COVID-19 Decision making Risk

The year 2020 was full of unexpected dilemmas. It started with the spread of the COVID-19 pandemic and the hardship it brought to the whole world. Businesses of all sizes and sectors were not an exception.

At first, we thought that it might be a temporary thing that won’t last. We never considered that it would affect us, whether on the personal or the business level. But the truth was full of bitterness.

This pandemic has paralyzed all aspects of our life. The way we deal with each other, and especially in the business world.

Leaders and managers in any organization make business decisions daily. They might be instant decisions. The ones that leaders take as a response to immediate and pressing business demands. An example here would be to make a salary raise decision for a talented employee who might leave the organization. In this case, the organizational leaders decided without relating it to any data or analysis.

The other type of decisions is the ones that leaders take after thoughtful analysis. This decision-making process is best for ideal circumstances. Leaders have the luxury to take such decisions when the business conditions are normal and free of turbulence. But here comes the question, can leaders rely on having normal business conditions when making these decisions?

Before COVID-19 the business world was going through dramatic changes. Artificial intelligence has changed the face of the business world.

The fierce competition that the world is witnessing is another influence that disrupted the business world. An example here would be the gig economy (The economy that relies on temporary workers and freelancers). This aspect has impacted a lot of businesses that rely on the brick-and-mortar business style. 

This means that business leaders and managers were going through dramatic changes before the hit of COVID-19. The burden of making fair and effective business decisions was getting complicated. The era that ensued COVID-19 has only added to that complexity.

Some would argue that this pandemic has brought a new landscape to our business. Many are talking about the virtual workplace and how it became a reality. This reality was existing before the pandemic, but it wasn’t that much appreciated or commonplace. The COVID-19 era and afterward has accelerated that reality. 

The timing of making business decisions is of utmost importance to the success of any decision. As once said, “There is a time when we must firmly choose the course we will follow, or the relentless drift of events will make the decision” (Franklin D Roosevelt).

Wise business leaders know when to hit for their decisions. It’s a matter of selecting the right timing and make a business decision that is equitable to all the stakeholders. We can’t wait for the best time to come and then making our decision. The turbulence we live through makes it nearly impossible to go through the decision-making process (Will explain it below).

Business leaders might choose to buy shares of a new company rather than making a full acquisition so they can preserve the company’s capital and start preparing for a complete business acquisition in the future.

The Decision-making process is illustrated below, and I will show how COVID-19 has affected the decision making-process at each stage:

1.    Define your target: this is the step that constitutes the corner stone of the decision-making process. If you can’t translate your organization vision and mission into clear and achievable targets you will reach nowhere. Having a clear sense of purpose will make it easy for you to plan and to take right decisions. It would be easy for a business leader to make decision based on the company’s vison rather than make random decisions that are based on gut feelings. Investing in consultative selling skills development for your sales workforce is an easy decision if one of your objectives is to build long-lasting customers’ relationships. On the contrary making such an investment is a waste of time and money if you follow a transactional sales process in which sales deals doesn’t require that much skill level (e.g., governmental bids).

In today's business world, leaders find it problematic to stick to their objectives in the long run. There is a lot of complexity and turbulence today that make it almost impossible to be consistent in the objective-setting process.

You put an objective one day to find the other day that you must change it to cope with the business demands. Business leaders can solve this problem by acknowledging that being a highly adaptive organization will help the business to thrive.

COVID-19 has added to that complexity to the degree that we can anticipate a change every minute, and they all impact the organization. Most of the organizations have struggled a lot with managing their workforce at the beginning of the crisis.

The impact of COVID-19 on organizations was so negative. A lot of jobs have to be eliminated, and this was a difficult condition to deal with. Leaders of the organization should preserve their organization's well-being and preserving the livelihood of their employees.

Making one decision at the expense of the other will affect the organization badly, e.g. Having to downsize the workforce will help the organization to cut costs. On the other hand, it will affect the organizational goals in the long run. Keeping your employees will also affect the organizational financial ability if its revenues were affected because of COVID-19.

Making the balance in such a situation is very difficult, but as an organizational leader, you need to do what’s best for your employees and your business.

Many organizations decided to decrease the income of their employees instead of terminating their employment as a temporary solution during the crisis. 

2.    Collect data: setting objectives is very important to decision making, but collecting data is complementary to the first one. Many business leaders rely on their gut feelings when they make decisions. There is no harm in that, but it shouldn’t be the only driver for making robust decisions.

The amount of data that any business generates every day is enormous. Although data is power, you need to know how to use it, or else it will pull you back.

One of the mistakes that leaders make is analysis paralysis. They gather a lot of information to the degree that they are not able to make a decision. Again, COVID-19 also made the data gathering process more complex than ever. The rush of the updates that the pandemic has brought causes many mistakes during the decision-making process because you make your decision based on data, but after a while, you find that new data that you are not aware of has emerged, which make your first decision irrelevant anymore.

Successful leaders assigned this task (Data gathering) to cross-functional teams that are specialized in data gathering and analysis. They are the owners of data gathering, and so they will keep the organization abreast of the new updates.

3.    Generate choices: Leaders must have choices to select from when making business decisions. Leaders should assign this responsibility to teams who can handle this responsibility.

These choices must be relevant to your decision, or else you will be forced to select an alternative that might not serve your targets. You start with many choices, and you narrow them down until you have two alternatives to choose from. It’s not the other way around.

COVID-19 crisis has affected the business environment in two ways, negatively and positively. Because of the crisis, you have many options to choose from, and this could be a negative thing that might affect the leader’s ability to make decisions. but it’s also a positive thing if you looked at it from the perspective of the third step of the decision-making process. You have many choices that you can study carefully and make your decisions based upon.

After COVID-19 has hit, many governments provided organizations with worker protection programs to help alleviate the crisis. Choosing any of these programs without careful study will raise the financial burden of the organization, so it’s a matter of selecting what is best for your organization that would serve your vision and mission.

4.    Carry out the decision: after identifying the choices from which business leaders will choose the most appropriate one comes the next step, which is making the final decision. These choices must be assessed in terms of their advantages to the organization and the risks and consequences of following any of them.

Before the COVID-19, the business world was going through a smooth and lengthy decision-making process. Although in some cases decisions have to be decided on immediately. After the crisis, this decision-making process is fueled by the urgency to make wise decisions, and the most important thing is to make them so quickly that you won’t go through the assessment of the decision’s opportunities and risks.

Following this approach holds a lot of threats to the business, but if the organizational leaders went through the previous steps carefully, then the possibility that the decisions are going to be of added value to the organization.

5.    Execute and evaluate: this is the last step in the process, and here the business leaders monitor the consequences of the decisions they make and how they affect the organization.

If the results of the decision were valuable to the organization then the leaders must learn from it and try as much as possible to widen the decision on a larger scale. If the results were bad then the leaders must know when to stop the execution and to reassess the whole situation and accordingly adjusting their current decision or making new one.

It is vital to be aware of the surrounding complexities, how they affect us, and how we can take advantage of them. The main goal is to make business decisions that will lead to a successful organization.