The Psychology of Decision-making

By Disha Sharma
6 min read

Good decision-making is at the heart of a businessโ€™s growth. Every decisionโ€”strategic, tactical, or operationalโ€”impacts a companyโ€™s bottom line. Whether itโ€™s the HR manager hiring an employee or the CIO choosing a certain service provider, every right decision moves a business forward.

But decision makers often face complex problems and have time constraints that lead to limited mental computational power. Add to this the pressure to find a way to focus on rational, logical, and solely data-driven decision-making, and making optimal business choices becomes even more difficult.

While technologies like AI or data and decision analytics support decision-making with the โ€œdataโ€ processing part, itโ€™s the default decision-making approach that needs more understanding and effort.

Yes, no, or maybeโ€” how most organizational decisions happen

There are many approaches to decision-making. A company can choose any based on its company culture and the matter at hand. Sometimes, a manager might go with the stochastic decision-making model if they need to decide between two fairly comparable options. At other times, the consultative decision-making model works very well when a CIO needs more inputs from a few select people at the company.

But it doesnโ€™t matter what decision-making model a company uses or โ€œwhoโ€ or โ€œwho allโ€ make the decision; the professed ideal approach to decision-making is to look at the data. In fact, when companies call themselves data-driven, they mean that every decision is derived from data. The intelligenceโ€”for example, the statistics, trends, probability, etc.โ€”that drives their decisions is all pulled from data analytics reports.

These data analytics reports, however, leave one critical input out of all their decision-making: emotional intelligence (EQ).

Emotional intelligence: a key source of data for organizational decision-making

For the longest time, decision makers have believed that decisions must be based solely on the available data or hard facts. Emotions have been consciously left out of the decision-making mix because theyโ€™re believed to โ€œget in the wayโ€ of good decisions.

But the idea that emotions are always a decision-making hindrance is now obsolete. In fact, to make the most of all the cognitive and data-processing tech solutions that support decision-making, companies need to recognize EQ as a key input to inform decisions.

Psychology infographic

Mostly seen as a personal competency, emotional intelligence has now evolved into a critical decision-making skill. Decision-makers with high EQ are great at identifying, understanding, and managing the emotions of all the stakeholders in the decision-making process.

This talent unlocks a wealth of โ€œhumanโ€ inputs that they can use when deciding. Itโ€™s only by combining these emotional insights and operational data that a company can make winning decisions.

Bringing โ€œemotionally intelligentโ€ decision-making to data-driven companies

While every company has a few employees who have great emotional intelligence, EQ is usually not cultivated or nurtured as an enterprise-level practice. This limits the possibilities of digital transformation in these companies because data always comes with caveats. And bad decisions are mostly a result of an imbalance between reasoning and emotions.

Celonis provides the means for companies to move away from subjective, gut-instinct decisions that arenโ€™t supported by some real data. And the nature of process mining technology eliminates the subjective risks inherent with choosing and curating data by handโ€“by pulling data directly from your operational systems.

That data shows you whatโ€™s happening now and inspires you with the choices and opportunities you have to reach or redefine your goals. The next steps are gathering together all your inputs, prioritizing, and planning how best to proceed based on where you want to go and what you want to achieve for your company.

Finding the balance between emotional intelligence and data

Any company canโ€“and shouldโ€“make intelligent decisions that are informed by both data and emotions.

  • Support collaborative decision-making. Teamwork is no longer just about working together to hit team goals. Today, teamwork happens at even the highest levels of decision-making. Using collaborative decision-making models based on content, consulting, consensus and more can help a company engage more personnel and get more emotional inputs for making better decisions.

  • Work toward a company culture thatโ€™s data-driven AND โ€œemotionally intelligent.โ€ In todayโ€™s workplace culture, everyoneโ€™s a stakeholder, and everybody makes multiple decisions each day, which means restricting emotional intelligence training to just the managers can still leave a lot of decision makers without the right skills. By investing in emotional intelligence training across all teams, a company can build a culture of making emotionally intelligent decisions. Building emotional competencies of the team is a small step toward the big transformation good decisions can bring to a company.

  • Fight decision fatigue. When company employees have to make multiple decisions each day, the quality of their decisions deteriorates. This is called decision fatigue. As a result of decision fatigue, people often take shortcuts and make incorrect decisions or donโ€™t decide at all (indecisions). Automation is a great way to fix this, in scenarios that donโ€™t necessarily require EQ.

โ€ฆ But do all decisions need emotional intelligence?

No. In every organization, of every size, there is a lot of decision-making happening on a daily basis that can be safely automated. These arenโ€™t just limited to rote assembly tasks, however. The Celonis Action Engine is an example of how you can delegate decisions that donโ€™t require EQ but are critical to the functioning of your company. They just donโ€™t require the same level of input as other decisions.

Emotional intelligence, once relegated to the status of an interesting idea in a whitepaper, is now considered a competitive advantage that makes good decision makers great decision makers. Businesses are finding pressure from customers playing a greater role in what they provide and how they operate, and they need to be sensitive to the ramifications of the decisions they make on all their stakeholders.

Thereโ€™s a long-standing ideology that nothing beats good data. And itโ€™s true that good data and the insights it provides can have an exponential effect on a companyโ€™s growth and transformation. The struggle with EQ is the needed shift in perception.

The fact is, thereโ€™s no better time than now to add emotional intelligence to your organizational decision-making mix, because itโ€™s not a factor in competition with your data-driven approach, itโ€™s a factor in enhancing the decisions you make for the good of your business, the satisfaction of your employees, and the delight of your customers.

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