It is not unusual for high-performing leaders to favor their intuition over a comprehensive analysis when making decisions impacting the future of their organization. The effectiveness of this practice was recently tested in a study of 234 companies (Szanto, 2022). The relationship between the decision-making approaches used by leaders and corporate performance and attitudes towards change was studied. The companies had at least 50 employees and represented six different sectors (manufacturing; construction; trade and car repair; transport and storage; tourism and hospitality; and information and communication). The senior management team from each company completed four questionnaires which provided data on company performance, attitudes toward change, and decision-making approaches.
The study found no relationship between business performance (market share and profit-to-sales ratio) and rational-analytic decision-making. The researcher concluded that laggards rely as much on comprehensive analysis and quantification in their decisions as leading companies.
A significant relationship, however, was found between business performance measured by revenue-proportionate profit and intuitive decision-making. Decision-making based on experience and intuition was generally associated with better business results and better operational performance based on cost-effectiveness. Additionally, the evidence indicated that companies that were more prepared for change and had a greater capacity to effectively manage change used intuitive decision-making more so than those who were less responsive to change.
The researcher stressed that intuition and logical analysis are complementary components of effective leadership decision-making, which means leaders most often perform best when they combine both forms in making critical decisions.
What do scholars generally agree are the characteristics of intuitive decisions? Intuitive decisions are:
- Automatic, not intentional, processes
- Result in quick judgment
- Rely on extensive experience and knowledge
- Tempered by emotional intelligence and gut feelings
- Based on pattern recognition rather than data points
Szanto, R. (2022). Intuitive decision-making and firm performance. Journal of Decision Systems, 1–10.