How to make smarter decisions for your organization

As business leaders, one of our most important tasks is making good decisions, especially in regards to where our organization needs to go and what we need to do to get there.

But as the global marketplace puts pressure on companies to develop strategic agility—the ability to move fast with focus and flexibility—it becomes increasingly important for people at all levels of the organization to make decisions that are good for the business.

Which leads to two important questions: How do people know how to make the best decisions? And what criteria do they consider before acting on those decisions?

If you think these are trivial questions, consider the recent Wells Fargo debacle. Clearly, thousands of front-line employees were not given the appropriate criteria for making decisions involving customers. Equally clear, their decision-making criteria was handed down from above, which means upper-level managers didn’t have the proper criteria as well. As we all know, this resulted in illegal activity, the firing of thousands of employees and a huge black eye to Wells Fargo’s reputation as a trustworthy financial institution.

Defining your decision-making criteria

To instill your workforce with appropriate decision-making criteria, start by identifying the “non-negotiables” for your organization. Many of these—such as lying, cheating and stealing—are blatantly obvious, but others are more subtle. Ask yourself, what attitudes, values and behaviors should your employees always consider when making a decision?

Next, consider whether your employees have the right information to make good decisions for the organization. Unless you constantly communicate your vision of success, people won’t know what it takes to get there.

Similarly, if you don’t communicate your company’s core decision criteria, employees won’t always know how to act appropriately. Every employee should have the information they need to answer this question: When I am faced with a challenging client, problem or situation, what questions do I ask myself to make the best possible decision?

The right questions to ask

Here is a starter list of strategic questions to ask:

• Does this decision move us closer to our destination in a manner that aligns with our values?
• Does this decision contribute positively to client retention, growth and other key goals relative to our markets?
• Does this decision support and reinforce our desired brand image?
• Does this decision engage our clients in other areas?
• Is this the best way to contribute to the company’s revenue and efficiency targets?

From an operational standpoint, questions to consider include:

• Is there flexibility in how this can be accomplished?
• Do I understand why this process/approach is set up this way? If not, who do I ask?
• What outputs must be maintained or enhanced?
• What management practices must stay in place?
• What does winning look like at the team level?

Developing a decision-making criteria sets everyone up for success. It supports actions that lead to your destination. And it makes everyone accountable for understanding the context for excellence in your organization.

Ranking initiatives

Often, the most important decisions in an organization have to do with whether to start, continue or stop a major initiative. I recommend using a strategic value ranking grid to help make these critical decisions.

This involves ranking the following areas on a scale of 1 to 5 (5 is highest):

• Strategic: What impact will this initiative have on achieving our core strategies?
• Revenue: Will it contribute significantly to revenue growth?
• Profit margin: Will it contribute directly to profit margins?
• Market growth: Will it contribute directly to further definition and penetration of key market segments and targeted end users?
• Emerging markets: Will it directly support current or pending investments in new market development?
• Operational efficiency: Does it contribute to achieving new operational efficiencies, or is it necessary for ongoing business operations?
• Brand equity: Does it expand our brand equity?
• Time frame: When can we reasonably expect to achieve these goals?

Add up your ratings for each initiative and list them on the grid in terms of their totals.

Keep in mind: I am not suggesting you make decisions strictly by the numbers. The primary purpose of this grid is to assist in your thinking process and provide a starting point for the conversation about an initiative.

Your judgment is always more critical to the decision-making process. Use it to guide how you communicate why your organization will focus or not focus on any given initiative.

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