Bad decisions cost British business dear

Aug 16 2004 by Brian Amble Print This Article

Britain’s business leaders and senior managers admit that a quarter of the decisions they make every years are wrong.

Consulting group Cap Gemini interviewed 270 senior managers reporting to the boards of companies with turnovers of more than £200 million a year for its ‘Business Decisiveness Report’.

They found that while each makes an average of 20 “business critical” decisions each year, or roughly once a fortnight, 24 per cent of these are – by their own admission – wrong.

The nature of these decisions varied, but on average, one in four of those surveyed made more than ten decisions a year about location or status of their organisation’s operations or workforce, while more than a third made in excess of ten decisions a year about business direction or strategy.

The report calculates that each decision is worth £167,267, putting the cost of each year’s mistakes at some £800,000 per person per year.

Capgemini’s Bill Cook said: “These were either very senior management or direct board report positions, and 24 per cent is quite a significant number. If this were the General Medical Council and GPs, there would be an outcry and a major investigation.”

“A large part of our community of decision-makers, right across the commercial sector, are saying: ‘We are being asked to make an awful lot more decisions, an awful lot more quickly, with rather less information than we’d like and rather less time to consult with people than we’d like. As a result, we are making more wrong decisions’,” he added.

The report found that the biggest decision-making failure rates occurred in the financial services sector, where almost one in three decisions were considered to be incorrect.

But this poor record corresponded with the greatest pressure on decision-makers. Almost half of those working in financial services said that more than 50 people in their organisations had to make a frequent number of important decisions.

Conversely, local and central government staff rated themselves the best decision-makers, with almost six out of ten claiming a decision success rate of 75 per cent or higher.

Look more closely and another interesting pattern emerges. Almost six out of ten of those in government also felt that their organisations play things too safe when making decisions compared to a quarter of those in financial services who think that their organisations take too many risks.