Decisions can fuel success or stymie an organization in a dynamic business world. If you’re a manager or leader, chances are that those decisions lie squarely on your shoulders. As the saying goes, “It’s a tough job, but someone’s gotta do it.”

Day-to-day decisions are integral to streamlined workflows and happier staff, but executive decision making is a much more complex beast. Tough decisions can’t rely solely on instinct. To make better decisions, managers, leaders, and executives must depend on shared information, metrics, multiple perspectives, and whether the decision aligns with the company's mission and values.

The ability to make informed decisions isn’t innate for most people. Instead, they use decision-making framework to bring them to the best solution to a problem or the direction of the company. Through executive decision making, leaders can remain poised in times of crisis, make good decisions based on all available information, and ultimately, feel confident about their choice.

What Is Executive Decision Making?

Executive decision making is the process a key decision-maker uses to make a reasonable and strategic decision within a company. The process can deal with operational, tactical, structural, or expansion-based solutions that solve a problem and provide a solution.

Though decision-making techniques can vary based on the industry or individual, executive decision making typically follows these steps:

1. Identify and understand the problem.
2. Summarize the problem.
3. Question the source of the issue.
4. Gather all relevant information from the right people and reputable sources.
5. Align the decision with the company’s goals, mission, values, and vision.
6. Weigh the pros/cons and possible outcomes of a decision.
7. Take action based on the information received.
8. Commit to the decision.

By following this framework, executives can make a decision that positively impacts the business and puts its operations, profitability, shareholders/stakeholders, and goals at the forefront.

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The Difference Between Executive Decision Making and Daily Decision Making

An importance distinction regarding executive decision making is that it’s different from day-to-day decision making. Though important, they don’t guide the overall direction of a company. Executive decision making encompasses major events that can impact the expansion/contraction, profitability, and direction of an organization.

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Some types of decisions made by senior leaders or senior executives through executive decision making may include:

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• Acquisitions and mergers
• Restructuring and layoffs
• Expansion to other products or markets
• Major changes in business units or departments
• Extensive projects
• Selecting company-wide benefits such as retirement, perks/stipends, and healthcare plans
• Profitability vs. ethical questions

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Executives tend to make these important decisions based on their expertise, experience, and leadership development over time. In most cases, it’s part of the job description and role itself.

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Daily decision making generally focuses on operational decisions. They have less impact on the business as an entity but still require an effective decision — albeit on a smaller scale than executive decisions. Some examples of day-to-day decisions may include:

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• Ordering more inventory
• Delegating tasks
• Handling conflicts between workers
• Providing employee feedback and evaluations
• Scheduling activities for team members
• Customer relationship management
• Setting goals for specific departments
• Setting departmental budgets

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Again, day-to-day decisions are integral to business success, but they’re not necessarily part of the company’s vision or commitment to stakeholders. As a result, they rarely need an executive director or CEO, negating the need for an all-encompassing approach like that of executive decision making.

The 4 Types of Executive Decision Making

Management and leadership styles evolve with circumstance and experience. But according to a study from the Harvard Business Review (HBR), four distinct executive decision-making types exist based on the amount of information needed to make a choice and the focus of the decision.

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The decision can have either a singular focus (a more iron-fist approach) or multifocus (which lends itself to adaptability and lists of possible solutions). Neither is particularly wrong — each decision will have its own set of specific circumstances.

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Through the information you have and your focus, you have four decision-making options:

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• Decisive (single focus and little information needed): Decisive executive decision making requires little information; oftentimes, it’s when instant action is needed. Most executives don’t require the advice of others, tending to trust their instincts to decide.
• Hierarchic (single focus and lots of information needed): Hierarchic decision making uses all data available to come to a choice, so these are often useful when speed isn’t necessarily essential. However, the single focus means that the executive ultimately makes the decision without much input or interference from other team members.
• Flexible (multifocus and little information needed): Synonymous with a more social, interactive, and responsive approach, flexible executive decision making adopts numerous solutions to a problem. Once an exec makes a decision, they can always pivot to another satisfactory option — provided it meets their values and agenda.
• Integrative (multifocus and lots of information needed): Integrative leaders use lots of data and multiple options to decide on a course of action. Choices made in this style are multifaceted and allow the decision-maker to adopt other solutions when necessary, as well as sourcing all available raw data and resources.

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These decision-making styles aren’t always cut-and-dried. Leaders can use multiple approaches or change their style based on many factors and scenarios — whether they’re a seasoned veteran looking for a new approach or a first-time executive.

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There’s no single way to approach the decision-making process. Trial-and-error, self-reflection, and genuine analysis of the problem using the steps listed above become crucial, but with due diligence, you can come to a solid conclusion and decision.

Ways To Improve Your Executive Decision-Making Skills

High-quality decisions require a roadmap and style to achieve success. While following the steps outlined above can guide you, several proven methods can help you even more. Integrate these tips with the styles and executive decision-making process to make better, smoother, and faster decisions for the betterment of the organization.

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Involve Important Parties in the Process

Although decisive decisions typically don’t require outside input, the other styles require the professional and personal input of others. Think of it as another way to gather insight and data outside of figures and statistics.

Consulting other people within your organization has some key benefits:

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• Ensuring that your decision fits with the plans of others
• Getting others to buy into your choice
• Learning about any current problems that could influence your choice or potential problems with the decision you make
• Gaining perspective and gathering information on processes or problems you weren’t aware of

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Beyond aiding you in the executive decision-making process, outside perspective acts as a way to foster trust and engagement among your staff — two bonuses that can reap benefits in the present and future.

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Avoid Cognitive Biases

Cognitive biases are subconscious feelings that impact your decision. Unjust and typically unfounded, they result from past experiences, assumptions, and social norms — and they’re a major hurdle in executive decision making.

To overcome cognitive bias, you need to accept that you have them no matter what. Identifying and accepting this fact helps you become more aware of your own. Once you’ve figured out potential biases, use the advice of others in decision-making and avoid a black-and-white outlook. Different decisions require various perspectives. Putting on blinders can hinder the entire process, come off as self-serving to others, and cheapen your overall decision-making.

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Use Your Core Values To Guide You

When you enter the executive decision-making process, you may not consider your values. It’s a perfectly normal thought. But by including the core values of the company and your personal values, the process becomes that much better.

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When you align your choice with the values of the company, you’re leading by example. This fosters trust and transparency while also building a company culture based on accountability.

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Trust Your Mind and Gut

Data and others’ input can take you to the precipice of a great decision, but how you interpret it is also important. Analytics and statistics are ideal for some decisions but don’t forget to trust your instincts and mind simultaneously.

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When you have a gut reaction to a decision, it’s not always perfect. But coupled with data, it becomes a force. Strike a balance between the two, and you should come to an insightful conclusion.

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Assess Your Final Decision

Poor decisions aren’t necessarily the result of omissions and carelessness. Even high-level executives can miss the mark at times. Committing to your choice is essential to move your vision forward, but don’t be afraid to assess your decision later.

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To some degree, you’re making the best choice at a given time, but that doesn’t mean it won’t change later. Assess after an established timeline — be it quarterly or annually — and adjust your plans accordingly. This may mean using the executive decision-making process once again, but it will propel you to the best options — even if they change over time.

How Leadership Development Leads to Better Executive Decision Making

Executive decision making isn’t for the faint of heart. It can guide an entire company for better or worse, and you’re the person who owns it whether others think it’s the right decision or not.

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But being a successful decision-maker goes beyond making a choice. It’s how you use your leadership skills, trust others, and understand your impact on the organization that’s integral to your success.

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That’s why leadership development is vital to any business leader. High-performing execs build high-performing teams to scale while handling the decisions that spell glory or failure. Without leadership development, you’re spinning your wheels.

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With Unicorn Labs, you get the instruction, coaching, and insight to tackle executive decision making and other important aspects of the business. Leaders aren’t born overnight; they’re created through experience and learning. You may be able to make crucial decisions, but more knowledge never crippled the process.

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