Decision making

HR professionals make decisions every day. Each of them directly affects the business and can potentially produce the so-called “butterfly effect” – to cause problems for the company in completely different areas.

Making decisions is difficult, especially in times of crisis. In this article, we will talk about what are the most popular decision-making methods and how to make the right choice.

How should you make decisions?

Making a decision is our choice of the most appropriate option out of all possible.

Problem: What problem does a specific solution solve? How does it affect the company’s activities?

Effects: What exactly will the decision affect? What is the magnitude of the impact?

Responsibility: Who will be responsible for the changes and the consequences of those changes?

Four popular methods for making decisions

SWOT

SWOT analysis involves the creation of a matrix that helps organize information into categories:

Strengths are strengths.

Weaknesses are weaknesses.

Opportunities are opportunities.

Threats are threats.

As a result, you have a matrix with the characteristics of the problem situation. The information obtained helps to make a correct decision in the existing conditions. 

Pareto chart

With this method, you can identify problem areas and find a solution step by step.

Based on performance results (identifies the main problems).

For reasons (identifies root causes).

Building a diagram consists of 7 stages :

Definition of the problem

I am creating a list of reasons that provoke the problem.

I was counting the number of occurrences of each cause over a certain period.

It is drawing up a table with data that are arranged in descending order of importance.

I am displaying data in a coordinate system. The abscissa axis is a list of factors; the ordinate axis is the value of aspects’ contribution to the problem’s solution.

Create a chart for each cause of the problem. The height of the posts should decrease from left to right.

Analysis of the results using the diagram.

cause-effect scheme

In another way, this diagram is called – “cause-effect diagram” or “fishbone diagram.” It allows you to sketch the main characteristics of the problem. Ishikawa is one of the developers of the Toyota production organization concept.

The scheme is built from the formulated problem. From it comes the so-called “ridge” – a horizontal line. This line has many branches – the main factors of the problem. Each of the factors is divided into the reasons that formed this or that factor. There are usually several reasons.

The diagram is excellent for seeing the relationship between the problem’s factors and identifying the root causes, which means it helps to choose the right solution.

Risk map

A powerful tool to help you make decisions is described in the book “The Right Choice” by John Hammond, Ralph Keeney, and Howard Riff. 

To make the right decision, you need to

Identify your main doubts. Write them down for each solution, then review to determine the severity.

Determine the possible consequences. The number of consequences depends on the number of doubts.

Determine the likely scenarios for the development of events. Understanding probabilities will help you understand the reality of a particular approach.

Analyze the results. Describe the results in as much detail as possible for each solution. You can evaluate the results in terms of “normal” or “bad” and also financially characterize “included in the budget” or “too expensive.”

Tough decisions require more effort than thinking about doubts and risks. A decision tree will help you with this, which shows the essence of the decision and the relationship between choice and doubt.

Decision-making mistakes

Wrong decisions are based on mistakes. Usually, two groups of factors influence decision-making: internal and external.

By the internal include factors related to the personality of the one who decides. This is perception, values, and motivation.

The intrinsic decision factor may be based on the person’s experience, which may be irrelevant. Also, internal factors determine the ability to make risky decisions, overestimate resources, and delay decision-making.

External – these are factors that are associated with the conditions of decision-making and external influences. Such decisions can be based on a sense of duty, be limited in time, depending on others’ judgments or status.

Another mistake can be called the wrong goals and timing of implementing the solution and the unfair distribution of responsibilities, and lack of control over performance.

To prevent mistakes in the decision-making process, you need to adhere to the following rules:

Set goals and deadlines correctly

Indicate the criteria for making a decision.

Analyze the data carefully.

Choose the correct decision-making methods.

Correctly distribute functions and responsibilities within the solution.

Monitor the implementation of the decision at each stage.

Consider the consequences and be responsible for the wrong decision.

The complexity of decisions in a crisis

A crisis is an influential external factor that significantly affects the quality of your decisions. The first thing to do is to abstract from external circumstances, choose one of the methods, and strictly follow it. When you see the problem as a whole and stop focusing on external factors’ complexity, you will find the right solution.