Friday, September 5, 2014

How to Overcome the Inertia in Decision Making

The decision-making always contains a part of the risk. Deferring decision-making is an essential aspect of human factors.

One of the most important tasks for management is to make decisions, however, across the sectors, many management teams are happy to "put off making decisions till tomorrow, that is needed today." This is nothing new; in many organizations, indecision is masked as patience. So what’re the root causes in deferring making a decision? And how to overcome such inertia in decision making?

There’s the ‘problem of defining a problem'; with its cause-driven by an individual's ability to make sense out of uncertainty. There are so many factors that exacerbate inertia, for instance, not having common business values. A structured and unstructured approach for managements' decision making is depending on the problem context. Effective resource allocation and utilization is an important factor for decision making. Sometimes internal factors that may influence the decision process include, such as the goals of the decision-maker, decision situation, decision context, relevant knowledge, as well as the organizational capabilities and resources. On the other hand, external factors can influence strategic decision-making as well, including technology factors, political and legal conditions, and competition and consumer demands.

One 'ideal' approach is to prove the 'financial' gain or alternatively, 'show the loss' due to deferral. Turn it around back to the management team and calculate the cost to the business of not making a decision now, as it is affecting business productivity improvements and not enabling new business efficiency to be introduced. If it is not improving the business, they have a right to defer the decision. However, that's easier said than done. For the past few years, most managers have been bludgeoned with the corporate edict of "reduce costs so we can meet the quarterly target" and so their automatic response to any new idea is "we cannot afford to increase costs, so unless this new idea can be implemented for free, the only alternative is to thank the proposer and put it off indefinitely." Lost opportunity costs are always difficult to quantify, but an immediate increase to the cost base is easy to see and can have a direct impact on managers' incentives for the current year.

Frequently the reason is risk related. The team or individual is unable to assess the risk and it is easier to put off the decision sometimes on the pretext of having insufficient information. Often the decision is related to some significant change and they don't know how to assess the impact. Being afraid of making the wrong decision could be because of the peer group/punishment and others. This could be linked to wrong performance measurement, no support from superior, political tension within the company itself, the competitive culture within the company. Some actually legit reasons to postpone such as not enough information to move forward. So the next question would be, what other information do you need, and how and when are you getting them. 

How to overcome such inertia in decision making: One way to overcome this is to re-phrase the question, instead of seeking agreement to the decision, ask if anyone has any reason why this decision should not be made. It has worked to remove the logjam on multiple occasions; then, to phase (or time-manage) is using the Important/Urgent decision space, where actions are ‘Do it, Defer (non-urgent), Delegate (unimportant) or Dump ’. This decision matrix is good most of the time but it does sometimes fail: 
(1). 'Defer' tasks ultimately become urgent. You ideally want to do them before that happens. A good way is to start the task as a background task. 
(2). 'Delegate': The decisions should be made for the whole team. The remedy is to question why it is urgent and dismantle that. Unfortunately, Urgent/Unimportant tasks are often political. 
(3) The importance is different from different people's perspectives. There are two failure modes here - you are wrong or the other person is wrong. The remedy for both is the same - discussion, negotiation, and agreement. Relationship building should be an intermediate goal.

The decision-making always contains a part of the risk. Deferring decision-making is an essential aspect of human factors, putting off making decisions till tomorrow that is needed today is one of the signs of dysfunctional management, the businesses just have to overcome such inertia in order to improve management effectiveness.  


Post a Comment