Imagine this: You’re a general manager for a manufacturing company and orders are up. You know you should be celebrating, but instead, you feel gut punched. Your plants are facing severe capacity and material constraints and you know you can’t fill these orders. Now you have to decide which ones to fill, which to delay, and which to turn away.
Your decision will favor winners and losers: desperate customers, angry sales reps, and frustrated factory employees. And, if you don’t get it right, your reputation with all of these stakeholders will take a serious hit.
Here’s another tough decision scenario: You were just told that you’ve been laid off. It’s not entirely surprising since your company — and the community you live in — has been struggling. Do you stay in your depressed community where your kids go to school? Or do you move to another state where jobs are more plentiful?
This decision is full of bad options and a good dose of uncertainty. If you move, you’ll incur expenses and may even lose any unemployment benefits you’re receiving. If you stay, you’ll be in the same boat as your neighbor who has been out of a job for two years.
Every leader has to make tough decisions that have consequences for their organizations, their reputation, and their career. The first step to making these decisions is understanding what makes them so hard. Alexander George, who studied presidential decision-making, pointed to two features:
- Uncertainty: Presidents never have the time or resources to fully understand all of the implications their decisions will have.
- “Value Complexity”: This is George’s term to explain that even the “best” decisions will harm some people and undermine values leaders would prefer to support.
The decisions that senior leaders, middle managers, frontline employees, and parents have to make often have the same features. Uncertainty and value complexity cause us to dither, delay, and defer, when we need to act.
What steps can leaders take to deal with these factors when making decisions?
Overcoming Uncertainty
Our initial reactions to uncertainty often get us deeper into trouble. Watch out for the following four pitfalls.
- Avoidance. It often feels like problems sneak up on us when, in reality, we’ve failed to recognize the emerging issue. Instead of dealing with problems when they begin to simmer, we avoid them — and even dismiss them — until they are at a full boil. For example, perhaps your plants have been running at near capacity for a while and there have been occasional hiccups in your supply chain. Instead of addressing these issues, you accept them as normal. Then, “suddenly,” you’re unable to fill orders.
- Fixation. When a problem presents itself, adrenaline floods our body and we often fixate on the immediate threat. In this fight or flight mode, we’re not able to think strategically. But focusing exclusively on the obvious short-term threat often means you miss the broader context and longer-term ramifications.
- Over-simplification. The fight-or-flight instinct also causes us to oversimplify the situation. We divide the world into “friends” and “foes” and see our options as “win” or “lose” or “option A” or “option B.” Making a successful decision often requires transcending simplifications and discovering new ways to solve the problem.
- Isolation. At first, we may think that, if we contain the problem, it’ll be easier to solve. For example, it may feel safer to hide the problem from your boss, peers, and customers while you figure out what to do. But as a result, you may wait too long before sounding the alarm. And, by then, you’re in too deep.
To avoid these pitfalls — or to get out of them once you’ve fallen into them — it’s best to take incremental steps forward without committing to a decision too quickly. Below are five things you can do to reduce uncertainty as you evaluate your options.
- Assess the situation. First, fairly consider and add up the risks of notacting. Seeing these costs will push you out of avoidance. Second, consider the pluses and minuses of your options. Walk through different scenarios to uncover hidden risks and discover new options. For example, if you’ve lost your job, then not acting carries unacceptable risks. Moving to a high-employment area might make sense, but it comes with costs. Make lists of the costs and benefits of moving and not moving.
- Don’t get stuck. Challenge any either/or assumptions you’ve made. Ask, “Can we do both?” and “What other options are available?” For example, can you focus your job search on a high-employment region without actually moving until you find a job? If you do find a job elsewhere, would it be possible to work remotely?
- Add others’ perspectives. Grab a lifeline. Don’t stew alone about the choices in front of you. Instead, talk to people you trust about the decision and your assessment. Chances are that, if you expand your circle, you’ll expand your options.
- Try a test run. Find a low-risk, small-scale way to test your options. For example, if you can’t fill all customers’ orders, can you test having a few sales reps call select customers to delay orders and see what the response is? Can you outsource a few critical orders to another manufacturer? Use these tests to reassess the costs and benefits of your different options.
- Take a step. Break a complex decision into simple steps. Determine the very next step you need to take and then take it. For example, the next step is not: “Move to Omaha.” Instead, it might be: “Call three recruiting firms in Omaha.”
Overcoming Value Complexity
When you know that your decision is going to negatively impact others — say hurt loyal customers or punish well-intentioned sales reps — watch out for the following missteps.
- Don’t downplay the damage. When you have to make tradeoffs, it’s tempting to ignore or underestimate the damage. While this may make you feel better about your decision, it usually adds insult to injury for the person on the receiving end. For example, if you decide to move, which means pulling your daughter out of her senior year in high school, it’s important to recognize the sacrifice she will make, not minimize it by trying to convince her it won’t be so bad.
- Avoid dehumanizing labels. It’s also easy to view your decision as picking winners and losers and then to disparage the “losers.” For example, if you decide to fulfill certain customers’ orders and delay others, you might try to make yourself feel better by saying that those who are getting delayed orders aren’t valued customer anyway because they don’t always pay on time or they order less. This may make it easier to stomach the harm you’ve caused but it compromises your values. Instead, recognize and honor the stakeholders who must bear the brunt of your decision.
Decision Making
When a decision will result in unwanted harm or force you to compromise your values, use the following approaches to reduce the damage.
- Make your intention clear. Be as clear as possible about your intention. Explain that you are in a bad situation where any decision you make will harm someone. You don’t wish negative consequences on anyone, but it’s impossible to avoid.
- Mitigate or compensate for the harm. Find ways to make the harmed people whole again. Give them preferential treatment in the future to restore a sense of fairness, or give them opportunities to make up for what they have lost. For example, if some of your salespeople will lose the commissions from the sales you need to cancel, still allow those cancelled sales to count toward their bonus.
- Minimize the maximum harm. Humans tend to catastrophize and, when presented with bad news, imagine and obsess over whatever those worst-case possibilities might be. If you can anticipate these worst-case scenarios, and take them off the table — honestly guarantee they will never happen — you can help to quell fears.
- Recognize sacrifices. When your decisions result in harm for some, frame the harm as a sacrifice they’re making for the greater good. Their willingness to “take one for the team” should count in their favor. Do your best to turn them into heroes.
Decisions — whether they’re about your business or your career — are often complex, and given the rate of change in the world, are getting more so. However, if you explicitly recognize the role that uncertainty and value complexity play in making these decisions difficult, you can take steps to ensure you’re making the best choices with the information you have — and you can help those affected by your decisions better accept the consequences.
