Decision Making for Organizational Sustainability : HR Vista

Mukesh Mihir, IOCL

mihirm@indianoil.in

In the current volatile, uncertain, complex and ambiguous socio-economic environment, organizational sustainability is the need of the hour. Though the organizational life cycle follows a typical path, every organization cannot survive forever. Very few organizations in this world maintain their continual growth. Decisions taken by the team from time to time make the difference. There are many myths about right or wrong decisions. But the truth is far away from the discussions and general opinion. There is a need to understand the importance of decision-making to get the organization going with its continual growth without affecting future generations. This article talks about decision-making in organizations for their sustainability. It also talks about the myth prevailing about it, where people are either unable to make decisions or leave it to others as a strategy.

Introduction:

The concept of product life cycle is widely taught and discussed in managerial books. (Fig-1) Similar is the organizational life cycle, where growth is impacted after achieving the maturity stage by declining and then re-invention / diversification is required to revive continual growth. However, in the whole lifecycle, decision plays a vital role.
As discussed in various forums earlier, when the organization reaches its maturity stage, there is a need to make decisions for diversification for re-inventing business or harvesting as a choice. There are various financial theories and concepts for making such decisions.

In fact, at every stage, right from Concept creation and development to Market development and business optimization, we must make a choice out of available options.

Fig-1
[Source: pinterest.com]

From beginning to end, i.e., from concept and design to the harvesting stage, we need to make various decisions. These strategic decisions may be of a short-term nature or for a long-term result. The typical decision tree is deciding the estimated path. But, while endeavouring the predefined path, we need to take many steps which are undefined. The environmental conditions can’t be predicted in toto. Thus, decision-making becomes a crucial and critical turning point in the life cycle of an organization.
It is often found these days that people are not ready to make decisions on their own. They are either in a dilemma or pass this responsibility to others to make it. The reasons could be many. People in organizations are required to be trained and developed to make decisions at the right time.

No decision is right or wrong. What we need to do is to make another decision based on the earlier decisions taken in the past. Of course, the knowledge and updates about the environment make it easier to choose a path.

Is decision-making a competence?

HR-Survey > Competency Model defines Competence in decision-making as the ability to confidently and decisively decide on a course of action after critically analysing information, parameters and constraints. Informed decisions come from gathering information and viewing the choices from different perspectives. High-quality decision-making requires flexibility and openness as well as a careful evaluation of the costs and benefits.

What are the steps involved in the decision-making process? (Fig-2)

Fig-2
[Source: https://www.umassd.edu/fycm/decision-making/process/]

In general, the following seven steps are required to make a decision:

Identify the decision that needs to be made
Gather relevant information
Identify alternative solutions
Weigh the evidence
Choose among the alternatives
Take action
Review your decision and its impact (both good and bad)

It is easy to follow the steps. Nevertheless, decisions are either kept pending or passed on to the next person in today’s working environment. What could be the cause of this situation? Here comes the competence which is required. Decisions need courage, attitude, ability and intention to move ahead.

If we understand the fact that no decision is right or wrong. There might be a better option or choices we have while moving ahead. What we need is to follow the steps mentioned above and then act with the consequences we face. That simply means we must keep on making decisions with the changing environment. The most important thing is to move ahead.

Various Decision-Making Models:

Rational decision-making models – This type of decision-making model is the most common type that you’ll see. It’s logical and sequential. The seven steps listed above are an example of the rational decision-making model.

When your decision has a big impact on your team, and you need to maximize outcomes, this is the type of decision-making process you should use. It requires you to consider a wide range of viewpoints with little bias so you can make the best decision possible.

Intuitive decision-making models – This type of decision-making model is dictated not by information or data but by gut instincts. This form of decision-making requires previous experience and pattern recognition to form strong instincts.

This type of decision-making is often made by decision-makers who have a lot of experience with similar kinds of problems. They have already had proven success with the solution they’re looking to implement.

Creative decision-making model – The creative decision-making model involves collecting information and insights about a problem and coming up with potential ideas for a solution, like the rational decision-making model.

The difference here is that instead of identifying the pros and cons of each alternative, the decision maker enters a period in which they try not to actively think about the solution at all. The goal is to have their subconscious take over and lead them to the right decision, like the intuitive decision-making model.

Decision-making tool with AI – Tracking key decisions can be challenging when not documented correctly. Artificial Intelligence can be also used as a tool which can help us track key decisions, collaborate with teammates, and stay on top of progress all in one place.

What is Sustainability?

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (Fig-3)

Fig-3
[Source: International Union for the Conservation of Nature]

For an organization to sustain the VUCA (Volatile, Uncertain, Complex and Ambiguous) environment, the goals are to be set in such a way that all the three aspects are covered in a balanced way. The organization not only should have a financial goal, but it should also develop a culture to develop its people for future needs, and it should also run in a way that the environment is protected.

Why is decision-making so important for sustainability?

With the change in economic and social environment, organizational goals and objectives require changes. However, corporate growth needs to be maintained. There are many factors we need to consider with change in the environment. Unless our environment is safe, we, as an organization, can’t survive. For sustainability, our decisions need to be viable, bearable and equitable. Balance is the key factor.

Discussions and outcomes:

Many people believe in the phenomenon that if the situation is ambiguous, let it be solved on its own. Is that the right approach in the corporate world? There are examples where this kind of approach leads to a disaster, and the organization could not survive. Diversification is the answer to the maturity stage for a change in market conditions.

Another approach is to delay the decision for the sake of favourable conditions to come. This also is not the right approach. We can lose a big volume and market share, which may lead to a big financial loss for the organization. This way, we are giving the opportunity to the competitors, especially the start-ups, to come up and make a dent in our market share.

Sometimes, the successor blames the predecessor for the current situation, as if the wrong decisions were taken in the past. But the fact is that the successor is unable to execute the plan according to the decisions taken earlier. Or the situation has changed, and new decisions are required to be taken in time. The concept of Change Management plays a vital role over there.

A choice by one person may be different from another in the same situation, depending on his or her perception, knowledge, experience, and capability to resist external and internal influence.

It is often found that team leaders depend on their superiors for making decisions in an ambiguous situation. The superiors may not be aware of the ground-level details, so the decision taken by them, if at all, maybe at a gross level. This may not be the best choice for that situation at a lower level.

Similarly, policies made in general are interpreted by the field force at their own convenience sometimes. It’s an ambiguous and complex situation at the field level, so a decision is required by the team in that very situation.

Conclusion with a few tips:

Leadership is incomplete without decision-making competence.
We must select the best options available to move ahead.
No decision is right or wrong. It depends on the situation and availability of resources at a particular moment.
If you do not make a decision, nature will take its own, and then you will have to face the consequences.
The decision has a cascading effect. Every decision-making situation is a consequence of a decision taken in the past. So, will this decision work for the future?
Sustainability is the goal which can be achieved by continuous change and updating the system.
A balance between economic, social and environmental can only lead to organizational sustainability.

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