2018-01-31 00:00:00Business InsightsEnglishUnderstand the negative effect of poor decision-making habits on an organization's growth. Learn how to establish a healthy decision-making...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/02/Coworkers-Arguing-Over-Business-Decisions.jpghttps://quickbooks.intuit.com/ca/resources/business-insights/poor-decision-making-habits/Avoiding Poor Decision-Making Habits in Your Small Business

Avoiding Poor Decision-Making Habits in Your Small Business

4 min read

Good decision making is crucial in any business setting, and it can be of make-or-break importance for small businesses. All major decisions affect the organization’s path and success, but they have a further impact as employees watch the decision-making process. If employees spot you as the business owner following a destructive decision-making process or making poor decisions, they are likely to feel less confident in the company’s prospects and may even consider jumping ship.

Poor Decision Making Habits and How They Harm Your Business

Poor decision making can be affected by many factors. Perhaps you don’t have all the information you need or you’re in conflict with partners or investors about your business goals. You could be lacking resources to make the proper decisions, or you may be paralyzed by having too much information. If poor decisions are being driven by bad habits in making choices, however, you may be facing a problem that just won’t go away. For example, in some organizations, leaders postpone decisions in a pattern sometimes known as “decision avoidance psychosis,” creating a sense of hurry and panic that inhibits wise choices.

Another problem occurs when you don’t have all the people available who are needed for input into wise decisions. You need people who understand the problem your organization is facing, people who are able to provide solutions, people who can provide resources, and people who are empowered to make decisions, all working together to create an effective decision-making process. If one of these elements is missing, you could find yourself in trouble.

Trying to please the majority or making the assumption that a certain decision is what everyone wants is another poor decision-making habit that can hamper your business momentum and growth. In addition, if leaders coerce their employees into accepting poor decisions, employees are often afraid to point out any flaws in the plan.

Understanding the Problem to Be Solved

Before you can develop a healthy decision-making process, you need to understand what problem you’re trying to solve. Problems typically have several levels to them, and you may need to dig deep to understand how a specific problem is manifesting within your organizational culture. What appears to be a squabble that’s hindering your billing staff from keeping up with their work may actually be a leadership problem one or two levels up. A failure to meet sales goals might stem from inventory or supply problems.

Try to identify problems quickly, before they have a negative effect on your organization. If you wait until all your employees are complaining or the bottom line is suffering, you find that you actually have more problems to solve and more difficult decision making to handle. Be proactive, and seek out honest data to inform your decision making. Doing this often involves communicating authentically that you really want to know the truth and that you won’t seek any revenge on whistle-blowers or truth-tellers.

Improving Your Decision-Making Habits

Once you have clearly identified problems to be solved, you’re in a position to establish a healthy decision-making process. Start by deciding who needs to participate in each decision, remembering that you’re looking for people who can provide information and resources as well as those who understand the problem clearly. Bring everyone into the same room, and make sure all players share the same understanding of the problem as well as the end goal. If you start your decision-making process here, you avoid the endless arguments that can easily happen when people are worried about who’s going to be blamed.

Your next step, before you actually dive into the factors affecting the decision itself, should be to establish process. Set ground rules for discussion, and make it clear who the final decision makers are. Remember that the goal is to reach a wise decision, not necessarily to see who wins an argument. Control the contributions of your employees and colleagues so that no one person or faction is able to dominate the room.

Since you’ve already defined the problem, you should hear the voices of those who understand the problem first before turning to those with potential solutions and resources. If you’re making the final decision, do so when you’re ready. If you’re deciding with colleagues, you may want to adjourn the larger meeting to simplify the final steps of making the decision and thinking through its consequences.

The Effect of Good Decision Making on Your Employees

When your small business decision-making process is reasonable and healthy, your employees feel more confident. They’re less likely to be worried about job security for reasons of office politics, and they enjoy the boost in morale that comes when strong leadership is in control. When you incorporate employees into your decision making process, even just by listening to them as people who understand the problem you’re trying to deal with, they end up feeling important and needed. You also boost morale when the time allotted to decision making is appropriate for the issue at hand. If you and other top executives dither endlessly over the color scheme for the redecoration of the reception area in your facility, your employees may despair of what might happen should a real crisis occur. Keep a sense of perspective so you can direct your decision-making focus to the areas that truly affect your organization’s survival and growth.

By establishing a healthy decision making process and avoiding the hallmarks of poor decision making, you can provide the kind of leadership that a small business truly needs.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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