Leading Successful Group Decisions: 10 Tips for Financial Managers

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Leading Successful Group Decisions 10 Tips for
Financial Managers

• ASMC 2009 PDI
• Workshop 125
• Tony Hardin James Short
• Friday, May 29th
• 0915-1030

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Decision-Making Is Challenging

• At least 50 of all decisions end in failure.

• 33 of all decisions made are never implemented.

• 50 of decisions implemented are discontinued
  after 2 years.

• 66 of decisions are based on failure prone
  methods.

• Decisions using high participation succeed 80 of
  the time but occurs only 20 of the time.

• Practically every decision failure is preventable.

Source Why Decisions Fail - Author Paul Nut -
Publisher Berret Koehler 2002 20
year study of over 400 business decisions from
Public, Private and Not- For Profit
organizations in the United States, Canada
Europe.
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Overview

• Are Group Decisions Better than Individual
  Decisions?
• Why is Group Decision-Making Challenging?
• 10 Tips for Financial Managers
• Summary

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Are Group Decisions Better Than Individual
Decisions?
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Are Group Decisions Better Than Individual
Decisions?

• Debatable Since the Beginning of Time
• The widely read The Wisdom of Crowds Why the
  Many Are Smarter Than the Few and How Collective
  Wisdom Shapes Business, Economies, Societies and
  Nations, first published in 2004 by James
  Surowiecki, concluded that the diverse collection
  of independently-deciding individuals is likely
  to make certain types of decisions and
  predictions better than individuals
• Whats the weight of the Ox?

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• Elvis Costello
• Scott Joplin
• Roy Orbison
• Norah Jones
• Leonard Bernstein
• Tina Turner
• Laila Ali
• Ichiro Suzuki
• Angela Merkel
• Dana Perino
• Corazon Aquino
• Ben Carson
• Tom Clancy
• Tony Parker
• Chi Chi Rodiguez
• Michelle Wie
• Archie Griffin
• Andrew Card
• Dmitry Medvedev

• 20. Jodi Foster
• 21. Boom Boom Mancini
• Adlai Stevenson
• Shirley Chisholm
• Prime Minister Stephen Harper
• Yao Ming

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Why is Group Decision-Making Challenging?
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Meeting Efficiency

• 11 Million meetings in the U.S. per day

• Most professionals attend a total of 61.8
  meetings per month

• Research indicates that over 50 percent of this
  meeting time is wasted

• Professionals lose 31 hours per month in
  unproductive meetings, or approximately four work
  days

• SOURCES
• A network MCI Conferencing White Paper. Meetings
  in America A study of trends, costs and
  attitudes toward business travel,
  teleconferencing, and their impact on
  productivity (Greenwich, CT INFOCOMM, 1998), 3.
• Robert B. Nelson and Peter Economy, Better
  Business Meetings (Burr Ridge, IL Irwin Inc,
  1995), 5.

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Why Some Group Decisions are Tough
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10 Tips for Financial Managers
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10 Tips for Financial Managers
Tip 1 Plan the Decision-Making Session(s) Tip
2 Know the Goal Tip 3 Identify Cogent
Criteria Tip 4 Prioritize and Weigh
Criteria Tip 5 Create Clear Scales for
Criteria Tip 6 Identify the Best
Alternatives Tip 7 Identify and Pre-Brief
Participants Tip 8 Identify and Ensure
Constraints are Understood Tip 9 Vote in the
Most Efficient Manner Tip 10 Use a Facilitator

Which One Do You Think Is Most Important?
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Tip 1 Plan the Decision-Making Session(s)

• Gather as much information as possible about the
  decision including understanding
• What is the decision goal and specific timelines?
• Who are all the stakeholders (e.g., who gets a
  vote versus just provides input)?
• How and when will the final decision-maker be
  brought into the decision?
• Are we choosing a single winner or multiple
  winners?
• What are the assumptions to this decision?
• What are the major drivers that will affect the
  decision?
• What are the choices or alternatives that we are
  looking at?

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Tip 2 Know the Goal

• Ensure the Goal Meets the Following Criteria
• Concise
• Clear
• Specific
• Example To prioritize FY10 program funding
  requests

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Tip 3 Identify Cogent Criteria
At the most basic, a criterion is a driving
factor that is used in making a decision

• At the highest level, objectives are stated as
  actions or goals to be accomplished
• i.e., Increase Impact to Mission
• At the lowest level, drivers or indicators used
  to evaluate alternatives at a detailed level
• i.e., Mission Area 1

• Dont confuse criteria with strategies, actions ,
  or methods of execution
• The criteria should be the end state, not the
  path to get there.
• i.e. Increase Growth is a good criterion.
  International Expansion is not a criterion, it
  is a strategy to achieve the objectives.
• Expand Brand is a good criterion. Acquire New
  Products is not a criterion, it is a strategy to
  achieve the objectives.

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Tip 3 Example Government (Defense) Investments
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Tip 4 Prioritize and Weigh Criteria

• Realize the following
• Some criteria are more important than others
• Its important to develop a method for comparing
  criteria (e.g., pairwise comparison)
• Assigning weights to each criterion will help
  with the objectivity of the decision

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Tip 4 Example Prioritize and Weigh Criteria

• Support to Mission (30)
• Secretarys Priorities and Applicable Objectives
  (26)
• Maintain an Effective Infrastructure (14)
• Legal Compliance (11)
• Executability and Feasibility (10)
• Opportunity Cost (5)
• Affordability/Longevity (4)

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Criteria Concept Exercise
Allocate 100 among shapes based on volume
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Exercise Answers
Resulting Allocation
0.05
0.10
0.47
0.15
0.24
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Tip 5 Create Clear Scales for Criteria

• There is no one size fits all approach to
  ratings
• Rating scales can be numeric or data driven
• Example Support to the Mission Direct Support
  to the Mission More than 70 of requirement
  supports the mission Between 40 to 69 of
  requirement supports the mission Less than 40 of
  requirement supports the mission and, no support
  to the mission

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Tip 6 Identify Alternatives

• Alternatives are the options you are choosing
  among
• Ensure Alternatives are well-defined and
  understood by all participants
• Evaluate alternatives against the criteria you
  have developed

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Tip 7 Identify and Pre-Brief Participants

• Participants are voting stakeholders in the
  process, not the reviewers
• Different participants can participate in
  different parts of the process
• There are a few situations where it makes sense
  to weigh participants unevenly (1) If there is
  leadership or a boss that carries more weight
  or, (2) If a subject matter expert is required
  and they have more knowledge on certain matters
• Ensure all key participants are pre-briefed on
  the decision-making process and their roles

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Tip 8 Identify and Ensure Constraints are
Understood

• Sample Constraints
• Fixed Minimum - Fund the investment at the exact
  amount, no more, no less, than the minimum
  funding
• Hard Minimum - Fund the investment at, at least
  or more of the minimum funding
• Contingency Funding Alternatives with direct
  relationships to at least one other alternative
• Ensure participants understand the constraints

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Tip 9 Vote in the Most Efficient Manner

• Pros and Cons of not immediately revealing votes
  (discussion point)
• Pros and Cons of a revealing votes immediately
  (discussion point)
• The Situation will determine the best approach

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Tip 10 Use a Facilitator

• If possible, use an internal or external
  facilitator during the decision-making process
• The facilitator can assist greatly with the
  decision-making process if used correctly

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Tip 10 - Role of the Facilitator(Key Role in
Process)

• What the facilitator does
• The role of a facilitator is to foster a
  collaborative environment
• - Encourage communications
• - Clarify positions
• - Inform the group about progress against
  milestones
• What a facilitator does not do
• Defend a stakeholder position as if it is the
  facilitators own
• Act as a mediator between conflicting parties

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Tip 10 - Role of the Facilitator (Meeting
Preparation)

• Pre-meeting interview with meeting leader to
  define
• Assumptions
• Milestones/Schedules
• Participant Roles
• Relevant Preparatory Data on Criteria/Alternatives
  
• Critical Success Factors/Barriers

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Tip 10 - Role of the Facilitator(Tools)

• Meeting Objective
• Agenda
• Ground Rules
• Definition of Consensus
• Parking Lot
• Tracking/Prioritizing Conversations

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Summary and Questions
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Points of Contact
Tony Hardin Director of Operations Acuity
Consulting, Inc [phone] Tony.Hardin_at_teamacu
ity.com
James Short Director, Business Development Acuity
Consulting, Inc [phone] James.Short_at_teamacu
ity.com