Decision making is a complicated human behavior that affects every level of an organization’s operations. The common practice is to focus on the outcome when judging the validity of a decision. However, it is more important to examine the process by which the decision was made, an expert said.
In a presentation, “Decision Making: What Makes a Decision Good,” held by the SPE Human Factors Technical Section, Margaret Crichton discussed the factors that influence individual and group decision-making strategies. She is an industrial psychologist and managing director at People Factor Consultants.
Effective decision making begins with the establishment of situational awareness, which Crichton characterized as a three-step process.
The first step of this process is the collection of information from the surrounding environment. She said it is important for decision makers to obtain as much information as they can handle, and to follow through with the second step in the process, which is determining which actions must be taken to interpret that information properly.
“We have to understand what’s going on around us,” Crichton said. “It’s what we hear. It’s what we see. In many cases, especially on a drilling rig or a production rig, it might even be what we smell. It’s information that we see in reports, or in emails. It’s information that we hear as we’re given verbal information from the people around us.”
The final step of the process is anticipating possible future scenarios based on the information provided and preparing for contingencies.
Crichton said individuals and organizations should not limit themselves to only one solution. They must be prepared to constantly review their interpretation of the information and adjust their predictions if they receive new information.
“We are preparing ourselves for different avenues that a situation might take, so that even when we make our decision, we are prepared to be able to go back and modify that decision if we see that the situation has changed slightly. It’s only after we have gathered as accurate an understanding of the situation as possible that we should then move on to actually making a decision,” she said.
Crichton presented four types of decisions: They are
Intuitive. The decisions contain one known, unquestionable solution. Intuitive decisions are often “gut feelings” so ingrained in an individual’s consciousness that he or she may not be aware that a decision is being made. For example, a driver stopping at a red light at a traffic signal.
Rule-based. Decisions are made after the application of a standard procedure. The procedure can either be prescribed by a superior in an organization, or developed through time and experience. These decisions are not quite as second nature as intuitive decisions because they require the consultation of an outside source.
Choice. The decisions hold several possible solutions. They take more effort because the decision maker has to devise and compare the possible solutions.
Creative. Decisions are borne of unusual circumstances in which the decision maker has no prior experience. They require significant effort, since the decision maker must think of a unique solution to a new problem.
The institutional knowledge needed to make a rule-based or intuitive decision generally derives from experience, Crichton said. Because these decisions take place in familiar situations, they require less thinking and are not as stressful; it takes less effort for a person to make a decision that he has made several times in the past.
Conversely, creative and choice-based decisions are less influenced by experience, since they are usually made in situations that an individual has little experience in handling. The lack of experience leads to an increasing cognitive workload and higher stress level.
Rule-based and intuitive decisions are the most common, accounting for 80% to 85% of all decisions made in a given situation. Since creative and choice-based decisions require the most effort, they are often the types of decisions people remember making.
“Decision makers can actually use each of these decision-making strategies,” Crichton said. “It all depends on the situation that you find yourself in, and we have to have the ability to modify our decision-making process to make best use of the decision-making strategy that is relevant to the situation you are in.”
A decision-making process by a group is subject to challenges such as poor communication and members who feel inhibited in speaking their mind.
Crichton said an effective process reduces the effects of cognitive biases on decisions. It also accounts for different agendas, motives, perceptions, and opinions among the members of a team, and will often combine more than one perspective of information source.
Additionally, organizations must develop systems for reviewing their decision-making procedures and protocols.
The webinar is available at https://webevents.spe.org/products/decision-making-what-makes-a-decision-good