Five Tips for Improving Employee Decision Making

Employees have a jillion different factors they might consider when making a decision. In reality, all decisions turn on two or three factors. Your challenge is to prepare your employees so that they will make the decision you would make if you were in their shoes at that time.

Factor #1: Information Availability

A research study showed that people almost always make the same decision as their manager when presented with the exact same information. The "so what" here is that frequently decisions are made differently than you might wish solely due to your employees not having full access to the information you do. (The study's design blocked out the next several factors.)

You must get the systems in place that gets necessary information to the decision makers. Leaving them in the dark is a sure fire way to create poor decisions.

Factor #2: Aligning Motivations and Incentives

The vast majority of employees have a common top priority: staying employed.

These employees' fear of losing their jobs frequently leads them to be severely risk averse. They will strive to make the "safest" decision thinking that you will not have any grounds for second-guessing the "safe" decision. As business is all about managed risk, the safest decision is often the wrong decision.

Some employees, typically younger confident ones, have career advancement as their top priority. Their assumption is that bigger paychecks will be tied to bigger responsibilities. These employees are the ones most apt to take ill-advised risks as they figure they can always get on with a competitor.

A+ employees are in it for the win. They thrive on helping drive a business to greater glory. Obviously, you'd like your company to be staffed exclusively with A+ employees.

That's not likely to happen anytime soon so you'd better figure out how to align the interest of the common employee with your personal interest - growing the bottom line.

Once you have figured out how to align interests and motivations by putting in place systems that will support the desired work behaviors, such as a well-designed bonus plan, you will have knocked down the second - and by far biggest - factor for improving employee decision making.

Factor #3: Coaching

Help your employees learn from their decision making mistakes. Help them learn from your old mistakes. Help them learn from others' mistakes.

When an employee makes a decision that you disagree with, work with them. Have them walk you through their decision process. Point out where and how you would have approached the decision differently. Point out the information they ignored or failed to access that they could have and should have.

Employees must be taught how to make the right decision. It's human nature to believe in one's decision making ability. I'd be willing to bet that you haven't met 10 people in your life who truly believed deep down inside they were a poor decision maker. It's an ego thing.

We all learn from doing and messing up. Experience is a great teacher. Pass your experience on to your employees. Teach them how you make decisions.

Factor #4: Removing Fear of Failure

Your employees need room to breathe. They need to know failure is somewhat expected. They need to know that they will not be fired for a poor decision - the first time anyway.

Repeat offenders deserve what they get. The ability to learn from mistakes is one of the most valuable characteristics of an employee. You must allow people to learn from their mistakes. It's the only way they are going to grow and become more valuable to you. You can't afford to hire proven and perfect employees. You would be at a severe cost disadvantage if you did.

Factor #5: Process

People have a terrible tendency of judging a decision by its outcome. That's a huge mistake.

So few people understand probabilities. All decisions have a chance of a poor outcome. Outcomes are always uncontrollable. A great outcome does not validate the decision.

That's like saying your child walking across a highway full of cars to get to the other side made a sound decision because he made it. No it wasn't.

Focus on the decision making process no matter what the outcome was. That means you need to periodically sit down with each of your key employees and have them explain how they arrived at various decisions they've made during the past week or two. This is extremely important to do with salesmen, estimators, superintendents and foremen.

A Quick Recap

  1. You need your employees to make the decisions you would if you were in their shoes.
  2. Make sure they have access to all the information they need to make a good decision.
  3. Align motivations and incentives.
  4. Coach them on how to make good decisions.
  5. Don't create an atmosphere of fear.
  6. Focus on the process, not the outcome.

If you manage to adhere to these six principles you will see a significant improvement in your employees' decision making and in your bottom line.

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