Commercial decision making is one of the current business buzzwords surrounding HR, recruitment and training. But what is a commercial decision, and why should organisations, regardless of whether they are a commercial enterprise, government department or not-for-profit charity take an interest?
What is a commercial decision?
A commercial decision is any decision that creates value for an organisation helping to achieve its underlying strategy, mission and aims.
A commercial decision does not have to be a ‘big’ decision, but the person in the position of making the decision must be able to adopt a logical step-by-step approach and be able to evaluate the likely outcomes through a well-rounded consideration of all possible options.
Making commercial decisions
The key to making commercial decisions is to follow these six steps:
Gather information
Firstly, what do you know about the situation at hand? Do you have any experience in this area that could be of benefit? Or maybe a colleague has dealt with something similar in the past? Utilise any relevant data and analyse the information in front of you.
And, if necessary, share this information with relevant colleagues to ensure you gain fresh perspectives you may not have otherwise considered.
Generate ideas
No idea should be ignored. Even if the idea is not right for the task at hand, it may prove useful for future problems or issues. With this in mind, and based on the analysis of the data gathered, you should look to brainstorm and generate the widest range of options for consideration.
At this stage, it is important to keep on task as it is quite common to ‘do nothing’ given the all the options on the table or take an easier way out with a ‘halfway house’ option instead of implementing a considered, commercially viable solution.
Set a deadline
Is there an external deadline? Or is an immediate decision needed? Understanding the timeframe in which you are to make decisions is half of the battle. For larger or more difficult decisions, having the ability to ‘sleep on it’ can really help, but more time is not always ‘better’! Setting a personal deadline can help to get things done and reduce the risk of dragging things out unnecessarily.
Efficiency is key and with some commercial decisions, implementing an idea quickly could be the difference in creating a competitive advantage or implementing a process that minimises waste and ultimately saves money.
Step back
What are the possible implications of your decision? Take yourself out of the situation, and try to see the decision from all angles and explore the possible implications for the organisation’s stakeholders. This approach will help to prevent decisions made in haste you would later come to regret.
Weigh up the risk versus reward
Identify and evaluate the risks associated with the preferred options by drawing up a list (be that physical or mental) of the pros and cons. When making ‘big’ decisions, it is essential to conduct a thorough appraisal, both financial and non-financial, to ensure you have a full understanding of the possible implications and likely outcomes. When in doubt, get the opinions of others in a similar position. Sometimes, all you need is a slightly different perspective to ensure you are making the right choice.
Have a backup plan
There is no fool-proof guide here, having a backup plan is a part and parcel of making commercial decisions. The key here is good planning and good planning involves organisation. Put a contingency in place, and be prepared to execute ‘plan B’, should you need to.
An employee with a good level of commercial awareness is more likely to make sound commercial decisions on behalf of your organisation. The ability to weigh up the pros and cons of each situation, and make a decision based on what is best for the business is essential, but in turn, employees must be able to work collaboratively too to potentially arrive at a more robust decision and in turn share responsibility.
Commercial awareness among millennials
One of the key issues raised among graduate recruiters in recent years is the lack of commercial awareness among millennial applicants, but now that almost 35% of the average businesses workforce is made up of millennials, how can you improve this situation?
Commercial awareness, decision and skills training
Commercial awareness and making commercial decisions go hand in hand. However, the focus can vary from organisation to organisation.
This doesn’t always come naturally to your employees, which is where training comes in. Commercial skills training enables employees to be flexible, knowledgeable and proactive when it comes to moving with current market trends.
The term ‘commercial awareness’ can vary from organisation to organisation and is driven by internal and external factors. As such, commerciality can be quite fluid and can change as the organisation evolves and responds to developments in the marketplace, industry, technological advances, customers etc.
As such, employees also need a commercial skillset that will allow them to adapt to changes and apply these robust skills to make commercially viable decisions.
A commercial skillset goes beyond financial skills that it is typically associated with, including a wide range of interpersonal skills too in areas such as customer service, project management and effective communication.
Do you think your organisation could benefit from commercial awareness, commercial decision making or commercial skills training? Contact us at MDA Training today!