7 Steps To Help Make Effective Decisions (With Tips)

All managers want to make the best decisions.

The decision‐making process involves the following steps:
  • Define the problem.
  • Identify limiting factors.
  • Develop potential alternatives.
  • Analyze the alternatives.
  • Select the best alternative.
  • Implement the decision.
  • Establish a control and evaluation system.

By any measure, decision making is a vital management skill. A vacillating manager or boss can quickly erode a company’s culture through employee resentment, a loss of momentum, a decline in team morale, and possibly even negative effects on the bottom line. On the other hand, having a manager who is prone to acting rashly and without all the information can have similar negative effects for a business. Â Â.


Tips for managers on making decisions

Although managers may use various decision-making processes, the following advice is applicable to all of them:

What is decision-making?

Making decisions involves deciding which course of action will best solve a problem. These decisions can be small, like the color of notepads you want to use, or big, like the best city for your company’s new factory. When making decisions that affect many of their employees, managers may use a variety of techniques. Regardless of their method of decision-making, successful managers frequently have the abilities necessary to assess available options for a problem and select workable ones.

7 steps of an effective decision-making process

Since there are many different ways to make a decision, many managers have their own decision-making process that works well for them. One process you could follow includes the following seven steps:

1. Identify an issue

Prior to beginning a problem-solving effort, it is critical to clearly define the nature of the issue. Without first comprehending the issue, a solution may be made that doesn’t fully address it. For instance, it’s crucial to determine the cause before deciding how to respond if one of your employees complains that sales have decreased. You risk missing the real issue, which is a new competitor with lower prices, if you assume without doing any research that the cause is a lack of brand awareness and search for a solution to address this problem.

2. Research

You might occasionally lack all the information required to make a decision. Spend some time learning more about the problem in these circumstances. If you are choosing between two businesses that offer the same service, look up reviews of each business or ask coworkers if they know anyone who has dealt with either company directly. If possible, seeking advice from someone with knowledge or experience on a particular subject could be another option.

3. List all possible solutions

The next step is to think about all the choices you could make to resolve a problem. This step may not take much time or consideration when contemplating something with a limited number of options, such as selecting between four vendors for a new product. This step is most advantageous when there are numerous viable options for a decision, but it is nonetheless crucial for any decision.

Conducting brainstorming sessions with everyone involved in the decision-making process is a useful step you can take. Encourage everyone to contribute as many ideas as they can during the meeting, and make an effort to value each one. Include those who will be impacted by the decision as much as you can because they may have more knowledge and solutions than you do.

4. Include each member of your team

You invite various perspectives and viewpoints that you might not have considered alone by including other employees. When selecting a task outside of your area of expertise, this can be useful. Additionally, workers are more likely to support a decision that they participated in making than one that was made without their input.

5. Define the potential results of each solution

The next step includes evaluating each potential idea you have. Consider figuring out which ones your company can actually carry out. For instance, a solution that calls for spending half of a company’s budget is probably impractical, but one that calls for hiring a few contractors may be. Compare the advantages and disadvantages of each potential solution once you have a list of them. This aids in identifying the solutions with the most advantages and the fewest disadvantages.

6. Choose the best option

Select the strategy that will most likely resolve your problem once you are aware of the options that are feasible and most advantageous. Keep in mind that you base decisions on the knowledge you currently possess; therefore, rather than searching for the ideal solution, choose one that addresses the issue and benefits your company at the time.

For instance, if you’re trying to choose a factory to make your new line of bath soaps, you might take into account a number of variables, such as price, product quality, and company reputation. Choose a company if you find one that offers a good price, high quality, and a solid reputation rather than using up more of your limited time searching.

7. Evaluate the result

After you make a choice and put a solution in place, keep reflecting on it to see how it affects the issue you were originally trying to solve. Consider checking in with the department a month later to see if they actually worked fewer overtime hours, for instance, if you decide to hire an assistant for your accounting department to lighten their workload. This can reveal whether your choice was successful or the reasons why it wasn’t.


What a manager does he does through decision-making?

According to the authors of Crucial Conversations, there’s four common ways of making decisions:
  • Command – decisions are made with no involvement.
  • Consult – invite input from others.
  • Vote – discuss options and then call for a vote.
  • Consensus – talk until everyone agrees to one decision.

Why is decision-making important for managers?

Peter Drucker, a management consultant, stated that decision-making is the foundation of all management actions. This demonstrates that decision-making is essential to organizing, directing, controlling, and staffing, effectively elevating it to the status of the core managerial responsibility.

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