The 8 Threats To Effective Decision Making

Decisions Help Us Navigate Through Work (Image Credit:  schaeffler,

Decisions Help Us Navigate Through Work (Image Credit: schaeffler,

Decisions are the core of what we do in the professional world. You decide whether or not to fund a project. Next week, you decide to skip exercise to work longer hours. Later, a team member makes a technology decision and you have to clean up the mess. The quality of our decisions are a major factor in shaping our professional success.

Unfortunately, very few people have reflected on the art of making decisions and decision making. That’s going to change with today’s article. You will learn nine common threats to effective decision making and what you can do to overcome them. Let’s first set the stage by looking at decision making challenges we face every day and studies on decision making.

What The Research Says About Decision Making

Researchers in economics, psychology, health and many other fields are producing a growing field of research into decision making. It is humnbling to learn just easily our decision making ability can be disrupted. Let’s consider a few of the findings below and ask ourselves how these ideas apply to the working world.

  • The Stress of Poverty Tends To Lead to Poor Financial Decisions. Have you ever wondered why people take very high interest loans from “payday lenders”? One answer to this question is that the stress of living with limited resources acts as a “tax” on one’s decision making ability (The Guardian).
  • Memory Strongly Influences Decision Making. Researchers at the University of Basel found that “people are biased toward remembered options and reject them only if they are very unattractive.” When looking at several options, keep in mind the influence of familiarity.
  • Lack of Sleep Slows Decision Making. Effective leadership includes the ability to make decisions as needed. A lack of sleep slows down your decision making in crisis situations according to research from Washington State University. As the stress and importance of your decisions increase, your need for sleep also increases. Cutting sleep also cuts away at your ability to make good decisions.
  • Consistent decision making leads to success. A 2015 study from Statistics Canada reports that “Early demonstration of consistency in career decision was associated with earlier entry into postsecondary studies and higher levels of educational attainment at age 25.” This research reminds me of a comment by John C. Maxwell who write, “successful people make right decisions early and manage those decisions daily” in his book Today Matters: 12 Daily Practices to Guarantee Tomorrows Success.

Combatting The Eight Threats To Effective Decisions

The research studies cited above clearly demonstrate the high cost of poor decisions. Specifically, let’s look at eight problems that hurt your decision making ability. Developing the ability to combat these challenges will set you apart from others. Spending time on developing decision making skills is especially important as your responsibilities grow.

1. The Impulsive Threat

The impulsive threat means you are acting too quickly. You are ignoring the data and the impact on other people. This threat can be a weakness for people with a strong desire to move ahead. This threat can be overcome using systems and a process.

2. The Risk Avoidance Threat

In some organizations, risk is a “four letter word”, a concept to be avoided at all costs. However, risk and uncertainty are all around us. In the investment context, one faces the risk of inflation which may overwhelm the modest gains available in low risk investment vehicles. As a leader, it is important to develop and practice the skill of making decisions about risk and the potential rewards.

3. The Ignorance Threat

Making decisions without information presents two significant problems. First, you are likely to miss important considerations such as costs you may need to pay. Second, deciding without good information may harm your decision making reputation. After all, if people see you deciding in an information vacuum, they may consider you biased and irrational.

4. The Halo Effect Threat

When you are facing large decisions, it is natural and reasonable to involve other people. However, the halo effect needs to be taken into consideration. This effect states that an overall perception of a person may be impacted by their ability in one area (e.g. a skilled engineer is perceived as universally effective even if he has no knowledge of the market you are considering entering).

5. The Loner Threat

While most important decisions are ultimately made by a single person, being a loner is a threat to effective decisions. What is the threat of being a loner in the world of decisions? Being a loner means it will be difficult for you to implement a different decision and obtain all the benefits you foresee.

6. The “One Solution” Threat

Decisions often concern developing a solution to a problem. For example, your company may face a challenge from a competitor who brings new products and technology to the market. The decision you face becomes: how will we compete and win? One response is to simply copy the competitor’s methods. That’s just one option. The more important a decision you face, the more options need to be considered.

7. The No Follow Up Threat

One of the insights I learned from reading Peter Drucker’s classic book “The Effective Executive” concerns the importance of follow up and implementation in the area of decisions. Making a decision without follow up is like sitting in a car with directions and never going a step further. If a decision is made in a meeting, then make sure at least one follow up step is made. For example, you may assign a team member to gather research on your company’s data analytics talent before starting a substantial Big Data project.

8. The No Delegation Threat

Keeping all decisions to yourself in a project (and in other situations) is a threat to long term success. Thoughtful delegation is an effective way to help people grow. As Dan Rockwell points out on the Leadership Freak, it is also important to help people think through risk tolerance issues. Dan also makes a great point in setting deadlines when asking others to make decisions. Sure, collecting “just a bit more data” might make the decision better. However, there is also a high cost to delay.

Question For The Comments:

What are the greatest threats and challenges you face when you make important decisions?

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3 thoughts on “The 8 Threats To Effective Decision Making

  1. It’s never ceased to amaze me the poor decisions people make under stressful financial conditions – thinking specifically of when someone loses a job. The panic of worrying about how next month’s bills will get paid can have a terrible effect on one’s ability to make smart choices about their next move, which job offer to take (or to not take), and even how one presents oneself in an interview.