A recent study finds that many company executives still rely on information whose accuracy has not been verified, resulting in poor decisions on important matters that affect the future of their companies. The study, titled “Joining the Dots: Decision making for a new era”, surveyed executives at various large companies across 16 countries.
The findings revealed that executives admitted to having made poor decisions, with more than three-quarters (80 percent) of respondents saying they used information whose accuracy had not been verified to make strategic decisions. Furthermore, in the study initiated by the Chartered Institute of Management Accountants (CIMA) together with the American Institute of CPAs (AICPA), 42 percent of respondents also acknowledged that their companies had to sacrifice their competitiveness because of slow decision-making processes. The study noted that many senior leaders struggle to make the right decisions, yet in fact 72 percent of companies failed to execute at least one strategic initiative over the past three years due to weaknesses in their decision-making processes.
Several key factors highlighted by the report include information overload, with 36 percent saying their companies were unable to handle excessive information. The use of big data remains something that companies have yet to explore extensively. Some 37 percent of respondents said big data helped them, yet 32 percent of respondents said big data actually worsened their performance. Another factor is the problem of bureaucracy. Nearly a third (29 percent) of respondents revealed that one of the biggest obstacles to achieving effective decision-making is a coordination problem caused by the diversity of organizational structures within a single company and by complicated bureaucracy. Trust and collaboration are the third factor, with 43 percent of respondents saying the level of trust among executives needs to be improved and 57 percent stating that more active collaboration needs to be strengthened to improve decision-making. The final key factor is incentive structure. As many as 61 percent of company leaders admitted that their company’s incentive structure does not help drive decision-making for short-, medium-, and long-term business potential.
CIMA CEO Charles Tilley said, “Decision-making must be an essential process in business development that needs to be continuously refined. “Leaders need to have an integrated mindset—that is, having a clear and well-designed business model and orienting all decisions toward that business model; quickly gathering and analyzing all relevant information from every spectrum of the business being run; and always focusing on key performance indicators rather than on instinct or rumor.