company has experienced changes to its culture and employee experience, changes to technology, the operating model, and ways of working – and people across the organization are starting to experience change fatigue.

So, when the subject of introducing another org-wide transformation is brought up, you and others on the leadership team are confronted with decisions about if and how this will best benefit the business and your employees.

To come to an informed decision on how to proceed, here’s how psychological influences might show up and how you can better control their impact: 

Influence # 1: Reason

If you’re a leader who leans towards using reason to guide your decision-making process, you probably work to gather data and build a pros and cons list. But when the data doesn’t indicate one path forward, it’s not always clear how to proceed. Even when the right data is there, it can lead to “analysis paralysis,” whereby leaders are unable to choose between numerous attractive options, and no decision is made.

What to do: To combat this, you must be confident that you’ve done the due diligence and can discern between a smart and reckless risk. You should use the data to determine the top 2 or 3 most suitable options and make the best-informed decision from there. If analysis paralysis is still present, you must have confidence in your approach and logic and remember that the hard work has already been done in determining the best options.

In practice: In the transformation scenario, this might mean narrowing down the options for transformation to one with a smaller scope (e.g. one or two functions) but a more immediate time frame, and one with a larger scope (e.g. the whole organization) but with a longer, more staggered time-frame.

Influence # 2: Biases

Many leaders are driven by unconscious biases when making decisions. One bias that often pops up is the “sunk-cost fallacy.” Meaning, you become reluctant to abandon a course of action because you’ve already invested heavily in it, even if it’s clear that abandonment is more beneficial. There are many other biases – like confirmation bias and affinity bias – that can also impact decision-making objectivity without you realizing it.

What to do: To avoid being led by biases, you should get the thoughts and perspectives of a diverse set of people. This can mean increasing the data available or assigning someone to play the role of “devil’s advocate.” Be aware of how diverse your leadership team is and bring in perspectives from those outside the team if you can.

In practice: In the transformation scenario, this may mean bringing in the perspective of different function heads, external industry experts, or representatives from the most-affected markets into the room to make the decision.

Influence # 3: Emotion

Imagine you’ve just come out of a string of difficult meetings and are visibly stressed or agitated. You probably aren’t in the right headspace to make a thoughtful decision and may push for the quickest and easiest answer without giving it due thought. This is another common pitfall. When faced with complex and conflicting choices, you may be unable to decide using only cognitive processes and will only use emotions as a guide. While this can be helpful at times, a decision made in an emotional state (a “hot state”) might not be the same decision made when things are approached more objectively (a “cold state”).

What to do: You must recognize whether you’re in the right frame of mind and do your best to make big decisions when in a “cold state”– and not influenced by strong emotions. This might mean postponing a decision to ensure you aren’t influenced by events that will have an emotional impact. Set some decision-making principles to mitigate the risk of emotions playing an outsized role.

In practice: In the transformation scenario, this may mean making a conscious choice about when you will agree to a final decision – ensuring that large or stressful events, such as earnings calls, are out of the way before planning the decision-making meeting. This might also mean avoiding a Friday afternoon decision when everyone is tired from the week.

Influence # 4: Memories

Many leaders rely on memories when making decisions – especially when revisiting a strategy that has previously been explored and rejected. And recent memories have even more sway over our decisions versus earlier ones. That’s because recent memories can have an outsized effect on our decisions (known as recency bias), even if others did not have the same experience.

What to do: You should speak to others about their memories of a similar or recent experience – what went well and what they would have done differently – and ask what the key barriers were last time around and if that barrier still exists. This should be used as a learning opportunity to mitigate the risks that remain. But you should also be aware of your own recency bias and try to conjure up memories of similar situations further in the past.

In practice: In the transformation scenario, that could mean removing the most recent org transformations as a factor in the decision-making process, and instead, looking at experiences further back in the organization’s history. You should also call on the Leadership Team (or beyond) who can share their prior experiences.

The more aware you are of your own decision-making processes, the better equipped you’ll be to make tough calls when the job requires it. Considering each of these four influences will help you further sharpen your decision-making skills, and better prepare you for the next big decision.

Jonny is an Associate Principal at Daggerwing Group with 17 years of consulting experience, spanning cultural transformation, building networks of change advocates and developing organizations’ change and communications capabilities. Recently, Jonny has worked on several projects helping global firms tap into the innovative potential of employees. Jonny has a firm belief that empathy for the impact of change on the individual is key to transformation success – and he has developed a passion for working with clients to bring their employees with them on a journey.
Gisela is a Managing Consultant with Daggerwing Group. She has a background in psychology, HR and Organizational Development which has fostered her keen interest in why people behave the way they do. She is a lifetime learner of behavioral science and tries to find robust and creative ways to weave it into work. Gisela loves to travel and uses the opportunity to try new foods and take colorful photographs.
Take the change diagnostic