Estimated reading time: 10 minutes
Challenges for leaders are changing at an incredible speed. Much of that change is due to the huge amount of readily available information influencing invention, process, and progress.
Because information flows as quickly as the world changes, yesterday’s information rapidly becomes yesterday’s old news.
Leaders have internet, television, magazines, newspapers, and small portable electronic devices at their disposal.
Whether progress evolves in a positive or negative way, change itself constitutes significant decision-making challenges for leaders.
Information availability poses an interesting paradox for leaders that Bolman and Deal (2001) identify as the misconception of leadership solely expressing itself through individual heroism.
Though there is a great amount of information via technology available today, leaders need to revise their skills and consider elements that may not be easily recognizable in order to adapt to changing circumstances. Effective leaders can mitigate decision-making challenges for leaders through an application and recognition of the Politics, Ego, Emotions, and Money (PEEM) domains.
Decision-making is a daily activity for leaders. One could argue that leadership can be simply reduced to the actions of exercising judgment and making decisions.
The effort behind exercising judgment and making decisions is to prepare and arrive at an unbiased alternative or course of action for a decision-maker. This is based on the information available to effectively lead and accomplish an organizational goal.
Decision-making is both an art and a science. It can be a highly structured analytic process designed to ensure that key factors relevant to the problem are considered or it can be as simple as flipping a coin.
The art of decision-making involves subjective analysis of variables that usually cannot be easily measured. For example, morale and motivation are difficult to measure. But they may play a critical role in developing alternatives to make a decision.
During these kinds of situations, a leader’s judgment is enhanced by his or her professional experience because of practice they may have had during a similar situation.
On the other hand, the science of decision-making may employ various quantitative analytical tools that are available. Regardless of a leader’s artful or scientific decision-making efforts, there is always an element of unknown.
Politics, Ego, Emotions, and Money
A model to consider that can mitigate the problems of a leader’s limited awareness and help make more effective decisions is the awareness of the PEEM domains. In every decision that leaders and organizations make, there seem to be four domains that impact systemic decision-making efforts.
These four domains are Politics, Ego, Emotions, and Money. They are intertwined and influence decision-making. There are literally thousands of books on the shelf regarding leadership and management, and the common thread found in almost every one of these works is the ability to make effective decisions.
When studying leadership and management, an area that is not normally identified as part of the decision-making process is a leader’s ability to look beyond the theoretical steps or processes and identify the qualitative domains of Politics (at all levels):
- Egos – A leader’s or organization’s and others around them
- Emotions – A leader’s or organization’s and others around them, combined with;
- Money – A limiting quantitative concern and usually viewed as the cost of any actions resulting in a decision made.
Whether sustaining system operations or creating new ones, leaders must make decisions for improved continual growth and effectiveness. One could argue that systems typically fail because leadership fails to address the PEEM domains involved with their system development decisions.
We typically spend a great amount of energy analyzing the fiscal quantitative aspects versus the implicit qualitative ones to make decisions. Together or independently, these four domains are present and can either limit or expand a leader’s rationality and ability to make the most effective decision.
Politics can be defined as the process by which groups make collective decisions. It is the authoritative allocation of values. Although the term is generally applied to behavior within governments, politics is observed in all human group interactions, including corporate, academic, and religious institutions.
Politics are associated with every system from the local to the international level. Politics can be described as a bargaining process or a formal process of checks and balances.
Specifically, politics may bind an issue or alternative that we generate either individually or are directed to explore. We may select a particular alternative based solely on its political implications, and sometimes the unpopular choice is selected for the “right” reason.
Though they may be closely related, politics and ego can compound the challenge of making effective decisions.
Ego is popularly defined as an over-inflated sense of self-importance. Egos can present major leadership challenges (Debman, 2006). When faced with systemic decision-making, egos can wreak personal and organizational havoc.
Instead of placing organizational interests first, an unchecked and unbalanced ego may steer an organization in the wrong direction—especially in the case of taking greater risks to change.
Vital for leaders and organizational accomplishment, egos have drive and energy, and if used appropriately can be highly productive. Balancing our egos may be extremely difficult since self-confidence and a strong ego are often factors in executive success.
If we release the need to be in control, to be right, or to have all the answers, we will foster better decisions and build organizational capacity. Giving up control is easier said than done, especially considering cultures and organizations associated with dynamic leaders.
Our emotional involvement can have a tremendous impact on the decisions we make. Interrelated with politics and ego, emotions are very powerful and can easily interfere with our ability to be objective.
Consider for a moment leaders who have worked in an organization for a long period of time, and imagine how that investment alone links directly to their emotions.
Throughout history, nations, families, and individuals have fought because of their unwillingness to get beyond the emotional aspects of the event that may have occurred and affected them.
Emotions are a contributing factor to any paradigm shift in thinking and actions. If leaders are unaware of the emotional aspects of systemic decision-making, subjectivity may cloud their ability to make the most effective decision.
Money must be considered in almost every systemic decision a leader or organization makes. Monetary resources will always be limited and there will always be competing interests that are attempting to maximize their focus to be more effective and do more with less.
Kirkpatrick (1998) especially addresses the importance of money, specifically the return on investment from a decision as a quantitative aspect within the PEEM domains.
Unlike politics, egos or emotions, determining the most effective decision (true return on investment) must not be limited to analyzing dollars and cents. Greater informational awareness gets to the heart of why considering all PEEM domains are critical. If leaders make decisions on numbers alone, we are missing the other three domains further limiting our rationality.
If a leader can grasp issues associated with each of the PEEM domains, their ability to make better-informed decisions may increase. Capturing such knowledge can be a very complicated ordeal when information only becomes knowledge through a social process. Human interaction is required from personnel upwardly, downwardly, and laterally within an organization.
The four PEEM domains a leader is attempting to become more knowledgeable about complicates this process because of the unwillingness to share information. Knowledge is an important commodity we all possess regardless of our organizational position.
When sharing information with others, we may hesitate because information gives us a feeling of importance or job security.
If a leader can create an organizational environment that nurtures knowledge sharing, then leaders expand their boundaries for better decision-making and further mitigate their bounded rationality.
The PEEM domains become more exposed through greater awareness. Working through the social process Fullan describes the need for interpersonal and organizational relationships. This presents the paradox of trying to establish relationships to gain greater awareness within the PEEM domains while being faced with overcoming the challenges each PEEM domain presents.
In other words, if a leader had a political, egotistical, or emotional dispute with another person or organization, they may not be able to obtain the very information they need to make a more effective decision.
Relationship building is an important process an effective leader should consider to reduce their limited rationality. Whether personal or organizational, relationships enable better information sharing and flow which expands a leader’s decision-making horizon.
Though relationships may not be necessarily rational, they are important for knowledge creation and for leaders within organizations to maintain adaptability.
Additionally, relationships are important because as noted in Allison and Zelikow’s (1999) Model III, the Bureaucratic Politics Model, who plays determines how play occurs. Leaders today confront organizations that have multiple stakeholders looking to achieve multiple objectives for a common organizational purpose or mission.
An effective leader recognizes this dynamic and nurtures relationships between the different stakeholders because each player in this process may hold an
overlapping piece of information that another player needs to achieve their objective.
As stakeholders achieve their objectives, they produce valuable information and knowledge for leaders to make better organizational decisions. All the players involved in relationships may not possess the desire to achieve the same objectives but may use similar information to accomplish them.
Leaders must stay aware of the players within organizational relationships because some interactions may be biased or take priority because of their members.
Based on the level and stature of the players involved, relationships may take on a different dynamic. For instance, a relationship with an organizational Vice-President (VP) may be more important than another organizational relationship because of the VP’s position.
Relationships such as this can become problematic because the VP’s intentions or egotistical issues may override, hinder, or influence the information knowledge-sharing process within other relationships.
Once again, one can see the importance of recognizing the human element effective leaders confront when making decisions, especially within the PEEM domains. Relationships lead to ways of accomplishing objectives by means of action channels.
Certain relationships have access to particular individuals or organizations that can make things happen known as action channels. Within an organization, action channels exist and influence attention.
If a leader nurtures solid relationships within their organization and knowledge sharing is taking place, then action channels are the means by which information will arrive to make better-informed decisions.
Additionally, when used appropriately, action channels are the means by which subordinate leaders will accomplish their objectives. This concept is akin to the expression, “it is who you know that gets things done.”
As leaders, our limited awareness is an inherent fundamental issue that will always exist regardless of the level of the organization or leader. Though considering the PEEM domains within the decision-making criteria may seem simplistic, the human element deeply complicates this effort.
Regardless of how objective we try to make the decision-making process, the one component that is always a part of the process is the human element and existing complex relationships within the four PEEM domains.
When leaders acknowledge their blind spots and can consider the PEEM domains to broaden their horizons, they begin to get to the heart of the many challenges organizations face today.
- As a leader, know that you will never have all the information to make a decision, but make sure you have considered the qualitative as well as quantitative data.
- Learn and be aware of the action channels within your organization.
- When making a decision, be sure to consider the political, egotistical, emotional, and monetary issues not only within other people and organizations, but within yourself as well.
Allison, G. & Zelikow, P. (1999). Essence of decision: Explaining the Cuban missile crisis. New York: Longman.Bolman, L.G. & Deal, T.E. (2001). Leading with soul. San Francisco: Jossey-Bass.
Bolman, L. G & Deal, Te. E. (2001). Leading with soul. San Francisco, Jossey-Bass.
Debnam, S. (2006). “Office Egos Uncovered,”Management-Issues.com.Available on the internet at http://www.management-issues.com/2006/10/19/opinion/office-egos-uncovered.asp.
Kirkpatrick, D. L. (1998). Evaluating Training Programs: The Four Levels, 2nd ed. San Francisco: Berett-Koehler Publishers, Inc., pp. 19-25.
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