decision making

Daniel Kahneman’s Thinking, Fast and Slow provides valuable insight into understanding how the human brain's analytical systems impact decision-making. The book provides a dual system thinking theory, explaining that when someone is faced with a decision, they will utilize one of two systems, called system 1 or 2 thinking. 

Strong decision-making skills are crucial for managers' success. Leaders are constantly faced with decisions that heavily impact the lives of others. Managers' decisions affect team morale, culture, and efficiency so mindfulness in making these decisions is crucial to team success and longevity.  Layoffs, raises, promotions, client placements, and strategies are all decisions that leaders face on behalf of their direct reports. To best keep serving teams and executives, it is paramount for leaders to be deliberate in their decision-making. 

Managers may employ a variety of decision-making tactics so to mitigate bias in decision-making, every leader should be conscious of how they utilize system one or system two thinking. 

System one thinking is immediate. This system is essentially automatic and is initiated by the surrounding environment and habits. System one thinking is dangerous because it is subconscious and can sincerely affect decision-making processes in all people. System one thinking enables unconscious bias to influence choices. These biases are problematic because the individual is unaware of the bias that impacts their decisions. Unconscious bias can appear in all individuals and is extremely hard to detect and reverse. 

System two is critical thinking. System 2 thinking is intentional and engages the brain in analyzing every aspect and result of decisions. System 2 thinking is usually initiated by a fight or flight type response. When the brain is unfamiliar with the circumstance, system two thinking kicks in to analyze and understand aspects the brain doesn’t realize in system one thinking. 

To minimize bias and prioritize system two thinking, managers can employ a variety of strategies to challenge their perspectives and beliefs. For managers to foster a positive team culture, they must encourage open dialogue, learning, and psychological safety. Being mindful of individuals' cognitive processes, biases and experiences will enhance decision-makers' tendencies away from system 1 thinking.  To better utilize system two thinking, managers should consider finding new opportunities for mentorship or collaboration that will broaden their understanding and perspective. 

A critical opportunity for leaders to learn from others' experiences is mentorship programs. Mentorship programs have benefits for individuals at all levels within an organizational hierarchy. Every member can benefit from mentorship but, finding mentors for executives can be challenging.  Ambition in Motions Horizontal Mentorship Program is an opportunity for executives of different industries and experiences to collaborate and create a productive learning environment. Opening new opportunities to grow and learn in a dynamic environment catered to specific problems faced in the workplace makes horizontal mentorship a great tool to initiate system two thinking and encourage learning from others. 

In the workplace, situations depending on system one or system two thinking heavily impact the outcome of decisions. For example, consider Sarah. Sarah is a manager at a small consulting firm and is responsible for 15 direct reports working underneath her. In a quarterly meeting with her boss, Sarah learned she has to lay off 20% of her staff, 3 members. Sarah is faced with a tough decision to make. 

If Sarah depended on her system one thinking, she would not critically evaluate her employees' performance. System one thinking promotes irrational decision-making and emotionally driven reasoning. If Sarah utilized system one thinking, she would likely lay off employees with whom she had issues or problems within the last couple of weeks rather than evaluating long-term commitment and performance. Or, using system one thinking, Sarah may lay off an individual who she had an argument with or faced a conflict while working on a client project. 

On the other hand, if Sarah critically evaluates options for this decision, she will be more apt to conduct the layoffs with consistent reasoning and explanation. System two thinking forces decision-makers brains to be engaged in the process of finding an evidence-based solution. If Sarah engages her system two thinking, she will be basing her decision on quantitative data or, factors such as efficiency or long-term performance, goal setting, and achievements. 

To collect quantitative data useful in system two decision makers, leaders should consider utilizing AIM Insights. AIM Insights is a software that provides continuous goal and progress reports to both managers and their teams. Members can see personal and team goals, sincerely impacting performance and lifting expectations. Additionally, AIM Insights provides tools for attainable goal-setting that are accessible to both managers and direct reports, with benchmarking and gap analysis available, creating transparency in performance, expectation, and growth. Through the use of software such as AIM Insights, managers have readily available data to find evidence-based solutions to problems they face in their roles. 

However, a pivotal benefit of AIM Insights is executive coaching. Executive coaching provides leaders with a personal connection to aid in goal setting and analyzing AIM Insight metrics. These experienced industry professionals provide guidance and consistently analyze results and metrics through a system-two lens. From the removal of personal connections with direct reports, executive coaches gain emotional distance and are able to objectively evaluate the performance of members, aiding in data-driven decision-making. 

Overall, it is crucial for all individuals, and especially leaders to engage their system's two thinking processes. Understanding the differences in automatic and critical thinking provides valuable insights into decision-making habits and how information is processed. By recognizing the best settings for each of the thinking models, leaders are enabled to enhance decision-making skills and efficiency along with mitigating bias. Embracing the dual-system thinking model will unlock potential and encourage mindfulness in decision-making across roles. 

Managers are often encouraged to listen and collaborate during decision-making, but sometimes, this democratic leadership style isn’t the most effective approach. While inclusivity and participation can empower employees, certain decisions require managers to be more direct. Understanding the balance between executive authority and team involvement can transform a slow, confused organization into an efficient and motivated one. 

A company’s vision is the purpose and direction of a company, which should largely be shaped by executive leadership. Long-term goals set the path for the organization and require a high-level understanding of the environment in which the organization operates, including markets, competitors, and brand identity. While gathering input from various department heads may provide valuable insights, the ultimate decision should fall within the scope of executives. 

Vision setting and other large-scale corporate decisions are not situations well suited for a democratic process. Working to incorporate too many opinions can dilute focus and prevent decisive action. It is the responsibility of leadership to guide the organization toward a strong, cohesive future, even if decisions aren’t popular in the short term. 

With all this being said, managers should still gather feedback. Successful leaders consistently gather data from employees, not to vote on strategies, but to inform them. Surveys, one-on-one conversations, and management insight tools can support leaders in gathering information from their workforce. 

While strategic decisions may require top-down leadership, day-to-day decisions often benefit from a democratic approach. Processes that affect how employees do their work, such as communication channels or workflow tools, are great opportunities for collaborative decision-making. 

When employees are involved in decisions that directly impact them, they are more likely to feel empowered and valued within the organization. Consequently, this can improve retention, morale, and overall productivity. Conversely, top-down decisions about operations can lead to frustration and inefficiency if they don’t reflect the needs of the workers these decisions are impacting. 

Consider a team that is told to adopt a new communication software. An executive decision might prioritize cost without considering the ways in which workers actually utilize their communication channels. However, if the team is involved in a trial period or able to provide their input to select a communication software, there will be better adoption and reinforcement of a culture of trust. 

To decide if a decision should involve democratic input, weigh the potential benefits and drawbacks of involving employees in each scenario. Here are some things for managers to consider when weighing the pros and cons: 

Using some of these points of consideration, managers can weigh the stakes and evaluate the context to better inform their decision-making approach. When making decisions, managers may struggle to communicate with their employees about how and why a decision was made. These are some tips that managers can use when implementing a decision-making process. 

Utilizing democratic decision-making styles is not suitable for every situation. Managers should consider the context of a decision and weigh the benefits and drawbacks of leveraging a more collaborative approach. The key for managers is to find a balance that allows for efficient and aligned with the company’s larger mission. 

A well-functioning organization uses more directive leadership when supporting the company’s vision, but gives a voice to employees when decisions relate to day-to-day operations. Managers who understand the difference between leadership and collaboration create more effective organizations.