What is the process of selecting or rejecting a course of action from several available options?

Which of the following is NOT one of the steps involved in decision making process?

1. Make decision or choose an alternative
2. change the desired outcome
3. research and identify options
4. evaluate results

Answer (Detailed Solution Below)

Option 2 : change the desired outcome

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General Principles of Business Management - 1

15 Questions 15 Marks 15 Mins

Decision making is the process of choosing among various courses of action or alternatives. In other words, it is a kind of problem-solving in which we are presented with several alternatives, among which we must choose. The six-step decision-making process is a rational decision-making process. It is based upon thinking about, comparing and evaluating various alternatives. The steps are as follows:

• define the situation and the desired outcome
• research and identify options
• compare and contrast each alternative and its consequences
• make a decision or choose an alternative
• design and implement an action plan
• evaluate results

Hence, we conclude that changing the desired outcome is NOT one of the steps involved in the decision-making process.

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Decision-Making: How to Determine the Best Possible Choices

Decision-making is a scientific function with a very defined process. Whether big or small, we all make decisions every day—from simple things like what outfit to wear to an interview, to bigger decisions like which tools will best help you achieve your goals.

In the same vein, whether big or small, the process can be challenging. There are always factors to consider, people involved, and a desired result to work toward. All of this can be daunting, especially when the results of the decision means success or failure in important things. Read on to learn how to permanently improve the quality of your choices going forward.

Decision-Making As Strategic Thinking – Full Guide Chapter Index

Chapter 1: What Is Decision-Making?

Chapter 2: Good Decision-Making

Chapter 3: Steps to Effective Decision-Making

Chapter 4: Decision-Making Styles and Models

Chapter 5: Decision-Making Skills

Chapter 6: How to Use SweetProcess for Better Decision-Making

Conclusion

Chapter 1: What Is Decision-Making?

Decision-making is one of the most important parts of management.

Even outside management, several decisions are made by individuals daily, with effects ranging from minor to severe.

The CFO of a chemical company had a bad track record of poor decision-making. Even though he was good at his job technically, he was bad with people and very strict. This attitude led to the development of a bad culture within the company. People hated the CFO, and in turn, hated the company. Finally, the board of directors asked that the CEO fire the CFO.

The CFO was fired, but things became worse at the company. The CEO was wary of making a decision to hire a new CFO because of the bad experience with the last one, which damaged his reputation as the employer. The position remained open for over a year.

This lack of leadership made the company suffer. The company’s internal controls got weakened, and the budgeting process became terrible.

The CEO’s lack of decision-making made the board of directors lose confidence in him, just as it made them lose confidence in the former CFO. The effect of the lack of leadership in the entire organization eventually affected the company’s revenue.

This may seem like an extreme instance, but is actually a real-life case study of what an organization can look like with bad decision-making.

Definition of Decision-Making

How do you define decision-making? Psychology defines decision-making as a cognitive process, the result of which is the selection of a course of action or belief amongst several possible options or alternatives. The decision-making process involves logical reasoning based on a collection of the values, preferences, and beliefs of the decision-maker.

Decision-making is the process by which people come to actionable decisions after a careful consideration of the facts and values of the situation and parties involved. Decision-making could either be rational or irrational, and every decision-making process results in a final choice, which would either prompt an action, or not.

To help you grasp the concept better, below is a video in which decision-making was explained in just two minutes:

Types of Decisions

Now that you can define decision-making, let’s take a look at the types of decisions there are.

1. Major and minor decisions
2. Policy and operation decisions
3. Routine and strategic decisions
4. Programmed and non-programmed decisions
5. Long-term departmental and non-economic decisions
6. Organizational and personal decisions
7. Individual and group decisions

1. Major and Minor Decisions

A decision involving who to put in charge of a project or which tools to use to achieve a goal is classified as a major decision. In contrast, a decision involving how many stationeries to purchase for the team is minor.

1. Policy and Operative Decisions

Policy decisions are crucial decisions taken by top level management, which often have long-term effects and relate to workplace policies.

Operative decisions concern the day-to-day running of the enterprise and are made by lower or middle level management.

The decision to give bonuses to employees is made at the top level, but it is the job of lower level management to figure out how much each employee gets.

1. Routine and Strategic Decisions

Routine decisions are about the day-to-day operations of the enterprise. They do not require extensive analysis and evaluation and are quickly made at middle-level management. An example is sending samples of products to prospective business partners.

Strategic decisions are about policy matters, and are taken at higher levels of management. This will involve analysis and evaluation of available options, and oftentimes are so delicate that a small error could be injurious to the company. Change in product line, business expansion, and pricing of products are examples of strategic decisions.

1. Programmed And Non-Programmed Decisions

Programmed decisions are decisions made in line with rule or procedure. In every organization, there are written or unwritten policies that guide decision-making by reducing the alternatives in recurring situations. Programmed decisions provide routine solutions for routine problems, leaving the decision-making to the organization rather than the individual.

For example, organizations will have an established salary scale for all positions, so the decision on what to pay a new hire is already made.

 Non-programmed decisions deal with unusual problems. In a situation that is not covered by a policy, a non-programmed decision must be made. An example is when you are tasked with doing something about a failing product.

More non-programmed decisions are made higher up the organizational ladder.

1. Long-Term, Departmental, and Non-Economic Decisions

Long-term decisions involve decisions covering an extended time period and involving more risk.

Departmental decisions only concern particular departments and are made by the people in charge of those departments.

Non-economic decisions are decisions that do not affect the economics/finances of the enterprise.

1. Organizational and Personal Decisions

Organizational decisions reflect the basic policy of the company. They are usually made by the managers, but can be delegated to others.

Personal decisions cannot be delegated as they concern the manager as an individual and not as a part of the organization.

1. Individual and Group Decisions

Individual decisions are made by a person, in routine matters, with already established guide­lines.

Group decisions are very important to the enterprise and are made by a collective of employees.

Let’s take a look at the types of decision-making there are.

Types of Decision-Making

Now you know the types of decisions there are, but there are also types of decision-making which are categorized based on the level at which the decision-making is occurring.

• At the lowest level are operational decisions made by employees regarding the day-to-day running of the enterprise.
• Tactical decisions are made by mid-level management on how to get things done.
• Strategic decisions are organizational decisions made by top level management on how the organization will run.

Problem Solving vs. Decision-Making

Often confused is problem solving and decision-making. Although related, they are very distinct.

You already know what decision-making means from the definitions we’ve given. Problem solving is using creativity and discovery to determine all possible courses of action after carefully examining the information provided. Problem solving is considered by many as a step toward decision-making, hence, the information gathered and solutions provided are used in decision-making.

A great way to distinguish between problem solving and decision-making is considering their characteristics.

Characteristics of problem solving

• Problems are often caused by a distinctive change.
• They are characterized by changes in performance standards.
• The cause of the problem can be understood in analyzing the relevant changes from the problem.
• Problems must be accurately identified and described.
• The likeliest cause of the problem will accurately explain all the facts and involve the fewest or weakest assumptions (Occam’s razor).

Characteristics of decision-making

• Objectives are first established.
• The objectives must be arranged in order of importance.
• All possible actions must be reasoned out.
• Alternatives must be weighed against the objectives.
• The alternative that most aligns with the objective is the tentative decision.
• Evaluate the tentative decision for possible consequences.
• After decisive actions, additional actions are taken to avert blowbacks which might become problems and begin the process over.

Now that you know all the basics of decision-making, it’s time to go even deeper.

Chapter 2: Good Decision-Making

More than other people, leaders are often saddled with the responsibility of making decisions, which can either have negative or positive effects especially in the workplace. After all, bad or irrational decisions are still decisions. Making good decisions does however have its own benefits.

Benefits of Good Decision-Making

Some of the benefits of good decision making are:

• Your decision-making skills can help you contribute positively to the accomplishments of your team, especially if you are seeking better opportunities in your workplace.
• Good decision-making improves productivity.
• Time and resources are saved.
• Minimizes risks and mistakes made.
• The better the decisions you make, the more valuable you are in the workplace.
• Good decision-making earns you respect in the team.

However, one cannot enjoy the benefits of good decision-making without knowing how to make them, which is what will be discussed next.

How to make good decisions

You now know what decision-making is, but one very important question is: how do you make good decisions? Good decision-making requires only these five steps:

Step 1: Identify Your Goal

This means recognizing the purpose of the process by recognizing the problem that needs to be solved, and asking why the problem needs to be solved.

 Step 2: Gather Information for Weighing Your Options

To make good decisions you need information directly related to the problem. Doing this will help you understand how the problem can be solved, and possible solutions to the problem.

Step 3: Consider the Consequences

Next, ask yourself what are the likely results of your decision? What are the short-term and long-term effects? This step is essential as this is where you weigh the pros and cons of the alternatives listed in the previous step.

‍Step 4: Make Your Decision

Don’t be indecisive. You have listed your alternatives, you have weighed the consequences, now it is time to act. Ask yourself: does this feel right now and will it feel right in the future? If your answers are satisfactory, make your decision.

‍Step 5: Evaluate Your Decision

You have taken action. Now it’s time to evaluate the results—though results aren’t always immediate. Evaluate your decision, keeping in mind that if the results are undesirable, you may need to return to step two.

Now that you know how to make good decisions, you need to be prepared for the worst and learn what can prevent you from making a good decision.

Why?

This simply brings to mind an old, popular saying: to be forewarned is to be forearmed. In other words, once you have this vital knowledge, nothing can prevent you from effectively making good decisions.

Before we delve into that, however, below is a video that further shows you how to make a decision.

What Can Prevent Effective Decision-Making?

While the steps above can simplify the decision-making process, there are also drawbacks that can get in the way of making good decisions.

1.     Misidentifying the Problem

Identifying the problem is not always easy. When the cause of the problem is misidentified, effective decisions cannot be made.

2.     Having a Single Source

When considering the consequences, your source of information must not be restricted. When you have a single source, you risk making unreliable decisions based on unreliable information.

3.     Considering Too Many Sources

Having as much information as possible eliminates the unreliability of a single source, but too much information can also misguide you, cause decision paralysis, and prevent you from trusting your intuition.

4.     Overestimating the Outcome

Before you make a decision, you must have weighed the outcome. But when you overshoot, you risk making wrong decisions based on overconfidence in the outcome.

5.     Poor Timing

Time can be a fickle friend. Timing is important when making decisions. There are times when it is beneficial to wait and there are other times when acting fast is necessary. It is important to recognize when these are needed.

To properly optimize your decision-making process, you must first know how to not make poor decisions.

Factors That Lead to Poor Decision-Making

As undesirable as they are, bad decisions are still decisions. These are a few pointers to help you identify a poor decision-making process.

1. Not enough information. Inadequate information will only lead to decisions made without the knowledge of all the facts and without considering all the alternatives.
2. Too much information. On the other hand, too much information makes decisions harder to make. To avoid this, it is important to recognize which information is relevant to the situation.
3. Involving too many people. Assigning a decision to a group can provide different perspectives to the process but it can also be detrimental when the individuals are unaligned.
4. Vested personal interest. Decision-making is compromised when decision makers have a personal goal in mind. The decision-making process then becomes geared toward achieving personal goals rather than optimal results.
5. Resistance to change. For some people, like those in management, attachments to the way things are done are formed and such people can be resistant to changes that may come with new decisions.
6. Detachment from the results. When there are no connections to the affected party (ties), the individual or group making decisions tends to be completely detached from the process and does not carefully consider the results before making a decision.

How to Avoid Bad Decisions

Knowing what can lead to poor decision-making is not enough—you also have to know how to avoid making bad decisions.

Use these four strategies to avoid bad decisions:

1.     Be Self-Aware

Being unaware means allowing external sources to affect your mental state. Thus, without self awareness, temporary factors like emotions, time, pressure, and environment affect the logical process required to make good decisions.

2.     Do Not Ignore Past Lessons

Experience is a good teacher. Analyze past decisions, good or bad. In doing so you are able to recognize what you did wrong and what you did right.

3.     Do Not Solve the Wrong Problem

Often, people apply a Band-Aid when surgery is needed; they effectively solve the wrong problem. The reactionary instinct needs to be controlled so you can properly analyze the situation and make proper decisions.

4.     Avoid Incomplete Information

Often, decisions are made based on incomplete information. This only becomes known when the consequences of bad decision-making begin to show.

It is not enough to know how to identify a poor decision-making process and the factors that contribute to bad decisions. You must also know how to avoid bad decision-making.

How Can We Avoid Making Bad Decisions?

It’s easier to make bad decisions than to make good ones, especially because of the work, preparation, and thinking that go into effectively making good decisions. You should avoid getting caught up in making bad decisions.

These tips below will help you avoid making bad decisions.

1.     Define the problem yourself—don’t let others do it for you.

Bad decisions are often made when opinions are accepted over facts. Study the problem, and then understand and define it by yourself. When you allow others to define the situation for you, you run the risk of being misled.

2.     Filter your iInformation.

Good questions detect incomplete information and help to check assumptions we might have previously made. Asking simple but in-depth questions like “Do we understand the fundamental truths of the decision we face?” will be helpful in later stages of decision-making.

3.     Avoid making crucial decisions when you’re tired, distracted, angry, or emotional.

Be it hunger, emotions, tiredness, or even just being in a hurry, the human mind is weakest when trying to manage some deficiency. We become impulsive and allow cognitive biases to influence our thoughts. You, therefore, should avoid making any decisions when in any of these states.

4.     Avoid gathering irrelevant information.

Consider the butterfly effect, where little changes in initial changes can lead to severe results down the line. Irrelevant information can set the stage for bad decision-making, so to avoid it, you want to always try to get information closely related to the source.

5.     Do a review.

Hindsight is 20/20. When you review your choices, you give yourself an honest assessment of your past decisions. Regardless of whether they were good or bad, you can learn from them.

So, is it possible to almost always make good decisions? Well, it starts with your habits—if they are tuned to help you make better decisions, or not.

What habits encourage good decision-making? And how can one inculcate them?

Habits That Make You a Better Decision Maker

To avoid bad decision-making, one has to be a habitual good decision maker. Thankfully, the skill can be learned by practicing these habits.

1.     Evaluate your habits

Identify the habits that have become routine, things that require little thought because they’re now automatic. Evaluate which of them might have become unhealthy, and create a plan to develop healthier daily habits.

2.     Positive outlook

The facts might be the same; however, research has shown that patients who are told “Ten percent of people die” will think they are in more danger than those who hear “Ninety percent of people live through the surgery,” when the risks are the same.

So, when faced with decisions, take a minute to breathe and frame it differently, in a more positive light. The wording of a problem affects how it is viewed.

3.     Avoid the availability bias

Consider the availability bias or availability heuristic. In the availability heuristic, decisions are made based on the first examples that come to mind when contemplating a situation or problem. This means the information you consume the most affects your decision-making, thus, they become dangerous decision shortcuts.

To achieve more objectivity, acknowledge these mental shortcuts and watch out for them during decision-making.

4.     Converse with yourself kindly

When you want to achieve emotional detachment from the process and objectivity, try talking to yourself like a trusted friend. We are often kinder to others than we are to ourselves. When self-compassion becomes a habit, decision-making skills have been known to improve.

5.     Properly label your emotions

Oftentimes, people refuse to accurately diagnose their emotions; they would rather use phrases and metaphors to describe what they are feeling. Take a minute to properly label your emotions and you will see how they may have been influencing your decisions.

6.     Be open to differing ideas

In psychology, belief perseverance is a principle that states that people will stick to a belief they have decided is true without considering contrary evidence. Considering the opposite of what you believe helps to eliminate unhelpful beliefs so you can make better, more objective decisions.

7.     Passively think about the situation

Sometimes, actively considering a problem does not provide results. In this case, it is wise to allow the mind to process the situation in the background. Focusing on other things in the foreground allows the mind to mull the situation quietly.

8.     Set aside time to reflect on your mistakes

As it is necessary to label your emotions, so is it also necessary to reflect on your past mistakes. Used properly, this information will help you in making better decisions. However, keep your reflection time limited. Dwelling too much on the past can impede good decision-making. Use the information you gather from your reflections to forge forward.

With time and constant practice, these habits will become part of you and improve your decision-making abilities.

Three Qualities to Take the Paralysis Out of Decision Analysis

When faced with crucial decisions, many people are likely to “freeze” for a little while. This is reluctance to take charge of the situation and this delay in the decision-making process often has negative effects. These three qualities are found in great leaders, and inculcating them can help you in making better decisions.

1.     Emotional intelligence

Emotional intelligence is the ability to understand and manage your emotions and those of others. Self-awareness, self-management, social awareness, and relationship management are all part of emotional intelligence.

Self-awareness, being the foundation for the other aspects of emotional intelligence, involves the ability to accurately assess oneself. Before a person can change, they must be self-aware. Their thoughts, feelings, and actions must be clear to them.

Self-management is being able to understand and control one’s emotions, accept and adapt to change, and keep an optimistic outlook of the situation.

The focus of social awareness is external and involves how you relate to others. This involves understanding their thoughts, feelings, and actions.

To take charge in decision-making processes, relationship management is crucial. This includes qualities like influencing, inspiring, and developing others.

2.     Managing uncertainty and choices

Nobody likes uncertainty; it causes discomfort and creates analysis paralysis. Trying to properly analyze the situation in a bid to alleviate uncertainty is often futile because most often than not, decisions need to be made during uncertainty. After all, there would not be a decision-making process if we were certain of the outcome.

In their 1992 study “The Disjunction Effect in Choice Under Uncertainty,” Amos Tversky and Eldar Shafir asked college students whether they would purchase a great deal on a trip to Hawaii during their holiday break. They were informed that they would receive the grade on their most important exam before they made their decision. Fifty-seven percent of those who were told they passed the exam said they’d go for the trip. Fifty-four percent of those who were told that they had failed also decided to go.

When uncertainty was added into the research, the results were greatly changed.

The students were told that they would not get the exam grade for another two days and that they could either buy or reject the trip now without knowing their grade, or pay $5 now and wait for two days to receive their grade. Sixty-one percent chose to wait.

In the first study, most students wanted to go whether they passed or failed. In the second case, they were willing to pay to wait and find out their grade.

The study displays that people will go to lengths to avoid uncertainty. The students believed knowing their grade would help them make a good decision when the first study has shown that it actually does not affect their decision.

3.     Trusting your intuition

In the study conducted by Timothy D. Wilson and Johnathan Schooler, participants were asked to choose a piece of art to hang in their homes. Half were asked to think rationally, and the other half were to go with their instinct. Participants who went with their feelings rather than rationality were found to be happier with their selection. More often than not, your intuition tells you what you should do. In other words, don’t think too much about it.

Not everyone is born with these habits. They can be learned and you can use them to reduce the effect of decision paralysis.

Important Decision-Making Tips

Decision-making is an important and ubiquitous part of everyone’s lives. To help you in your day-to-day decision-making, here are a few extra tips:

• Go for a walk, visit the beach, go out with friends, or do anything that helps you relax. Do not be overwhelmed with stress.
• In the best conditions, thinking clearly is hard enough. Do not let pressure affect you even further. Take a breather, consider a problem properly and give yourself time to be confident about your decision.
• Writing out the pros and cons for the alternatives and comparing them works. Things are not always as bad as you imagine.
• You’re more likely to end up with an outcome you’re happy with when you factor in your goals and values. This way, the best option becomes more obvious.
• Do not make decisions without considering all the possibilities.
• Sometimes, your perspective is not enough—getting another person’s perspective might benefit you.
• If you think you might be overrun by emotions, a good method for disentangling them is writing them down in a journal.
• Putting yourself in the shoes of other people will help you plan how to inform them of your decision and manage the situation afterward.
• If you make a decision and it turns out to not work in the way you expect, allow yourself to go through the steps again to make a better decision. Review your decisions even when they turn out well.

Tools for Better Decision-Making

Like any process, decision-making requires the proper tools. These tools will make the process easier and faster, better organized, and leave less room for error. Here are a few of them:

1. You can use a decision tree to evaluate the information available to you. This is a good tool to use in decision-making.

2. Another tool you can use is a decision matrix, like in the image below. A decision matrix helps to weigh the available alternatives and make better decisions.

3. A pros and cons list helps you to highlight the risks involved in your decision and where it meets your needs.

Using any of these tools singly or in any combination will put you well on your way to a more organized decision-making process.

The next question is: Can you make good decisions on the go?

How to Make Quick, High-Quality Decisions

It is widely believed that making a quick decision is being rash; however, that is not necessarily true. You can use the methods below to make better decisions in less time with confidence.

1. Decisions have to be made at the right organizational level. When decisions are made at the right level in the organization, which often involves delegating to lower levels in the organization, they are more likely to be better decisions.
2. Focus on the enterprise-level value. Decisions that focus more on enterprise-level value by aligning with the corporate strategy and allocating human and financial resources toward high-value projects have been shown to be more likely to succeed.
3. Get relevant stakeholders to commit. Winning organizations have built commitment to executing decisions once they’ve been made. They have been shown to be able to make the people who are accountable for a decision to take action. While this might mean involving more people and getting more buy-in, it does not translate to compromising on speed as it does not necessarily require unanimous agreement, which often slows a decision.

This has shown that fast decisions are not bad decisions—as you might have previously thought—and that you need not sacrifice speed to get high quality decisions.

At this point, you can now properly optimize your decision-making process with the right tools, methods, and qualities that reduce redundancy in the process. All these are important to know before moving forward.

Chapter 3: Steps to Effective Decision-Making

You have learned the tools of effective decision-making; knowing how to use them properly is what makes the difference between knowledge and appliance. There are steps and formulas that have been developed to simplify the process like the ones listed below.

The 7 Steps of Decision-Making

There are several variations of the steps to effective decision-making. The most common combination of the steps are these seven:

• Identify the decision

The first step to decision-making is identifying the problem or question that needs a solution or an answer. It is important to get this step right because misidentifying the problem will derail the decision-making process before it has even begun.

• Gather relevant information

Once the problem or the question has been identified, the next step is to gather information relevant to the choice. Do internal and external assessments, do studies, market research, consult consultants, and introspect on the company’s history in decision-making—particularly relating to the decision at hand. But remember that too much information might further complicate the process, so you want to keep all information simple and relevant.

• Identify the alternatives

With the gathered information, look for all the possible choices. In business decision-making, parties may have different needs, and making one choice for all of them might be disastrous. Sometimes you have to consider going with more than one choice. You also might have to choose the lesser of two evils, since there might not be a choice that works for everyone.

• Weigh the evidence

Beginning from the least plausible choice and working your way to the most suitable choice on your list, weigh the pros and cons of each alternative. You can write out the pros and cons in a list, or use a decision tree, or other decision-making tools.

• Choose among alternatives

You have identified the problem, you have gathered information, and considered your alternatives. It is now time to choose the most actionable of your alternatives. You might have to do some more thinking before making your choice, and sometimes it is best to go with your instinct.

You might have to combine alternatives to get your best choice, especially when there are several stakeholders involved in the decision. Don’t limit yourself; sometimes you have to get creative and think outside the box to find your best alternative.

• Take action

Decision paralysis can cause you to lose valuable time, and as you have read, timing is very essential in effective decision-making. Once the decision has been made and approved, take action! Create an action plan and get to work on it, follow it and you may begin to watch out for results to review in the next step.

• Review your decision

The best way to review your decision is to ask yourself questions like:

• Which stakeholders did this decision benefit?
• Which stakeholders were negatively affected by this decision?
• Was the team positively or negatively impacted?
• Did this decision solve the problem identified in the first step?

If your decision was positive, then you can proceed to find ways to make things better. If the results of your analysis are mostly negative, however, then you may need to take the steps all over again.

Watch this explanatory video to better understand the seven steps of decision-making.

Other Notable Decision-Making Steps Formulas

GOFER

In the 1980s, psychologists Leon Mann, Ros Harmoni and Colin Power developed a decision-making process for adolescents, which they called GOFER based on earlier work with psychologist Irving Janis. GOFER is an acronym for five decision-making steps:

1. Goals clarification: Surveying your values and objectives.
2. Options generation: Considering a wide range of alternative actions.
3. Facts finding: Searching for relevant information.
4. Consideration of Effects: Weighing the positive and negative consequences of each option.
5. Review and implementation: Planning the review and implementation of options.

DECIDE

Kristina Guo, a professor in the public administration department at University of Hawaii West Oahu, published the DECIDEmodel of decision-making in 2008. DECIDE is divided into six steps:

1. Define the problem.
2. Establish or enumerate all the criteria (constraints).
3. Consider or collect all the alternatives.
4. Identify the best alternative.
5. Develop and implement a plan of action.
6. Evaluate and monitor the solution and examine feedback when necessary.

Eight Stages of Moral Decision-Making

“The ethical decision-making process proceeds from Ethical Awareness to Ethical Judgment to Ethical Behavior. It is influenced by the characteristics of individuals (e.g., personal differences, cognitive biases) and by the characteristics of organizations (e.g., group pressures, culture).” Managing Business Ethics, by Linda K. Trevino and Katherine A. Nelson.

In their book, Managing Business Ethics: Straight Talk About How to Do It Right, Linda K. Trevino and Katherine A. Nelson outline eight stages of ethical decision-making:

1. Gather the facts: Determine what needs to be known about the decision to be made.
2. Define the ethical issues: Determine the moral standards that apply in the situation.
3. Identify the affected parties: Who does this problem affect? In what order of severity are they affected? This is how you identify the affected parties.
4. Identify the consequences: Recognize the effects of the decision you have to make.
5. Identify the obligations: Every business is held to some sort of obligation by their customers, every leader by their subordinates, and every employee by their co-workers. Before making a decision, identify to whom you owe obligations.
6. Consider your character and integrity: Ask yourself what a person of integrity would do in this situation. If you have a role model whom you look up to, asking yourself what they would do might help.
7. Think creatively about potential actions: Problems present themselves in a box, more often than not. Do not let the problem define the limits of your decision-making process.
8. Check your gut: Whatever decision you make, check your intuition. Many times, you will find a good answer.

Group Decision-Making Stages

Every effective group decision should involve these four steps:

1. Orientation: When the members of the group first meet to get to know each other.
2. Conflict: Arguments and conflicts will happen in every group. They must sort it out to work together effectively.
3. Emergence: Through effective communication, the group resolves all vague opinions.
4. Reinforcement: The group has finally made a decision and provided sufficient justification for it.

Popular belief has it that establishing critical norms improves the quality of decisions made by a group, while, in contrast, consensus norms do not.

Like we said earlier, using the right tools with these steps or any of the formulas will greatly optimize your decision-making process. Now that we’ve talked about steps of decision-making, let’s talk about styles.

Chapter 4: Decision-Making Styles and Models

Extensive research has been done into decision-making as a psychological concept and in other fields like management, economics, etc. This research has proved fruitful in many ways, providing the information you have learned so far. Further research proves that decision-making can be done in different styles and models. Here are some examples.

Cognitive Styles

Cognitive style is an individual’s typical manner of acquiring, organizing, and processing information. It is habitual, relatively stable across time and situations, influences preferences, and underlies behavior, including decision-making.

Optimizing vs. Satisficing

According to Herbert A. Simon’s theory, which he called bounded rationality, rationality is limited by available information, available time, and the mind’s information-processing ability. Upon further psychological research it was identified that individuals can be categorized in two cognitive styles: maximizerswho try to make optimal decisions, and satisficerswho only go as far as finding a good enough solution. Maximizers, who often feel the need to maximize performance in all ways, usually take longer to decide. More than satisficers, they are also able to identify when a decision has been negative.

Intuitive vs. Rational

Daniel Kahneman, a senior scholar and faculty member emeritus at Princeton University’s Department of Psychology, built on the work of Keith Stanovich (emeritus professor of Applied Psychology and Human Development, University of Toronto) and Richard West (professor emeritus in the Department of Graduate Psychology at James Madison University), to theorize that decision-making is a by-product of the interplay between two kinds of cognitive processes: System 1 which is the automatic intuitive system, and System 2 which is effortful and rational.

System 1 is described as a bottom-up, fast, and implicit decision-making system, while System 2 is described as a top-down, slow, and explicit system.

Combinatorial vs. Positional

Aron Katsenelinboigen, the founder of predispositioning theory, expatiate on the styles of decision-making in his analysis on styles and methods, where in reference to the game of chess, he said, “Chess does disclose various methods of operation, notably the creation of predisposition methods which may be applicable to other, more complex systems.”

Katsenelinboigen identified two major styles: combinational and positional used in the game of chess besides the methods and sub-methods. Both styles also reflect the two basic approaches to uncertainty: deterministic (combinational style) and indeterministic (positional style).

He defined both styles as thus:

The combinational style is a program that links the initial problem with the eventual outcome; it is a clearly defined, primarily material, but very narrow goal.

Whereas the positional style is a formation of semi-complete linkages between the initial step and final outcome. The positional style is geared toward the following:

• Creating a predisposition to the future development of the position.
• Inducing the environment in a certain way.
• Absorbing an unexpected outcome in one’s favor.
• Avoiding the negative aspects of unexpected outcomes.

The work of these scientists provides an insight into the complexities of decision-making, and with the information you now have, you can achieve a more rounded perspective on how to make good decisions.

General Decision-Making Styles (GDMS)

Suzanne Scott and Reginald Bruce developed the general decision-making style (GDMS). There are five decision-making styles: rational, intuitive, dependent, avoidant, and spontaneous. These styles often change based on context and situation, and no one style is necessarily better than the other. Below are brief explanations of the five styles.

• In the rational style, there is an in-depth search for other options and information, and a strong consideration of these before making a decision.
• In the intuitive style, the individual has confidence in and trusts their initial feelings and instincts.
• The dependent style asks for the opinion of other people before a decision is made.
• In the avoidant style, there is little or no decision-making as the responsibility is avoided.
• The spontaneous style makes decisions immediately, often without properly considering information and other options.

You need to know which of these styles you tend to adopt when faced with decision-making and adjust your habits according to the results you desire.

Other Decision-Making Models

Here are a few other decision-making models worth mentioning:

1.     Team leader decides and informs the team

These decisions are often made in time-sensitive situations when the entire responsibility rests on the team leader; members of the team are often not given input.

Example: The team leader cancels a meeting of the team because certain conditions have not been met.

2.     Team leader gathers input from team, then decides

This model is used when the team is needed to make the best possible decision. The contributions of the team are welcome and considered, but the eventual decision is taken by the team leader.

Example: The team leader holds a discussion with the team about the team’s needs, but it is the team leader who writes the job description for the opening on the team.

3.     Consensus Decisions

Contrary to what many people think, consensus decisions are not when everyone agrees on a decision. In a consensus, everybody does not necessarily agree on one thing, but everyone supports the decision made. This often happens after strong, progressive discussions.

Example: Coming to consensus about the methods by which the team is to evaluate progress on their next project.

4.     Consensus with a fallback

Consensus with a fallback is an effective way to implement consensus decision-making. It sets a course of action to be taken in the event that the entire team is unable to reach a conclusion in time. The time allocated is fluid and dependent on the kind of decision to be made. The preferred fallback is often the team leader, or a superior whose task is to consider the team’s input and then make a decision.

Example: If after a lengthy discussion the team is unable to make a decision, the team leader gets their consensus to act as the fallback using the opinions proffered by the team members during the discussion.

5.     Team leader sets constraints and delegates decisions to team members

The team leader sets the parameters of the decision to be made and then delegates the decision to an individual in the group or to a sub-group of the team that shares the responsibility. This can help the team and individual members develop critical decision-making skills, and frees the team leader’s time for other tasks.

Example: The team leader assigns a member of the team to handle the logo creation within a set budget.

6.     Majority rules voting method

Majority vote is effective and most advisable for low-impact decisions. However, it is not advised for more important decisions, like values-laden decisions or decisions where active buy-in is crucial. This is because the majority does not always make the right decision, and high stakes decisions are better handled by individuals or a small team. Before opening a decision to a vote, it is prudent that discussions have been had.

7.     Creative decision-making model

In this model, information and insights about a problem is collected and used to come up with potential ideas for a solution. This is similar to the rational decision-making model.

However, they differ in one way. Rather than identify the pros and cons of each alternative, the decision maker tries to not actively think about the choices. This allows their mind to contemplate the decision in the background, and eventually come up with the right choice. This model is similar in this way to the intuitive decision-making process.

8.     Cognitive bias

Inherent biases can disrupt and distort the decision-making process. The most common cognitive biases are confirmation, anchoring, the halo effect, and over-confidence:

• Confirmation is when a decision maker seeks out evidence that only confirms their beliefs, and discounts evidence that support contrary conclusions.
• Anchoring is when the decision-maker is too reliant on a single piece of evidence or experience and uses it to make conclusions.
• The halo effect is the overall impression of a company, individual, brand or product which directly impacts an individual’s feelings and thoughts.
• Over-confidence is when the decision-maker overestimates their abilities and the accuracy of their decisions.

Evaluating Decision-Making Models

Decision-making models vary, and their use is based on how motivated and experienced the decision maker is. The right path can be along any of these four general routes: rational, bounded rationality, intuitive, and creative.

Each model is used in different situations, such as:

1. Rational models require logical thinking and step-by-step rationality on the part of the decision maker. This model is best used when:

• The decision is important.
• You need to maximize the outcome.
• Information on available alternatives can be gathered.

1. Bounded rationality includes constraints on time and thought processing abilities. It is used when:

• There is not much time to make the decision.
• The minimum criteria have been clearly defined.
• You do not need to maximize the outcome.

1. Intuitive is, as the name suggests, going with one’s intuition. This is used for a faster decision-making process when:

• You are familiar with the problem.
• Analysis paralysis must be avoided.
• The problems and end goals are not clearly defined.

1. Creative models require outside the box thinking. This is often used in situations where:

• Available alternatives do not solve the problem satisfactorily.
• There is time to properly consider the situation.
• There are no clear solutions or decisions.

The ABCDs of Categorizing Decisions 

By using a simple template to categorize the type of decision you are making, the process of decision-making can be improved upon.

• Ad hoc decisions: These are infrequent, low-stakes decisions. Here, organizational ambiguity is least likely to undermine the effectiveness of decision-making. A customer service agent determining how best to handle a complaint not outlined in the company training is making an ad hoc decision.
• Big-bet decisions: These are infrequent and high-risk decisions that have the potential, to some extent, to shape the future of the enterprise. An example is Apple betting on the iPhone, iPad and iPod series.
• Cross-cutting decisions: These are also high-risk but frequent. This involves a series of small, interconnected decisions made by different groups in the company as part of the collaborative, end-to-end decision process. The final number of products a company decides to make is often a product of cross-boundary decisions involving several departments and stakeholders.
• Delegated decisions: These are frequent, low-risk decisions and are handled most effectively by an individual or a designated team. Their decision-making process is largely independent. A team leader assigning members of the team to handle the outsourcing of a particular project is delegating.

 Chapter 5: Decision-Making Skills

Now that you have an in-depth knowledge of decision-making, can you identify decision-making skills that you possess and might have used in the past, whether in a professional setting or not? Decision-making is not only for managers and top-level employees. Here are some decision-making skills that you might identify in your skill set or want to add to it.

Types of Decision-Making Skills

There are several types of decision-making skills that are useful for navigating the day-to-day personal or professional decisions you need to make. Some of them are common, some are not. Evaluate your abilities to know whether you possess these skills.

1.     Collaboration

Collaboration is important in decision-making as you will have to be able to recognize when the process requires collaboration and then take steps to ensure that you arrive at the best decision. These decision-making skills are intertwined. For example, communication and being a team player help greatly in facilitating collaboration.

2.     Problem solving

If one skill can be said to be the most important in decision-making, it will perhaps be problem solving. Possessing the ability to solve problems in a logical manner, while considering different perspectives, is essential to every decision-making process. People who are top problem solvers thrive in their chosen fields.

3.     Emotional intelligence

Emotional intelligence means you are aware of your emotions and you are in control of them. The ability to express emotions in a healthy manner and manage the emotions of other people around you is important in decision-making. It is especially important that emotions are not allowed to affect the process. So when working with others to reach a decision, it is important that emotions do not get in the way of effective communication.

4.     Logical reasoning

You need to carefully examine all the facts and information you have before making a decision, which is where you need logical reasoning. Emotional intelligence and logical reasoning go hand-in-hand. The ability to weigh all the pros and cons of your decisions is vital to every decision-making process. So as to not compromise the rational thinking needed for effective decision-making, emotions will have to be controlled.

Other important decision-making skills are:

• Compromising
• Embracing differences
• Brainstorming
• Teamwork
• Clear communication
• Asking for feedback
• Motivation
• Knowledge sharing
• Team playing
• Team-building activities
• Reliability
• Processing ideas
• Setting expectations
• Honest feedback
• Organization
• Authenticity
• Active listening

It goes without saying that having these skills will not just help you to effectively make better decisions, but equip you to succeed in your field.

Now let’s take it a notch further with something different.

Unusual Ways to Improve Your Decision-Making Skills

We have discussed ways to make better decisions, tips to be a better decision-maker, and habits that help you become a better decision-maker. All these fall under the regular ways to improve your decision-making, especially for professional matters. Below are some unusual methods that can help improve your decision-making skills.

1.             Acquire new skills or develop the ones you already possess

Exercise a different part of your brain by working on something technical. Some great options are studying a foreign language, or learning programming. If that is too daunting, you could simply go for mastering a useful software. By doing this, you learn new hard and soft skills which can improve your resume.

2.             Experience arts and culture

You could learn an instrument, take up painting, dance or take time out to enjoy works of art in museums, the opera, etc. While on the surface, this may seem time-consuming, immersing yourself in these will increase your concentration ability and grant you a mood boost, both of which are useful in decision-making. If you try something really out of your comfort zone, something that requires more from you, you will gain more from it.

3.             Exercise

If you cannot commit to the arts, you can pick a sport and commit to it. This has the added benefit of improving your physical health. It has been proven that stronger bodies house stronger minds; your decision-making prowess will increase as your body gets stronger.

4.             Relate with people of all ages

It is easy to lose touch with people who are outside your age bracket. To get a better perspective of life, try staying in touch with people outside your age range.

From older people, you get insights on how to be more mindful when making choices and planning the future, while younger people can help you keep in touch with your earliest aspirations and motivations, your past achievements, and mistakes. Achievements bring you positivity and confidence, and being mindful of your mistakes makes sure that you do not repeat them.

Try to include a wide range of ages, as these interactions will give you access to a more balanced and detached perspective.

5.             Get involved with more people

Joining online communities and attending social events around you will make you feel like a part of a much bigger society, and give you a deeper understanding of choices and decision-making. You’ll also have more samples and experiences to draw on when making decisions, whether personally or professionally.

Now let’s look at some specific examples to help us drive our points home better.

Examples of Workplace Scenarios That Require Decision-Making

Every employee will at some point or the other need to make decisions in the workplace, whether it is at an operational level or at a strategic level. Below are examples of scenarios that may occur in the workplace:

• A manager might use information from a staff survey to decide whether to increase or decrease staff hours.
• Identifying ways to permanently resolve an intra-departmental conflict.
• Selecting the employee who is most deserving of a promotion.
• Creating concepts during a brainstorming session for the launch of a new product.
• A factory worker may recognize that the production process is faulty, identify the faulty machine, and notify their superiors about the issue.

Chapter 6: How to Use SweetProcess for Better Decision-Making

Making decisions as a manager or a team leader, or even as an employee at any level, is not easy. There are many factors to consider and many people whom the decisions affect. There are also the results of your decisions to consider, and all this is done while handling your other tasks. It may seem daunting—sometimes daunting enough to cause decision paralysis.

How do you effectively make good decisions with everything else going on? This is where SweetProcess comes in.

How Do You Use SweetProcess to Make Better Decisions?

Using SweetProcess, you can:

• Make a list of your decision-making guidelines. You don’t even have to make a conclusive list at once. You can take your time and let it come to you over a period of time.
• Document your decision-making guidelines as they come to you.
• When you feel you have enough to work with, you can begin to implement them, put them into action, and adjust as you go.
• If what you have is working, you can kick back and let demand drive your other decision-making guidelines.
• And using SweetProcess, you are able to monitor progress and adapt.
• If you have to make group decisions, you can collaborate with your team and the entire organization in real time.  You can update the team, get updates from any collaborator within the software, etc.
• You can even add conditional logic to a procedure. On the software, this is also known as branching, “yes/no,” and so on. On the SweetProcess app, you can eliminate decision paralysis for the team by adding a decision or multiple to a procedure. Everyone involved in the procedure will get to choose from the options you have created, and based on the option they choose, they proceed to a different path/branch.

Below is an explanation of how you can simplify the decision-making process for your team.

1. While editing a procedure, click on the downward facing arrow to the right of the “Add a Step” button.

2. Click on the “Add a Decision” button.

3. Give the decision a title.

4. Give the option a title.

5. Select the step to follow when a given option is chosen.

6. Repeat steps 4 and 5 until you have added all the options and step pairs as needed.

As soon as you are done with documenting all the steps of the procedure, click on “Approve,” which is on the top right-hand corner of the page, to approve the procedure and make it live.

Note: If you do not have the ability to approve the procedure, you will be able to request approval by clicking on the “Request Approval” button as shown below.

How MoneVista Used SweetProcess to Streamline Their Business Processes

Before SweetProcess, Luke Pickerill of MonteVista Homes, a business that provides custom homes at production prices, had problems with the kind of efficiency his business model required. At first, the absence of proper documentation slowed down the decision-making process which in turn reduced the efficiency of other business processes.

Identifying the problem

As Luke noted, “We started by having loose leaf standard operating procedures (SOPs). We started to say: there’s got to be a better way. We got all these loose-leaf papers. Some are over here on John’s desk and some are on Suzy’s desk, nobody knows what’s going on.”

At first, MonteVista went with manual documentation, which did not work out. Information needed to make important decisions were disjointed and more time was spent trying to put them together.

SweetProcess as a solution

After considering the alternatives, Luke and his team decided on SweetProcess because it was easy to use and their very important documentation was safe.

“I was a little bit skeptical in the beginning. You move from this paper world to this online world. It’s like: what happens if I do all this work and it gets lost? But that being said, SweetProcess made it so really easy. It’s just not complicated.”

With all the documentation now properly ordered and in one place where it is accessible to all members of the team on every project, MonteVista was able to function more efficiently.

“As we started working with the software and working with the team at SweetProcess, anytime we would have a request, SweetProcess was there to help us implement and get that figured out. An example of that would be using videos.”

Another added benefit of using SweetProcess is the very helpful customer support.

It is very easy to get onboard SweetProcess, and you can start for free. Sign up for the 14-day free trial, without inputting your credit or debit card details.

To begin your trial period with SweetProcess, click this link.

Conclusion

You have now been enlightened on decision-making: what effective decision-making is, the different models of decision-making, the different types of decisions, how to avoid poor decision-making and bad decisions, how to better your decision-making skills, and more.

You have all the information you need at hand. Remember the steps that follow gathering information: it is time to consider your alternatives and make a choice. If you need to look at your information again, simply reread the article; everything you need to fully grasp the topic is here.

And if you need a trusty tool to help you make decisions more effectively, then you should try SweetProcess.

Finally, if you want to consider your information on a lesser scale, here is a free cheat sheet of the seven steps of decision-making, with short notes on each. Click on the link below to download your own copy now.

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What is the process involves selecting the most logical choice from among two or more options?

What is the process of choosing a course of action for dealing with a problem or opportunity?

Which term refers to the process of making a choice or solving a problem?

Which term describes a cognitive reasoning process resulting in a selection from among potential alternatives?