THURSDAY, March 28, 2024
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The importance of negative decision-making

The importance of negative decision-making

When the time arrives, it is inevitable for management to make tough decisions. Most people feel comfortable with positive thinking and the approach of business administration.

However, once the business encounters an unexpected situation, it is necessary to consider the right action, which might not be pleasant but might be important for the survival of the business in the long run. This is similar to some Thais working with foreigners, who like to say “yes” when they actually mean “no”. The point is how and when we have to openly and deliberately demonstrate objection and disagreement to the audiences. 
Without right decision-making, it is risky for a company to prosper in a healthy and sustainable manner. Sometimes, the negative opinion should be welcome as much as positive ones. 
But the decisions must be based on the benefits to the company as the ultimate goal. Failing to take the negative aspect of a business decision can also be harmful for a strong team as the inherent impact of a wrong decision could lead to low morale and inefficiency. Examples of tough negative decisions are:
Rejection of proposals: In business operations, there may be a number of cases when the management should not move forward with proposed ideas or projects. For instance, proposed new investment on a new production line where the return cannot be confidently justified. 
 Discontinuation of a product or business: Based on the performance of a particular business, it is possible that the management reaches a stage when it has to decide whether to go on with the failing business or stop losing money by closing it down. 
This is different from trial and error.
Terminating an employment contract: There could be a number of reasons why some people have to leave a company. 
As human resource is the most important asset of a company, it is important that a company employ any possible measures to retain good people. However, once it is evident that an employee cannot perform his job to the expected and reasonable level, it is better to let him/her go. 
In order to effectively make necessary negative decisions, some criteria could be set up as guidelines for concerned people. As a good business practice, some companies employ a warning system and screening process as an indicator for a negative decision, for example:
– In a factory, a product will no longer be manufactured once the sales fail to meet the minimum quantity. 
This may be due to greater competition.
– A section in the back-office operation is to be closed due to the disappearance of the value-addition work process. As a result, the headcount is reduced and the people can be moved to other appropriate functions instead. 
– The downsizing of a business line has to be made when it cannot deliver the expected performance based on key indicators such as sales revenue, return on investment and profitability. 
Making a negative decision can be considered tough, but it could bring about tremendous change in an organisation. 
It could cause pain and take time before the expected results can be realised. 
Therefore, the management has to exercise its own judgement based on past experiences to cope with it. 
Do what needs to be done no matter how negative it may look. It’s the management’s responsibility to ensure that wrong practices and people are eliminated from the organisation. And it must be done fast enough. 
 
Yanyong Thammatucharee is senior vice president for accounting and finance at Central Marketing Group. He can be reached at [email protected]
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