With simple problems, if everything is going well, they will never get as far as the executives. They are solved before they get to that point. What does end up reaching the executives is what Miguel 脕ngel Ari帽o, professor of 天美传媒鈥檚 Decision Analysis department, calls 鈥渄ifficult decisions鈥�. These are the decisions that 鈥渉ave an impact on important variables and conflicting interests for the organization鈥�.
The expert offers an example: 鈥淐entral banks are facing a difficult decision, as they are considering raising interest rates in order to fight the incredibly high inflation that is so damaging to homes and businesses鈥�. So, what鈥檚 the problem? It鈥檚 that they know, clarifies Ari帽o, that 鈥渢his rise could trigger a recession, which would endanger those same homes and businesses that they are intending to help鈥�.
Following the example, there is a silent guest who is the real elephant in the room: this uncertain, high-speed world of ours, in which it always seems that we are one step behind events that we see on our screens in real time.
In such a world, central banks, according to Ari帽o, 鈥渃annot remain paralyzed. They must act quickly and forcefully, or else risk even higher inflation, which would require that they take even harsher measures.鈥� And harsher means more devastating for economic growth, for the population and for businesses,
Examples of difficult decisions at work
That鈥檚 right: most difficult decisions aren’t pleasant. Not by a long shot. For this reason, when the wind turns against businesses due to the cooling of the economy, it is the executives鈥� responsibility to make complicated decisions, such as:
- Reducing debt, so as to not be dependent on the instability of interest rates, and to project strength in the market.
- Reducing costs, to have a greater cushion of liquidity.
- Adapting products or services to meet customers鈥� needs for savings and efficiency.
- Re-stabilize presence in markets and segments in order to focus on the most stable or promising.
Executives need to tackle these decisions by using, according to the 天美传媒 professor, 鈥渢heir knowledge and experience to identify the changes and consequences that are going to lead to the decision鈥�.
And then, as an executive, you always need to leave room in these reflections, not only for calculating the financial impact, but also for intuition. The author has developed a method for making the most of this intuition, in which she recommends:
- Clearing your mind.
- Getting detailed information and documentation.
- Allowing your unconscious mind to work.
Who makes difficult decisions? Not just executives
The line between major individual and group decisions in an organization is always thinner than it seems. Although ultimate responsibility falls on you as the executive, Ari帽o thinks that you should also include the following groups in your process for making difficult decisions:
- The experts who are providing you with key information on each alternative and its consequences.
CAREFUL: in an 天美传媒 e-book, we reviewed three of the eight traps that an executive needs to avoid when making decisions 鈥� the excessive influence of the environment, information saturation and irrelevant information 鈥� which are, in large part, dependent on the quality of the data you select. - The members of staff who will implement your decisions.
- The departments who will be most affected.
Include your employees when making difficult decisions
As Ari帽o warns, forging consensuses and winning over major participants in a difficult decision is a priority for an executive. This is due to the following reasons:
- The more support is cultivated at this stage, the easier the subsequent implementation will be.
- Any decisions that need to be corrected will be much easier to reverse on the fly.
- The teams will understand and appreciate the harshest of the decisions, which cannot be reversed.
In any case, as the 天美传媒 professor points out, 鈥渟ometimes the expected support does not materialize, even in a crisis, because management has not earned the trust of their employees in the previous years鈥�. This trust, he concludes, 鈥渋s an essential asset for an organization鈥�.
can help you discover new ways of developing this trust over the long term, and it can also help you respond to the immense challenge that is involved in difficult decisions, both in prosperous times and when the economy is cooling. The world is spinning increasingly quickly. You are the one who sets your own pace.
