One of the most important qualities of a good leader is the ability to make sound decisions.
There 4 different approaches that leaders can use for decision making.
There’s no right or wrong style of decision making. Each of these approaches is legitimate.
We believe that decision making is situational. The right approach depends on the circumstances.
Here’s an overview of each type along with some guidance about how and when to use it.
Autocratic Decision Making: the “king” rules
In this style of decision-making there is one person who makes the decision.
This is the simplest and, in many cases, the most efficient way to make decisions.
There are many situations where autocratic decision-making is the best choice.
These include emergency situations when there is little time to act, when the issue involves safety, or when the decision is small in scope and falls within the decider’s area of expertise.
Democratic Decision Making: the “majority” rules
Democratic decision-making often comes down to a vote.
Whatever option gets the most votes “wins.”
Democratic decision making can work well in low stakes situations where there are multiple options that are all “good” but individual preferences vary.
Deciding where to hold the company picnic or what food to serve are often best decided with a vote that involves all the interested parties.
Consensual Decision Making: 100% agreement
With a consensual decision-making approach, everybody must be in full agreement.
If you can’t reach 100% agreement, then you don’t do it.
Consensual decision-making sounds good on paper, but often results in deadlocks that are detrimental to the business.
When I think about consensual decision-making, I often remember a client where 2 brothers agreed to co-lead the company and make all decisions consensually. When they couldn’t agree on which direction to take the business, their stalemate nearly bankrupted the company.
That said, there are situations where consensual decision-making is warranted. A big one for us is the decision to be a business first family or a family first business. This is a far-reaching decision where consensual decision-making is a must.
Collaborative Decision Making: single decision-maker who solicits input
Collaborative decision-making is similar to the autocratic approach because you still have a single designated decision-maker.
But with collaborative decision making, the decider utilizes subject matter experts to collaborate and influence and shape the decision.
In our opinion, collaborative decision-making is the best way to make important decisions in most cases. As leadership coaches, we recommend our clients adopt this as their default decision-making philosophy.
There are a few keys to making this style of decision-making work:
Get high-quality input
Include stakeholders and subject matter experts. Try to get as many perspectives as possible. Solicit outside experts for advice on important decisions.
Make decisions at the right level
Match the decision with the level and role in the organization. The CEO should not be choosing the flavored coffee for the break room!
Clarify who owns the decision
You can do this by developing a RACI matrix that outlines who is Responsible, Accountable, Consulted, or Informed.
Implement an escalation process for timely decision-making
In addition to the RACI matrix, establish processes and timelines for escalating decisions when someone higher up the ladder needs to make the final call.
Develop a decision-making philosophy and choose a default for your business.
We recommend that businesses come up with a decision-making philosophy statement or policy statement, so that everyone in the organization understands how decisions are made and who makes them.
This, along with a RACI matrix, and a robust system for managing can help your organization make better decisions faster.
If you’d like some help implementing our decision-accelerating processes in your company, we offer the best leadership training and development program in Houston. Book a call with an advisor. We’d love to speak with you!
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