Why Is Decision-Making Important in the Workplace?

In the workplace, decisions are made practically every minute of every day. It could be as trivial as “Where should I position this bookshelf?” or “What snack will I order for our team meeting?” to something as consequential as “How do I enhance our customer feedback system?” or “Which supplier should I go for?” Good or bad, your choices will reflect on your team and the company’s growth and success. 

Decision-making is important in the workplace because it determines how an organization functions and operates. It also dictates how quickly and efficiently employees can work toward achieving set goals. Effective utilization of time and resources is also dependent on a leader’s decision-making skills. 

This article talks about the impact decision-making has on one’s leadership journey and how it can significantly affect how an organization functions. We will discuss the consequences of poor decisions and how these can potentially affect your power and influence as a leader, as well as the merits of quality decisions and how these can help you gain a strong foothold in your leadership career.

Why Decision-Making Is Important in the Workplace

Making decisions isn’t daunting in itself, but it is the uncertainty of the outcomes and ramifications that we typically find so intimidating. Some leaders often feel overwhelmed by this enormous responsibility set on their shoulders, and some even succumb to the weight that decision-making bears on them. 

This isn’t surprising because it takes an experienced, skillful, and determined leader to develop exceptional decision-making skills. Often, one mistake can spiral into something complicated to control. That’s why fortifying your decision-making skills over time and through relevant experiences will be crucial in your leadership journey.

Myths on Decision-Making

Many leaders are intimidated by the idea of decision-making because it connotes heavy responsibilities and a high level of accountability. However, most of these worries and fears stem from unfounded notions and misconceptions. 

Let’s take a closer look at some of the most common myths on decision-making so you can confidently address your fears and enhance your leadership brand:

• Decision-making is your sole responsibility. Some leaders adopt the outdated notion that making decisions for the business rests solely on their shoulders. These days, decision-making can be a shared responsibility because involving your team in the process allows for more perspectives, highly creative ideas, and inclusivity in the choices to be made. 
• Decision-making is a linear process. Your job as a decision-maker doesn’t end when a choice has been made. Decision-making is circular — it requires follow-ups, monitoring, and continuous analysis to determine if the choice that was made remains relevant and efficient. 
• Decision-making is all about trusting your gut and skills. Relying too much on your intuition or leadership competencies can lead to poor decisions. Your choices must always be relevant, inclusive, and efficient, and among the ways to ensure this is to promote group decision-making, thorough information gathering and research, and the utilization of decision-making tools. 

Consequences of Poor Decisions

Leaders are not exempt from foul-ups, nor are they perfect, faultless beings incapable of making mistakes. They can sometimes make bad decisions, especially when they fail to examine the consequences of their actions or are poorly organized. Their personal biases, preferences, and natural tendencies may also get in the way of making logical, inequitable decisions for the team. 

When this happens, leaders expose themselves and the entire team to many risks including:

• Loss of the team’s respect and trust
• Reduced employee engagement
• Lower productivity
• Insubordination from employees
• Confusion within the team
• Failure to accomplish objectives and goals

Benefits of Good Decision-Making

The ability to make good decisions will set you apart as a reliable, proficient, and trustworthy leader, and the positive impact will be felt in many aspects of the business. Let’s take a quick look at some of the most apparent benefits of having excellent decision-making skills:

• It will save you time. Good decisions typically remain relevant and effective for longer durations. It’s rare for good decisions to eventually be deemed inapplicable. Some excellent decisions may even last the business’s entire lifespan. 
• More goals will be realized. Good decision-making skills help accelerate a team’s trajectory toward achieving shared goals, especially if transparency, integrity, and the desire to promote the company’s welfare are thrown into the picture. Moreover, more employees tend to support good decisions, hence enhancing team motivation, collaboration, and loyalty. 
• Drives growth. Good decisions generally promote the business’ expansion, improvement, and stability. A company with reliable decision-makers will quickly carve out a niche in the industry and progress further in the game. 

The Impact of Decision-Making in Business

Effective managers strive to make well-informed, rational, and equitable decisions. Before making their choices, they gather accurate information and relevant feedback and insights from their team. They develop a deep understanding of the situation, determine the consequences of each alternative, and weigh these against the risks involved.

Decision-making is one of the most crucial responsibilities of a leader. Their skills are critical to the business’s success and distinguish good leaders from bad ones. 

Here is a closer look at the impact of decision-making in the workplace:

1. Decisions Are Needed in Daily Business Operations

Decision-making skills are utilized daily, from menial daily tasks in the workplace to momentous occasions that can spell the difference between failure and victory.

There are 3 main types of decisions leaders are expected to make in the workplace:

Operational Decisions

Business operations are the backbone of the organization. These involve daily tasks required by the business to function. As a leader, your goal is to make business operations as efficient as possible by making logical choices for the team. 

Operational decisions include day-to-day activities in the workplace and tasks that may have short-term effects on the business. Most of them are also repetitive, so once a leader makes an operational decision, this can be used and reused countless times for as long as it remains relevant. 

Here are some examples:

• What day should we schedule recruitment interviews?
• Which equipment should be sent to offsite projects?
• What’s the best way to send billing statements to clients?
• How often should we check on the supplies inventory?
• Which of our services is best suited for this client’s needs?
• How much commission should sales agents get?

Tactical Decisions

Tactical decisions are made to establish standard procedures in the organization and make daily operations more efficient. They are more specific and focus more on effective implementation. Tactical decisions also include the changes made in operational decisions to constructively respond to changes in the business environment.

Here are some examples:

• Developing a sales strategy for the entire sales force
• Deciding on what specific tasks and responsibilities are assigned to each position in the company
• Introducing promos and discounts to respond to a competitor’s sudden price change
• Launching a rewards program as a response to shifting market conditions

Strategic Decisions

Strategic decisions directly impact your business’ growth and dictate the direction your organization will take. These decisions align with your company’s mission and vision, and help it gain a strong foothold in the industry.

These types of decisions involve those that have a lasting impact on the business. However, note that, although these choices are made to cater to long-term goals, they are not set in stone. Strategic plans are most effective when they are flexible and capable of efficiently responding to potential changes in circumstances. 

Here are some examples:

• Setting annual targets and budget
• Hiring of candidates for top management posts
• Business expansion plans
• Where do we want the company to be 5 years from now?
• How do we get there?

2. Decisions Can Boost Employee Morale 

Managing a group of individuals with different personalities and diverse skills and experiences can be extremely taxing. As a leader, you must treat your team members as allies in the business, not just mere followers expected to obey your commands and meet all your expectations. 

A huge part of effective leadership involves listening to your team, encouraging them to share their insights and suggestions, and finding creative ways to meet their unique needs. You’ll be surprised to observe that your team will respond positively by exhibiting higher engagement, better teamwork, and improved productivity. They will also develop strong trust in you as their leader, as well as a higher level of loyalty to the organization. 

Being transparent to your employees about your decision-making process will also help keep your team’s morale up, especially when the decisions you are about to make entails risks. By letting your team in on the nitty-gritty, you’re letting them know you’re all on the same side, and they should be confident about doing their part in helping to reach common goals because you will provide them with the support and guidance they need. 

3. Decisions Can Help Foster Respect and Trust 

Your organization needs a strong, confident leader dependable in effectively leading the team toward shared goals. Your team needs someone they respect and trust to steer them in the right direction, and your decision-making skills will play a big role in how firmly you can establish yourself as a leader worthy of your team members’ approbation. 

Apart from leading the team toward success, your employees also need someone who’s an excellent role model — someone they can emulate as they grow personally and professionally in their careers. If they see how efficiently you handle difficult situations and strive to be level-headed in the face of critical situations, they’re bound to follow suit.

This helps establish a culture of efficiency in the workplace where a healthy level of trust and respect in the leader results in improved employee engagement, productivity, and loyalty. 

4. Decision-Making Skills Are Crucial To Risk Assessment

Business decisions are vital in determining the opportunities the organization will seize to grow and thrive in the industry. It is through tactical decision-making that risks are recognized and analyzed. Leaders then formulate strategies that can help minimize the risks to the business, maximize the possibilities, and boost chances for achieving the desired results. 

Risk assessment is a tricky job. Leaders have to take into account both internal and external factors that may significantly affect how the business will respond to the alternatives available. They must determine how likely (or unlikely) risks will turn out to be significant, to what extent the effects will be felt by the team, what steps may be implemented to help prevent them, and what actions must be taken when the organization finds itself in the face of a crisis.

Here are some questions you might want to ask yourself when analyzing business risks:

• What could go wrong with each of these alternatives?
• In which aspects will our company be most vulnerable?
• How can we determine if we’re on the right track toward achieving our set goals?
• Do the costs justify the risks involved and the probability of success?
• Do the risks outweigh the benefits?

5. Decision-Making Helps Prevent Conflicts

Leaders have to be assertive in ensuring that their influence and authority in the workplace is firmly established. When a leader isn’t self-assured enough, conflicts will arise within the team primarily because there is no clear person of authority and influence. 

Firm decision-making is one of the factors that can establish your power as a leader. You must provide clear directions to your team, as well as explicit instructions on the whos, whats, when, and hows of various aspects pertaining to the business. Conflict resolution must also be among your top priorities to help ensure a seamless, synergistic flow among your team members, and to prevent dissent from brewing within your team.

6. Decision-Making Helps Ensure Growth

Business decisions fuel changes in the organization. The decisions you make as a leader can help determine how resources are utilized and how team members spend their valuable time in the workplace. 

Ineffective decision-making can lead to avoidable expenses, wastage of resources, inefficient use of time, and a lot of miscommunications and errors among team members. In essence, a good leader should be able to make decisions that can help the company save money and time, as well as maximize the resources available to ensure continuous growth. 

7. Decisions Help Achieve Goals

Your organization’s success in achieving set goals depends on how good your decisions will be as a leader. Anyone can make decisions, but it takes a good leader to skillfully lead the organization in the right direction. 

The company’s objectives and goals will remain abstract until someone successfully rallies the team to work together toward achieving them. This is where a good leader enters the scene — they’re responsible for formulating strategies, making sound decisions, implementing smart plans of action, and ensuring that each team member is always on the right track. 

How To Fortify Your Decision-Making Process

Here are some tips on how to strengthen your decision-making process:

• Determine the impact of your decision. Think about the possible outcomes of your decisions, and who will be greatly affected. Remember, bad decisions may sometimes be easily remedied, but if it affects a large number of people, salvaging the situation may become extremely overwhelming. 
• Weigh the pros and cons of your options. Before making your final choice, analyze the advantages and disadvantages of your available alternatives by making lists, brainstorming with your team, or studying forecasts closely. Generally, you’ll find that most alternatives entail risks, but it’s essential that these risks far outweigh the benefits they offer. 
• Take accountability for the outcomes of your decisions. You must take responsibility for the outcomes and repercussions of your decisions. This will compel you to be more mindful of the alternatives available and conscientious of the choices you make. 
• Learn from your mistakes. Humans are bound to make mistakes, and being a leader certainly doesn’t exempt you from this. Although making wrong decisions is inevitable, what’s important is that you acknowledge your faults, learn from them, and take concrete steps toward correcting them. 
• Avoid basing your decisions on emotions. Doing so results in irrational choices that you may very well regret later on. Avoid impulsiveness by stepping back, looking at the bigger picture, and waiting until you are calmer, more clear-headed, and more objective about the task at hand. 
• Share the responsibility. Rather than going solo when making decisions on all aspects of the business, why don’t you involve your team members in the decision-making process? As the saying goes, “Two heads are better than one,” and other people’s insights will make a huge difference in producing better quality, well-informed decisions for the organization. 

Final Thoughts

Effective decision-making is vital in the workplace because it can make or break an organization. Whether decisions are mundane choices or consequential moves, good leaders are pivotal in ensuring that the team stays on track and is always aligned with the company’s goals.
Sancus Leadership places a premium on leaders’ decision-making skills. Anyone can make decisions in the workplace, but we believe that only a competent leader can make those that can make a truly significant positive impact on the business. Book us a call today so we can get you on your way to further sharpening your decision-making skills!