#4- Value-Based Decision-Making

How often are you faced with a decision, and you just aren’t sure of the right thing to do?

What should I charge for this change order?

Should I add a week to the lead time to cover myself or tell the true date?

My vendor missed some material in their quote- should I hold them to their pricing or allow them an opportunity to provide an add?

We missed some scope that is supposed to be included in our contract- should we try to justify a change order and ask for more money or eat the mistake?

Questions like these come up every single day.  The challenge with responding to them is that each project and situation is not equal. There are different project owners, different relationships, different personalities, and different magnitudes of risk and profitability associated each time. So, the question then becomes, how can I boil down my decision-making process so that regardless of the different scenarios, I know how to move forward?  

This week’s Talking Shop will focus on a “Value-Based Decision Making” process, which (as the name suggests) uses values or principles as the basis for handling ambiguous situations like those mentioned above.  Personally, I have been practicing it over the last few months, and hope that by sharing it someone else out there learns an alternative approach to decision-making that may provide more clarity and personal satisfaction.

Part 1. Defining Your Values

Ethically speaking, values represent the behaviors or actions that an individual considers to be “right or wrong”.  They define your character and how you expect to be treated. Most companies have a set of “core values” plastered on their website (Integrity, Quality, and Client Satisfaction are a few that are commonly referenced), however they often stop there and don’t necessarily preach or practice those values within their organization. This leads to decisions being made by tending to whichever situation is the most pressing at any given moment or prioritizing profit above all else.

Alternatively, in Value-Based Decision-Making, values are the priority behind how and why decisions get made. Making money is no longer the driving force, but instead it is a positive and reinforcing result of acting within your values. Therefore, defining your values is the first step in the decision-making process. A few of the professional values important to me are as follows:

  1. Fairness. Respecting myself and others, expecting the same in return.
  2. Consistency. Doing what you say you’ll do; moods and actions will change day-to-day but be yourself over the long-term.
  3. Understanding. Listening to other ideas and thoughts and holding off judgement; argue like you’re right and listen like you’re wrong.
  4. Transparency. Being honest and forthcoming in your words and actions.

Part 2. Using Values to Drive Decisions

With a defined set of values, answering ambiguous questions becomes a little bit simpler.  Instead of having a fuzzy set of rules governing your decision-making process, you should make the decision that most aligns with your values.  For example, let’s answer the question asked at the beginning of this paper: “My vendor missed some material in their quote- should I hold them to their pricing or allow them an opportunity to provide an add?”

If making money is your driving factor, then the decision will be easy- hold them to their number! But will you be satisfied?  Will you feel good about what you’re doing and believe in it? Or will you question if you did the right thing?

Alternatively, use Fairness to make that decision. Did you provide all the necessary documents to your vendor? Did you provide them an opportunity to review their scope prior to award? If the answer is “no”, then the fair thing to do would be to consider allowing an add in price. However, if the answer is “yes”, then it sounds like both parties knew what was expected and one made a mistake.  Therefore, the fair thing to do (in my opinion), is to enforce your agreement and hold them to their price! Therefore, using your values doesn’t mean that you’re just going to give in, but it does allow you to ensure that the reason behind your decision aligns with how you want to act and treat the people around you. And as always, if you still want to work out a deal because you have a good relationship with a trusted partner then you should do it! At least now you know why you’re making that decision.

Part 3. The Potential Challenges

There are some potential challenges associated with using Value-Based Decision-Making. Number one is that the other party in your agreement could take advantage of the fact that you are using your values instead of a more standard approach to decision-making.  Admitting guilt can be a slippery slope, and if you’re committing to a life of Transparency, then there are going to be times where you admit guilt when you don’t want to. Exposure to risk will increase, especially if the other side takes advantage. I’m still waiting to have this happen to me- and I am nervous about it! Although I also believe that if I find myself in that situation, then maybe I will “lose” in the short-term, but I will know in the long-term that this isn’t the type of person with which I want to do business.  I’m hopeful there are more good people out there than bad.

The other major challenge about Value-Based Decision-Making is that you can’t just talk about it, you have to be about it. You must live your life with Consistency and prove that you really care about your values and are willing to be vulnerable.  This can be scary and leave you open to criticism; you can’t say you care about being fair and then treat someone with disrespect. However, that vulnerability will be worth it in the long run. Rather than selfishly focusing on your own agenda, you will work with people for the right reasons.

You will undoubtedly stumble along the way. Reflect on it, adjust your process, and try again.

Part 4. Summary

In summary, Value-Based Decision-Making can be an effective tool in boiling down your decision-making process for any type of situation.  As a leader, there is so much you can do to create a Value-Based culture in your organization.  It starts with defining your own values and talking with your employees about theirs. Over time, you will create a cohesive whole that is focused on Understanding each other and the people you are doing business with. Focus on why you make decisions rather than what will result from them. And let me know if you feel your satisfaction raising and stress dropping. 

Thanks as always for following along, make sure to hold me accountable to my values next time you talk to me. 

Authored by:

Matt Verderamo

17 October 2021

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s