While leadership is a combination of many things, your characterization of particular leaders and their leadership effectiveness is often a reflection of the decisions that they have made or not made. Understanding how decisions are made, how they can be biased, and how to make the decision-making process run smoothly will help you to be a more effective manager. But first, let’s define decision making.
Decision making refers to making choices among alternative courses of action—which may also include inaction. While it can be argued that management is decision making, half of the decisions made by managers within organizations fail.1Ireland, R. D., & Miller, C. C. (2004) Decision making and firm success. Academy of Management Executive, 18, 8–12; Nutt, P. C. (2002). Why decisions fail. San Francisco: Berrett-Koehler; Nutt, P. C. (1999). Surprising but true: half the decisions in organizations fail.2Academy of Management Executive, 13, 75–90. Therefore, increasing effectiveness in decision making is an important part of maximizing effectiveness in the workplace.
Individuals throughout organizations use the information they gather to make a wide range of decisions. These decisions may affect the lives of others and change the course of an organization. For example, the decisions made by executives and consulting firms for Enron ultimately resulted in a $60 billion loss for investors, thousands of employees without jobs, and the loss of all employee retirement funds. But Sherron Watkins, a former Enron employee and now-famous whistleblower, uncovered the accounting problems and tried to enact change. Similarly, the decisions made by firms to trade in mortgage-backed securities had negative consequences for the entire U.S. economy. Each of these people made a decision, and each person, as well as others, is now living with the consequences of his or her decisions.
Because many decisions involve an ethical component, one of the most important considerations in management is whether the decisions you are making as an employee or manager are ethical. Here are some basic questions you can ask yourself to assess the ethics of a decision:3Adapted from ideas contained in Blanchard, K., & Peale, N. V. (1988). The power of ethical management. New York: William Morrow.
- Is this decision fair?
- Will I feel better or worse about myself after I make this decision?
- Does this decision break any organizational rules?
- Does this decision break any laws?
- How would I feel if this decision was broadcast on the news?
Management 2020 text remixed from multiple sources under a CC Attribution-NonCommercial-ShareAlike 4.0 International License. View a complete list of original sources.
