Effective Decision-Making Tactics
STUDY SHOWS MANAGERS DONT USE EFFECTIVE DECISION-MAKING TACTICS
COLUMBUS, Ohio -- A new study of 376 real-life business decisions found that managers tend to use decision-making tactics that are the least successful.
An Ohio State University researcher compared four different tactics that managers used to implement specific decisions in their organizations, including decisions concerning buying a new computer, launching a new product, and modifying an employee bonus policy.
He found that the most successful technique -- called intervention -- led to successful decisions about 90 percent of the time, but was used in only about 8 percent of the decisions examined. The least successful tactic for making decisions -- issuing edicts -- was used in nearly 40 percent of the cases.
Overall, 37 percent of the managers decisions failed -- they were never put to use.
Managers would be more successful if they used better tactics to implement their decisions, said Paul Nutt, author of the study and a professor of management science at Ohio States Fisher College of Business.
The problem is that the best tactics take time to implement and many managers are looking for quick fixes, Nutt said. However, poor decision making costs more time in the long run.
The study, published in a recent issue of the Journal of Management Studies, is based on a database of 376 business decisions compiled by Nutt over nearly 20 years. The database includes decisions by managers at private firms, government agencies, and non-profit organizations. In each case, Nutt asked a top-ranking official of the organization to suggest a decision involving the organization and to name two executives who were familiar with the decision and responsible for carrying it out.
Nutt conducted in-depth interviews with the two officials selected, asking each to spell out the sequence of steps that were taken to carry out the decision-making effort. Decisions were considered completely successful if they were adopted and continued to be used for two years. Nutt also compared decisions made by top executives with those made by middle managers in the organizations.
From these interviews, Nutt identified four decision-implementation techniques: intervention, participation, persuasion and edict. In general, intervention and participation were the most successful techniques -- but they were also the least used.
Intervention involves first establishing standards or expectations for performance (by making comparisons to similar organizations), and then measuring current performance against those standards. After identifying the gap between expectations and current performance, managers help identify realistic and justifiable ways to close the gap.
Intervention is a subtle approach, but its record is so strikingly successful that it merits wider use, Nutt said.
However, it takes some time to properly use the intervention approach, which Nutt says explains why it was used in only 8 percent of the decisions by top managers.
But managers need to realize that other techniques may look like they offer a quick solution, but they are more likely to fail. That means managers spend more time cleaning up the aftermath, he said.
The other beneficial technique was participation, which was successful in about 80 percent of the decisions studied. However, it was used only 13 percent of the time by top managers and 16 percent of the time by middle managers. As the name implies, participation involves having those affected play a role in the decision-making process.
Everybody has heard of participation, but hardly anyone really uses it in making decisions, Nutt said. When it is used, it tends to be a token effort, involving just a few people, that is not effective.
A third technique is one in which a manager makes a decision by issuing an edict. Top managers used this tactic 30 percent of the time, and middle-managers 39 percent of the time. But this tactic was successful in no more than 38 percent of the cases.
The most-used tactic was persuasion, in which managers cite the benefits of a proposed change to influence those affected to adopt the decision. This was used in 49 percent of the decisions by top managers and 31 percent of the decisions by middle managers. It was successful less than half the time.
In general, top managers were more successful with their decisions, and they were more successful using the best tactics. Middle managers, like top managers, had the most success with intervention and participation, but it also took them more time to implement their decisions. Thats because middle managers have less power in organizations, Nutt said.
Nutt also examined the decisions based on how much opposition they initially galvanized within an organization and how much the decisions would disrupt the organization. Results showed that intervention and participation remained the most successful tactics, regardless of the levels of opposition or disruptiveness.
The research was supported in part by Ohio States Fisher College of Business.#