Decisions, Decisions

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Decisions, Decisions

By Pan Demetrakakes - 07/10/2015

The phrase "decision fatigue" recently entered the psychological lexicon. Confirmed by numerous observations and experiments, on subjects ranging from mall shoppers to parole board members, it details what most of us know intuitively: Making decisions is one of the hardest mental tasks there is.

If there's any job where decision fatigue is an occupational hazard, it's CEO.

The decisions that a CEO has to make are, almost by definition, the hardest, most visible and most consequential in the company; the easier ones usually get taken care of at lower levels. Even the process of making a decision involves a series of decisions: How much time do I have to make the decision? What data do I need? How much input and feedback should I solicit? And, from whom?

It can all be uncertain, which is why probably the most important trait an effective CEO needs is self-confidence.

"People who have a higher level of confidence, what's typically called 'adjustment' in the personality literature, are more likely to make decisions because they feel confident about their ability to make those decisions," says Bill Berman, managing director of Berman Development, an executive coaching and consulting firm. "They tend to see their history in positive light, they tend to be more optimistic people, and so they're going to make choices because they believe that the choices they make tend to work out properly–whether or not that's true in fact."

Chuck Presbury of Presbury & Associates, another executive coach, agrees. Ambition and competitiveness are part of it, but self-confidence underlies all: "You've got to believe either in your decision-making ability or your ability to find a good answer."


Beyond self-confidence, a decisive CEO needs certain other personality traits. One of these, according to Melanie Kusin, vice chairman with executive recruiter Korn Ferry, is "learning agility," which she defines as the ability to improve one's own skill sets by adaption, as needed.

"Learning agility means you can take your combined life and career experience and drop into a new situation and adapt it to what the circumstances require in the new situation," Kusin says.

Personality traits may themselves require adaptation as the situation requires. In a report, "The Power of Business Chemistry," Kim Christfort, national director for Deloitte's Leadership Center for Clients, identifies four distinct business personality types:

  • Drivers are analytical, prefer experimentation over theorization, and aren't into small talk;
  • Pioneers are blue-sky types who like exploring possibilities and redefining the status quo more than structure and details;
  • Integrators are empathetic and take time to consider multiple opinions before making a decision;
  • Guardians prefer concrete reality, like to minimize risk and often deliberate thoroughly before a decision.

Christfort's paper dealt with CFOs, but in a response to Retail Leader, she said that these characteristics are potentially useful to CEOs as well. Different approaches would be appropriate in different business situations.

"A company that needs to effect a massive transformation and follow a bold new vision might benefit from Pioneer characteristics, a company that's highly creative might need Guardian characteristics to help keep it on track, a company that's facing rapid growth and disruption that needs to make tough decisions and execute quickly might benefit from Driver characteristics, and a company that's trying to appeal to new customer segments might need Integrator characteristics to help it relate," she says.

"A company that's trying to appeal to new customer segments might need Integrator characteristics to help it relate."



Surrounding yourself with the right kind of leaders, and drawing on their opinions as needed, is one of the trickiest aspects of decision-making. Most major decisions will require some kind of feedback.

"The perception of personal responsibility is understandable, since it is the individual leader who puts a face on the decision," says Robert Cardy, a professor of business at the University of Texas at San Antonio. "However, the underlying reality in many organizations is that the leader doesn't unilaterally make the decision in a vacuum."

Collaboration can often be the best way to ensure that a decision, especially a complex one, is made in the most rational possible way, says Ken Brousseau, CEO of Decision Dynamics.

"Many people are more collaborative than at first they might appear to be."

–KEN BROUSSEAU, Decision Dynamics

"Many people are more collaborative than at first they might appear to be," Brousseau says. "If they do easily exchange information and cooperate and listen, the decisions that are made with people working in that kind of mode can be very much superior, particularly if it's a complex decision with a lot of different parts."

CEOs who exercise a lot of power–defined as the ability to directly influence decisions and actions–within their companies, whether it's because they are the company founders or for other reasons, are less likely to seek input on major decisions, according to a 2005 academic paper, "Powerful CEOs and Their Impact on Corporate Performance." The paper, by researchers from the Stockholm School of Economics, New York University and the Universidade Nova de Lisboa, said that unilateral, or near-unilateral, decisions by such CEOs are more likely to turn out either very well or very poorly. By contrast, more collaborative decisions tend to cluster toward the middle in terms of quality, being neither extremely good or extremely bad.


One upside of greater collaboration is that when more people are involved in a decision, more have a stake in it. This can make a real difference when it comes to implementing the decision once it's been made.

"You can make a great decision but just not be able to follow through on it," Presbury says. "You've got to make a distinction between doing the job–you know how to do the job, you've got subject-matter expertise–so this is my baby, I know how to make this decision–[but] at some point that's not relevant with these major decisions. It's getting the job done."

Making unilateral decisions can be tempting partly because doing so is more efficient. The more people involved in a decision, the longer it takes. There are times, however, when fast decisions are required, such as a company that needs a quick turnaround or that is experiencing a major transition.

"If you have a short time fuse on performance, there are certain behaviors that have to take place."


"If you have a short time fuse on performance, there are certain behaviors that have to take place," says Korn-Ferry's Kusin. "In those cases, you get CEOs who are much more accustomed to leading the charge up the hill and [who] have to motivate people to come with them, but they need to move very quickly. CEOs with that kind of experience are important in businesses that need to go through important transitions."

CEOs should know which decisions have to be made quickly, and which ones can and should be made with more input over a longer period, says Patti Johnson, CEO of PeopleResults, a change and organizational development consultancy.

"A good CEO knows when the situation requires an authoritative quick decision, such as a crisis situation or, at the other end of the spectrum, a routine issue that needs fast attention," Johnson says. "Yet, other decisions or changes require engagement and involvement from a broader group to be successful."

Many decisions, especially those made under time pressure, have to be made with incomplete or ambiguous information. CEOs must accept this kind of ambiguity and be willing to make the decision anyway.

"The reality is that leaders usually must operate with incomplete information," Cardy says. "All options, details, and potential costs, benefits, and reactions from stakeholder groups cannot be completely known. Even when information is known, it can be interpreted differently. The best that can usually be done is to gather the information that time and budget allow, and then carefully analyze and consider the options... To be effective, a leader needs to accept that the best decision will be made given the information and analysis that was required by the issue."


Some of the toughest, most momentous decisions CEOs have to make are some of the most stark: the yes-or-no, "binary" decision. Larry Merlo was faced with this kind of stark choice when he decided that CVS Health would no longer sell tobacco products; Brian Cornell, when he decided to pull Target Corp. out of Canada; and Greg Wasson, when he decided not to move Walgreen's headquarters to Switzerland to pursue a tax-inversion strategy.

"The need for a binary decision is frequently faced by leaders," Cardy says. "It can make the decision situation difficult since the decision called for is clearly either going to be considered the right or the wrong one–there is no gradation."

One of the biggest challenges with binary decisions is that by their very nature, they're bound to disappoint someone. A CEO will usually consult numerous people within the company before making a momentous yes-or-no decision, and whatever she decides, she'll probably be going against the advice of several of those people.

Communication is the key to minimizing this disappointment, Presbury says. "If [CEOs] do that well, if they've gotten that input correctly, and they go back then and explain it, it should be clear what choices were made and why," he says. "That is something that's not always clear at some businesses. Those go/no go decisions are really a challenge for the CEO to talk about what it is that led them to decide, and then how to help the people impacted by that go back and recalibrate."

Paradoxically, even if a decision ends up not working out, a good CEO must have enough confidence to assume that it was the right one anyway, under the circumstances.

"It's an issue of confidence, it's an issue of optimism, and it's an issue of self-awareness."

–BILL BERMAN, Berman Development

"The most important thing is that they cannot necessarily judge the quality of a decision by the outcome," Berman says. "I can make a decision that doesn't work out well, but the decision that I made at the time was based on an absolutely accurate understanding of the data as we knew it. But sometimes the world changes, sometimes you're missing data... So the best [CEOs] do a combination of their own judgment and careful data analysis. They weigh different people's opinions, and then they make a decision. It's an issue of confidence, it's an issue of optimism, and it's an issue of self-awareness."