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Four Tips for Making Better Business Decisions

Article-Four Tips for Making Better Business Decisions

Group business people handshake at meeting table in office together
The most important decisions you make in the context of your construction business are people decisions.

We should start, I think, by defining the term decision.

A decision is an act of choosing between one or more things. Pretty simple.

But there is a nebulous alternative to choosing between one or more things to which contractors regularly default: They decide not to decide.

What does that mean?

When confronted with a challenging decision, alternatives that all look pretty good, some fall prey to analysis paralysis, lack confidence, or other barriers and, consciously or not, decide not to decide.

Deciding not to decide is a poor choice 98% of the time.

If you find yourself struggling to make decisions, find a way to push through and drive the process forward, but whatever you do, make decisions and act on them.

Even if you make a suboptimal decision, it’s not necessarily permanent.

As Bob Pittman, the CEO of Clear Channel Communications advises, "Make decisions quickly, but don't fall in love with them."

Having cleared out the specter of not deciding, the quality of your life and business is determined by nothing more than the sum total of the decisions you make over time.

How you invest the seconds and minutes of every day and the decisions you make determines the quality of your relationships with customers, employees, and stakeholders. Success in business and life comes down to the decisions you make.

There's a caveat: Doug McCright, a senior consultant at the Family Business Institute, says every decision requires trade-offs.

Since there are always trade-offs, the perfect decision simply doesn't exist.

The most important decisions you make in the context of your construction business are people decisions.

Focus your time and energy on your people, and those decisions will pay the greatest dividends over time.

Here are four tips for making better business decisions: 

1.    You're not as smart as you think. There is a terrific book called "The Wisdom of Crowds" by James Surowiecki. He started the book in a compelling way. There was an exhibition in London in 1884 which featured a weight-guessing competition. The public could buy raffle tickets to guess the weight of a slaughtered and dressed ox. 787 people bought tickets and made their guesses, but no single entrant nailed the weight exactly. A scientist named Francis Galton collected the tickets to determine the statistical spread as well as the average guess. He found that the crowd’s mean estimate was within one pound of the precise weight! Surowiecki’s point is that two heads, or in this case 787 heads, are better than one. If that's true in weight-guessing, why wouldn’t it also be true in making construction decisions? Why not gather your best thinkers together and get six or 10 heads to weigh in? Why not crowdsource your decisions? It certainly works for us here at FBI; I barely make decisions without involving my people; they're smarter than me, and we as a group are smarter than any one individual. 

2.    There is safety in numbers. Ohio State University professor Paul Nutt said that 70% of the time when making decisions, leaders only consider one alternative. Why don't leaders do a little homework, a bit more research? I had an associate once who said that anyone trying to sell his business has a bum process if he doesn’t have more than one suitor. When deciding, if you have only one alternative to consider, doesn't that violate the commonsense rule? More alternatives give you more data points and can lead to better decisions. 

3.    Having an atmosphere where people can disagree with you enhances the quality of business outcomes. If you have a psychologically safe organization where people can debate, challenge, and question the leaders, you'll make better quality decisions. The higher one goes in an organization, the more decisiveness is applauded, and so as one ascends the organizational hierarchy, she feels like she must make decisions ever more conclusively. That's simply not the case. Decisions don't always have to be top-down. In fact, some decisions are better made from the bottom up. 

4.    Recognize that we all have biases. We want to remove biases from decision-making, but we can't; we're human beings. Crowdsourcing decisions levels out the biases among a group.

Successful contractors achieve progress by making sound decisions over long periods of time. Share these four tips with your team, have a bit of discussion, and evaluate your decision-making structure to see if you can advance the ball with better processes.

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