Decision-making in a crisis: What every leader needs to know.

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Human Resources

Managing is a constant job. It’s never done. There is no sense of completion, and managers just move from one crisis to another solving problem and putting out fires. How managers make decisions in a crisis is even more important because crises can create three related threats for organizations: public safety, loss of reputation, and financial loss.

Decision-making is not a rational process; it is subject to personal biases, mental shortcuts, and heuristics that can be used to quickly sort through the myriad of information being thrown at someone on a daily basis. By understanding these sources of distortion we can strengthen the reliability of our decision-making strategies in times of crisis, and mitigate potential risks manifesting from these decisions.

The Adaptive Toolbox refers to a collection of cognitive, emotional, and social strategies that can help managers make accurate, fast, frugal, and computationally cheap decisions. Decisions are based a set of rules: ones that guide the search for information and evaluate alternatives, those that stop the search process, and those that make a decision based on the results (such as the simple but effective decision tree). While the process of making a decision is important (the cognitive component), considering the social consequences of the decision is equally important—how that decision affects employees, stakeholders, and the organization.

Every leader comes to the job with a personal toolbox. The toolbox doesn’t contain a wrench set or a blood pressure kit as it might for a plumber or a doctor; rather, it contains a series of experiential rules of thumb (ROTs). A rule of thumb is a principle derived from personal experience that provides almost immediate guidance for behavior in certain situations. When an exasperated executive comes to a CEO with a seemingly unsolvable conundrum, the CEO can easily recommend a solution derived from having experienced a similar problem many times before.

Constructive ROTs can either be portable or contingent. Portable ROTs travel with you across industries and contexts, whereas contingent ROTs, as the name implies, depend on your environment, the nature of the industry you are competing in, its stage of development and the position of your enterprise in that industry. At the other extreme of the continuum are destructive ROTS. The most frequently found destructive ROTs are the product of entangling potentially destructive emotions — hatred, revenge, lust — with major decisions.

In order for decision-makers to optimally leverage ROTs when facing a major decision, ROTs should be in perfect alignment with the higher-level values that serve as the leaders’ moral and professional compass. And it is the major decisions, above anything else, that determine whether an executive will be successful in propelling his or her organization forward.

Many decisions that leaders face are computationally complex, and often the input variables are characterized by a high degree of uncertainty. Leaders are well advised to evaluate the personal rules of thumb (ROTs) that inhabit their adaptable leadership toolbox. These ROTs are critical, because, in this uncertain and ever-changing world, where life-altering decisions must be made every day, the default decision-making tools should be the leader’s ROTs. Rules of thumb can bound, incline and ultimately shape our major decisions. For those reasons, a major objective of leader introspection should be to bring your ROTs to the surface while continuously challenging their validity and adapting them when necessary in the face of new knowledge and experience.

This is an executive summary of “Decision-making in a crisis: What every leader needs to know,” Organizational Dynamics (2014) by Fred O. Walumbwa, Modesto A. Maidique, and Candace Atamanik, faculty members in the College of Business at Florida International University.

FIU Online’s Master of Human Resource Management program is fully online, designed for working HR professionals who wish to prepare for a leadership role in an increasingly diverse and international workplace. To learn more, visit fiuonline.com.

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