According to leadership expert James McGrath, in order to make good decisions, one must understand the 4 rules that govern the process. Regardless of the size of your company or the organization you work for:

  1. single There are two types of decisions: those that can be taken quickly because they can be corrected easily and at low cost, and those that can only be adopted after much deliberation because their correction is extremely delicate and, moreover, expensive.
  2. No matter what decision is made is ALWAYS accepted with incomplete data.
  3. If you are a person with common sense You will only get a third of the decisions right what do you take? The other third would have ended the same way no matter what decision was made.
  4. Better if a decision is made in the lowest level an organization.

With all of this in mind, McGrath offers a Decalogue to help make more effective decisions:

1. Don’t obsess over decisions. “Delaying or not making a decision are decisions in themselves and have consequences,” says the author.

2. Don’t hand over decisions. “Especially if you have the power to take them. It will make you look indecisive,” he adds.

3. Make simple decisions. “Be sure to make decisions that are easy and inexpensive to correct, and that can be made with minimal information,” he emphasizes.

4. Delay expensive and hard-to-correct decisions until you don’t have enough data. “You must use both quantitative and qualitative data and your own implicit knowledge. Determining the right dates depends on the nature of the decision/project and your own risk profile,” he says.

5. Don’t consider what has already been invested to make a decision. “The money has already been spent. Only consider future liquidity. If you’ve already spent four million on a project and need to spend another million to complete it, compare that million to future liquidity, not the five million of the grand total,” he warns.

“If future earnings are projected to be over a million, you might not decide to go ahead, but if it’s under a million, don’t play. Never think: We need to get something for the four million already invested“, go on.

6. Although you will never have all the data when making a decision, you must critically evaluate the data you already have. “Ask if the data was influenced by incorrect assumptions, wishful thinking, miscalculations, overconfident forecasting (including customer and financial numbers), or underestimating risk,” says McGrath.

7. Always do a post-decision review. “If you don’t do this, you’re missing a great opportunity to identify flaws in your decision-making process and improve your performance in the future,” the leadership expert concludes.

company management