Difficult decisions under duress
The impact of stress on decision-making for executives in a COVID-19 world
It goes without saying that the past few months have been a time of unexpected change. The COVID-19 pandemic has not only caused a global health emergency, but it has also had disastrous effects on businesses around the world. Whilst it seems the worst may be over, at least in most parts of Australia, many challenges are still yet to come. Executives, and other senior leaders, are therefore faced with the critical task of paving the way forward for their businesses. If you fall under this category, the decisions that you make now could have a large and long-lasting impact on your business. Having the responsibility of making such important decisions whilst navigating uncertain circumstances is going to be stressful at times. It is therefore important that you understand what impact stress can have on the decision-making process.
Some background on decision-making
When you make a decision, the aim is to select the best option from a set of alternatives. Sounds simple, right? Decision-making is made more complex than it seems at surface level due to factors such as time, emotions, risk levels, past experiences, and the need to evaluate different costs and benefits.
The complexity of decision making at a senior executive level in organisations is exacerbated, given the nature of the decisions they are required to make. Such decisions often involve:
– strategic thinking;
– high stakes;
– a high level of detail and analysis;
– processing a large amount of information;
– considering the opinions of other people in your team;
– considering the interests of multiple stakeholders;
– innovative thinking.
Such factors are very relevant for most decisions that executives are currently having to make, given that many businesses are planning some form of COVID-19 ‘recovery roadmap’ strategy. Clearly, these decisions are much more difficult than everyday decisions like deciding on what to have for dinner or choosing what outfit to wear.
Research suggests that as the difficulty of decisions increases, decision quality, measured against a criterion such as return on investment or market share, is likely to decrease. Without stress even being in the picture, the decisions that executives are having to make are incredibly challenging. Ironically, the difficulty of such decisions may actually contribute to the stress that executives experience.
How stress can affect decision making
What happens when stress is involved in the decision-making process? How can being in a stressed state of mind impact the choices we make? Well, research in psychology and neuroscience suggests one overarching trend: stress tends to promote simple and intuitive decision-making strategies as opposed to more logical strategies which rely on detailed analysis.
1/ Tunnel vision
As we all know, being stressed can make it so much easier to become overwhelmed. Trying to consider many sources of information and a multitude of options all at once might seem impossible. Because of this, you are more likely to sidestep analysing all the intricate details, instead focusing your attention on less information and considering fewer options. This results in something which is commonly known as narrowed perception or tunnel vision. Research suggests that this could in fact be an adaptive mechanism, in the form of a ‘mental shortcut’, that allows people to make the best decision they can under challenging circumstances. For instance, you might focus only on the information you perceive to be the most important and block out anything else. Therefore, taking such mental shortcuts can sometimes be helpful, given that the amount of information that we can process at one time is always going to be limited. Remember, we are humans, not machines!
Whilst it is great that we have such a strategy available to us in times of stress, and even in times when we are not stressed, there is still an important caveat to bear in mind. What you want to avoid is developing extreme tunnel vision, in which you narrow your perception so much that you miss a piece of information that is vital to your decision. To combat this, it is ideal to consciously remain open to new information and alternative perspectives. You don’t want to miss a warning or let potentially great opportunities pass you by due to stress.
2/ Reliance on previous experience
Another decision-making strategy that we are more likely to implement in times of stress is the use of past experiences or habits. The ‘recognition-primed decision’ (RPD) model in the field of psychology describes how people can make quick decisions when faced with complex situations, by referring back to a repertoire of patterns. That is, decisions are based on past experiences. The RPD model therefore suggests that when people need to make a decision with little time available, they can rapidly match the current situation to patterns they have learned in the past.
Again, whilst this can be an efficient decision-making strategy, it is not always optimal. For instance, an executive who needs to make an important decision may think back to what they have previously done in similar situations and base their decision on this. Relying on previous experience comes at the expense of thinking critically about an optimal, innovative solution in the context of current circumstances. Unfortunately, thinking creatively is often difficult to do with a stressed state of mind.
Therefore, whilst it is great to consider the rationale of decisions you have made in the past when making a decision in the present, you should do so with caution. Although a particular strategy or way of thinking may have been effective in the past, it may not be the best solution now. This is particularly relevant at the moment, given that we are currently dealing with unique circumstances and moving towards a new normal. You should instead put logical evaluation and analysis at the forefront of important decisions, with the exception of decisions that must be made quickly. The RPD decision-making approach functions best in situations in which a fast decision is required, goals are poorly defined, and information is incomplete. Stress can push us towards this strategy even when we do have clearly defined goals and an abundance of time and information.
Stress may also make individuals more likely to ‘satisfice’. Satisficing is a decision-making strategy that involves searching through the available alternatives until an acceptability threshold is met. That is, satisficing means choosing the first available option that satisfies the requirements of the decision, even if it is not the most optimal decision.
Satisficing is particularly relevant for people who are stressed because they may want to get their decision ‘out of the way’ as soon as possible in order to reduce their stress. As a result, they do not expend the time and effort that would be required to ensure that they make an optimal decision. Of course, this is not always a bad thing, because sometimes what you need is an efficient decision as opposed to an optimal decision when there is time pressure at play. However, for very important matters in which the decision cannot or should not be simplified, it is wise to avoid satisficing.
To summarise, stress can have an impact on the way we make important decisions, as it may lean us towards tunnel vision, reliance on previous experience, and satisficing. A series of suboptimal decisions over time could be very detrimental to businesses, so it is best to implement strategies to reduce your stress levels as soon as possible.
Firstly, self-awareness is key. You need to take a step back and have a good think about where your stress levels are at, and how it is affecting you in terms of your thoughts, feelings, and resulting actions. This might require you to seek help and talk about how you are feeling with others, in order to really get an understanding of where you are at (see the below recommendation). In the words of our CEO Michael Fingland, “Stress is a really curious beast: it can really creep up on you, and you don’t know it’s actually impacting you until it hits you with a sledgehammer.”
Reach out for help. This could be in the form of asking for guidance from a mentor or speaking to a psychologist. Even something as simple as talking to a level-headed colleague, friend or family member could benefit you greatly. Alternatively, you may find comfort in talking to an expert about the challenges and concerns you are currently experiencing within your business. You should never be afraid to ask for help, as mental health is so important for both your well-being and your ability to do your job.
Of course, we cannot control what is going on in the world around us. However, we are always in control of our own actions and responses. We suggest that first and foremost, you make a conscious effort to reduce your stress levels. Focus on the basics like eating healthy food, exercising, and getting a good night’s sleep. We also strongly recommend implementing habits in your day to calm your mind, such as walking, yoga, breathing techniques, or meditation. Just find something that works for you. Have a listen to our Vantage podcast on this topic if you wish to learn more. The below infographic also provides a summary of how you can transform your current state to a more optimal future state.
The above infographic is from a slide that was included in our recent Vantage webinar on workplace mental health.
Finally, think about whether you and your team are considering all available options to help your business succeed in these uncertain times. Please get in touch with us if you would like to discuss how we can guide you through any difficult strategic decisions you are facing.