Leadership

Hurdles to Decision Making Leaders Need to Jump

By / Feb 8, 2016 (iStock/Thinkstock)

A new study from two accounting associations looked at the biggest obstacles in the executive-level decision-making process and how to avoid them.

A lack of integrated thinking and information overload are some of the biggest challenges to executive decision making, according to a new study [PDF] from the Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA).

Almost three quarters of organizations say they’ve had an initiative fail because of decision-making flaws. The report has narrowed down the biggest causes to an overabundance of data, silos-style thinking, a lack of collaboration, and mismanaged incentive structures.

Ash Noah, vice president of Chartered Global Management Accountant external relations at AICPA, said many of the challenges inhibiting informed decision making are due to a lack of workplace integration. Often decision-making processes focus on single departments or functions instead of encompassing organization-wide objectives, causing executives to ignore how decisions will affect the entire organization.

Using this same disjointed line of thinking, executives also come to problematic decisions if they do not balance short-, medium-, and long-term solutions. While filling one need, decisions could end up negatively affecting overall goals at a different point in time in this case, Noah said.

“Leaders need to think in an integrated way,” CIMA CEO Charles Tilley said in a statement. “This means having a clear and defined business model and relating all decisions back to it; quickly gathering and analyzing all relevant information from all parts of the business; and focusing on key performance indicators rather than gut instinct or hearsay.”

In addition, while big data can certainly help organizations make more informed decisions, it can also be a hindrance if used incorrectly.

Successful organizations properly harness and analyze their data, Noah said. “The organizations that are successful and the ones that we see have that integrated approach and integrated thinking, they’re actually using data to ask the questions because the data is generating questions that need to be addressed.”

The survey found 36 percent of organizations are not coping with information overload. In fact, 32 percent said big data has actually made the situation worse. However, since 37 percent said data has helped, it’s a not a warning against big data, but rather against the misuse of data or gathering of irrelevant data.

To avoid these obstacles, the report showed that leaders should actively share information across departments, encourage interdepartmental collaboration and discussion, and balance short- and long-term needs.

“When you are able to have that integrated thinking, which leads to integrated strategy which leads to integrated execution, that’s when it won’t be an issue of data, it won’t be an issue of collaboration,” Noah said.

Alex Beall

Alex Beall is an associate editor for Associations Now with a masters in journalism and a penchant for Instagram. More »

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