There are a handful of strategies that apply specifically to managerial decision-making within an organization, and none are a "perfect" solution. The fact is, making decisions is hard. It's extremely rare to achieve full consensus on a decision and there's always going to be someone who thinks you should be taking a different course.
How managers make, or should make, decisions is a complex area, and fully understanding the limitations of decision theory requires intense study. At the surface level, understanding the different strategies decision-makers use can help one understand the limitation of decision making.
Consensus decision-making strategies involve the entire group, allowing everyone a chance to be heard. For this reason, the biggest limitation of decision making when a consensus is sought is that it takes time to build a true consensus. Consensus does not mean that everyone agrees. Rather the focus is on getting everyone involved in the decision making process.
Another con is that group members are tempted to insinuate conflict reduction techniques into the process. The most common are majority voting and bargaining. These should not be used; rather the group should use conflict constructively to ensure that decision-making is a thoughtful and deliberate process.
Intuitive Decision-Making in Organizations
Intuitive decision making strategy is difficult, at best, for organizations. Although it is very quick, it does not satisfy the organizational need for complete information. Also, the process does not typically include the exploration of alternatives. So, if a better solution exists, it may never be discovered. Also, intuitive decision making does little to mitigate personal bias or systemic discrimination.
Intuitive decisions may be largely based on experience rather than some hocus-pocus magic, whereby a group or individual can divine the future without the support of credible evidence. Still, when intuitive decision making overrides systems, processes, and controls put in place to guard against human capriciousness, the result can be catastrophic – for example, bad loans to unqualified borrowers.
Approaching Decision-Making the Democratic Way
Democratic strategy also drives relatively rapid decisions, though some time is required to include everyone in the process. The biggest limitation of decision making with this strategy, however, is that the voting minority may feel little responsibility for the decision. Even the leader may not feel responsible. Further, under this strategy high quality decisions depend on an informed electorate. If the electorate is inexperienced, voting may not produce good decisions.
Autocratic Strategy and Its Limitation on Decision Making
The autocratic decision-making strategy — where one person imposes his will on the group — is best reserved for emergencies. When autocratic is the default, it can be alienating to the entire organization since the group was not involved. This strategy may weaken support for the leaders as it builds resentment among the troops.
Participative Strategies and the Importance of Decision Making
Participative decision-making strategies can border on autocratic since the leader is responsible for decisions. Although the process solicits group member inputs and ideas, the leader maintains ultimate control and say-so. The process can be time consuming and leave group members with the feeling that their opinions were not considered after all.
The organizational culture may favor some decision-making options more than others. This is above and beyond any inherent challenges with a particular strategy.
Pamela Fay has been a business writer for more than 15 years, with work appearing in publications such as "Legal Times." She has also worked in the consulting arena since the 1990s, specializing in leadership development, human resources, change management and diversity. Fay holds an M.B.A. from Dartmouth College.