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Steps to Effective Decision-Making in Organizations

Steps to Effective Decision-Making in Organizations

by Chris Musser and Dipak Sundaram

Story Highlights

  • 24% of U.S. managers strongly agree their peers make well-thought-out decisions
  • Decision-making is at the core of organizational effectiveness
  • Consider all dimensions -- sequence, organization level and complexity

Think about the last big decision your team or organization made. Do you know what drove it? Are you happy with how it was made?

If you are like most people, your answer is "no" to both questions. In fact, only one in four (24%) U.S. managers strongly agree that their peers make well-thought-out decisions for their organization. Even fewer managers (14%) strongly agree they are satisfied with the speed of decision-making at their organization.

One thing is clear: most organizational decision-making is not working.

Why? Because most models of organizational decision-making are either too simplistic, too narrow or both. They focus, for example, on improving (or eliminating) processes, on avoiding cognitive biases, or on using data to drive decisions. They often provide good tips, but they fail to consider a holistic view of the organization.

Decision-making is at the core of organizational effectiveness.

Taken together, these 12 holistic steps of effective organizational decision-making provide a helpful framework for enhancing decision-making across all relevant dimensions.


1. Understand the purpose and nature of the required decision(s).

2. Use relevant and available data and inputs.

3. Involve the right people at the right times.


4. Establish and adhere to pertinent decision-making procedures.

5. Clarify roles and responsibilities of all decision-making participants.

6. Foster an environment that encourages participants to share opinions and embrace healthy debate.

7. Ensure decision(s) made aligns with organizational purpose, culture and values.

8. Develop a plan of action.

9. Forecast the likely impact of the decision(s) and plan for contingencies.


10. Communicate the decision(s) to the right audiences.

11. Ensure follow-through.

12. Apply lessons learned to future decisions.

These are not quick tips. They are not simple, and they are not easy to "get right." In fact, many of these steps are quite complex and nuanced. But, then again, so is decision-making.

Some of these steps can be acted on by individuals, while others can only be addressed at a team level or even at an organizational level. They range across a company's operating model: people, processes and structures. Indeed, decision-making is at the core of organizational effectiveness.

The 3 Primary Dimensions of Decision-Making in the Workplace

Each of these steps should be examined to gain a comprehensive view of the state of your organization's decision-making.

Because they are holistic in nature, the 12 steps vary across three primary dimensions:

1. Sequence: As the list above makes clear, each of the 12 steps fits within one of three buckets:

  • laying the foundation for good decisions
  • development of the decision itself
  • realization of the outcomes of the decision

The steps in the first and third category should be viewed as temporally sequential (e.g., for a particular decision, it is important to understand the purpose of the decision before using available data).

In contrast, the actions in the second bucket are complex and interconnected. For example, one cannot foster a certain environment when the time comes to make a decision. Nor should processes be created ad hoc. Following procedures and leveraging a certain culture during a decision depend on having first established those procedures and created that certain culture. Leaders must discern which of these actions to focus on outside of the context of a specific decision.

2. Level of the organization: Different decision-making levers can be pulled at different levels of the organization and with different levels of effort. For example, certain companywide decision-making procedures may require full C-Suite buy-in, whereas bringing the right people to the table can be done at a divisional or team level. The best leaders can zoom out to look at these steps holistically, then zoom in to transform them.

3. Complexity: Some of these actions are intrinsically very difficult, while others are relatively straightforward. For example, fostering an environment conducive to debate is far more complex than creating procedures that will optimize the exchange of ideas in a room. Leaders and managers must decide which to tackle based on the most relevant idiosyncratic organizational factors.

Leaders and managers who focus on these 12 steps will find that they can increasingly answer "yes" to the questions posed at the start of this article. They will understand the factors that go into their decisions and will be happier with how decisions are made.

Increase confidence in your organization's decision-making:

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