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Tuesday, December 28, 2010

Improve Decision Making Effectiveness


Last month, Armanino sponsored the CFO Rising conference hosted by CFO Magazine in Las Vegas. One interesting session at the conference was presented by Michael Mankins of Bain & Company on how to improve decision-making effectiveness within your organization.

The premise was that the better a company is at decision-making, the higher its revenue growth, shareholder value and employee engagement. The talk focused on how to build an organization that makes great decisions. Mankins described five steps to achieving this goal:

1. Assess your decision-making effectiveness and organizational health. Look at good and bad decisions and identify their root causes.

2. Identify critical decisions made within your company. There are two types that matter: small decisions that are made frequently (pricing, special offers, customer service levels, quality checks), and big decisions that are made infrequently but have a large impact (M&A, new market entry, product launches, divestitures, capital programs).

3. Set up each individual decision for success. Define what decision you are trying to make – break it down into smaller decisions if necessary. Determine who will play each role – giving input, recommending, deciding, agreeing and executing.

4. Align the organization to support decision-making. For example, providing clarity on priorities and data for key measures.

5. Embed decision-making capabilities and sustain results. This can be done through training on the decision processes, tracking results, and continuous improvement.

This session was a good reminder to take time to consider a few things when asking a team or individual to make an important decision. Ask yourself:

  • Have I correctly identified the decision to be made?
  • Have I made clear the role each person is to play?
  • Have I clarified how and when the decision should be made?
  • Have I provided the resources and knowledge the team needs to execute?

This quick process will put the team or individual in the best possible position to make a great decision. In addition to it being a good management practice, the bottom line is that better decisions produce better business results.

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