Making business decisions requires more than just 'gut feelings' or 'domain centric skills'.

Everyday we face decisions; some are harder to make than others. From what to wear, where to eat, who to hire, and who to fire ... those last two are crucial to our professional longevity.

Making business decisions requires more than just 'gut feelings' or 'domain centric skills'. Working off of merely gut feelings is not leadership. When so many people's lives are depending on you, you need something more solid and robust. Peter Senge said in his book The Fifth Discipline that "People with high levels of personal mastery ... cannot afford to choose between reason and intuition, or head and heart, any more than they would choose to walk on one leg or see with one eye." A blink with two eyes is easier than a wink with one. [^1]

We at would like to share a few issues of mistakes that we have seen made in the industry that might be avoided through implementing a good decision making strategy.

Costly HR 'Bad Decisions'

Sometimes companies want to hire the best talent out there in the market, and since hotels are blessed with strong financial resources, you may even be able to hire the most expensive managers that money can buy. However, once those managers are hired, you may realize that best in class doesn't always mean best for the organization.

It is important that we take the organizational and cultural contexts into consideration, as well as looking at the nature of the position - is it centralised or decentralised? What's the departmental chain of command that they will be coming into?

Before hiring someone, an effective decision will have to be based on facts that are thoughtful and justifiable in terms of the required purpose.

You'll need to ask yourself:

"Why do we need this person? Who will they be directly reporting to? Will they be able to work well together? Is his / her salary more than their peers in the same level of position at the same hotel? What potential conflict might it cause?"

If you think that you can hire someone based on what's on his / her papers alone, you might be in for a costly surprise.

Cost Cutting Decisions

Right now during this global crisis, budgets are being cut everywhere, however we have seen that some 'knee-jerk' cuts, have proven disastrous. Even in times like these, you just can't cut every business cost and that's especially applicable to the money you plan to spend on marketing.

With every cut that you plan to go through with, go through them one by one and ask yourself "By cutting 'X' by 'Y%', what will the potential effect be on overall revenue?"

Another thing that can help managers make good decisions, is to look at what opportunities there are out there to be exploited. Does the hotel have surplus funds? If so, you will need to calculate what the most strategic decision will be profit-wise; should those extra funds be used to increase shareholder dividends or reinvested in current operations? - or even invested to help expand into other markets?

What can you outsource to help save costs? Can you outsource a portion of your operations through 'Business Process Outsourcing' (BPO) or 'Knowledge Process Outsourcing' (KPO)? What type of outsourcing would make more sense?

Decisions Decisions Decisions

Rational decision-making is based on the information available to the decision-makers and their ability to evaluate all of the alternatives.

Not relying on your gut-feelings alone, your decisions really need to be backed by knowledge.

Managers are usually evaluated and rewarded on the results of their decisions, and so honing a good, methodical decision making process to pay good dividends. Knowledge is power - study not only the obvious, but also walk through the chain reactions that might happen through each potential decision in a given scenario. When you're building your team up, your core of leadership needs to have a kernel of these skills supporting everything you do. The Master of Science (MSc) in the International Hospitality Management programme at The Hong Kong Polytechnic University School of Hotel and Tourism Management is one place that will ensure that you become a world-class hospitality leader by also ensuring that you develop a robust set of evaluation, technical and business skills to ensure that any decisions you make in the hotel business are the best ones.

[^1]: A Brief History of Decision Making: HBR