Trade-Offs in Decision Making
Understanding trade-offs is key to consider a variety of options in decision making
We all make lots of decisions every day. Most of them are subconscious. Some are small and trivial, like whether to wear a t-shirt or a jumper. And others are less frequent but carry lots more weight. On a personal level, it could be deciding whether to buy a house. In business, they can range from priority decisions to company takeovers.
We also want to make good decisions as often as possible. Good decisions are those that lead to the desired outcome. For example, we might ponder which outfit to wear on our first date, to increase our chances of a second date. Or we try and find the best set of priorities to hit business targets.
The first step to set up a good decision is to be clear about the desired outcome. We want to aim for a single, well-articulated outcome.
Once we have our target, the obvious next step is to explore potential solutions. Most often there is more than one path we can take to achieve the goal. Our job is to decide which one gives us the best possible chance of success.
And to be able to weigh up the options, we need to identify the trade-offs.
The Tale of Redbubble’s Hiring Process
As a case study, let us talk about hiring — the most beloved topic for tech companies at the moment. And like most organisations out there, we are looking for quite a few roles, ranging from engineering to design.
To make sure we are not falling behind, we are reviewing our recruitment process regularly. During one of those reviews, we identified a problem with the number of open roles and the load it was putting on our talent team. So we decided to aim for a new outcome:
Lower the administrative overhead for our talent team.
Decent first step. We identified our desired outcome.
While there are a lot of nuances to hiring, there are only a few high-level approaches to it. We considered two of them: a pooling strategy Vs. individual roles. To illustrate, let us imagine a scenario where we are looking for 10 engineers across many teams. In a pool, all are put together in a single ad, whereas the individual approach has separate roles for each team.
Great! We got options. But what next?
Both are feasible and offer — as expected — certain advantages and disadvantages. So to make an informed decision, we started identifying the trade-offs between the two options.
A pooling approach simplifies the setup and process. Fewer people need to manage the process and we only need to worry about one group of interviewers. However, it is not clear during the process which team a candidate might join. This makes it harder to get candidates excited about specific aspects of the teams looking for people.
With an individual approach, it is a lot clearer for the candidate to understand who they’ll be working with and what the projects might look like. As a company, we can also go into a lot more detail on the role and better sell it. However, we need more hiring managers and interview panels with separate roles.
We have a goal. We have options and trade-offs. Now it is time to make the decision.
And since we have done all the hard work already, this step is straightforward. Given our aim to reduce administrative overhead we went with the pooling approach.
Trade-Offs and Buy-In
Trade-offs can also help with another aspect of decision-making: Communication and buy-in.
Bad communication around decisions can be a huge source of frustration. When someone comes to you (or your team or department) and presents a decision, you want to understand why. Nothing is worse than a decision without good reasoning behind it.
A key piece to having good communication around a decision is to share the Why behind it. ‘We’re trying to lower the administrative load on our team, so we’re moving to a pooling approach’. If the why is not shared, then people will get frustrated.
But we can do better, simply by sharing a bit about the options and trade-offs we considered. It will bring more understanding to the group on why and how the decision was made. Which increases our chance of getting full buy-in.
Trade-offs are Crucial to Good Decision Making
Making good decisions consistently is tough. And there is no guarantee that a good decision will lead to a good outcome. But having a solid process increases our chances of a good decision and a positive result:
- Be clear about the outcome we want to achieve
- Identify the trade-offs between the potential options
- Communicate the decision to get buy-in
Trade-offs play a crucial part in this process. Without identifying and articulating them, our decisions will be mostly guesswork.
