Decision Making Process

Decision Making Process

Robert Frost wrote,

“Two roads diverged in a wood,

and I took the one less traveled by,
and that has made all the difference.”

• But unfortunately, not every decision is as simple

especially when you’re making a decision related to
your business.
Why is it so hard to make a decision?
• If you’re a manager who sometimes dreads making decisions,
it's understandable. When you lead the decision-making
process, there's a lot at stake. Your team members count on
you to be a good leader. And sometimes you may not have
enough time to make a thoughtful decision.
• Other times, the information available does not offer a
straightforward course of action. The fear of making the wrong
decision can loom over your head and fill you with self-doubt.
Sometimes, you might struggle with decision fatigue and feel
exhausted by even the smallest decision.
• Being a decision-maker presents endless opportunities for
success and failure. Making a bad decision is always a
possibility. The key is making the best possible decisions with
the information you have.
• Trust your training and knowledge and keep improving
your decision-making processes.
Decision Making Process
• Whether you manage a small team or are at the head of a large
corporation, your success and the success of your company
depend on you making the right decisions—and learning from
the wrong decisions.

• Use these decision-making process steps to help you make more

profitable decisions. You'll be able to better prevent hasty
decision-making and make more educated decisions.

• Decision making is the process of making choices by identifying

a decision, gathering information, and assessing alternative
resolutions.

• This approach increases the chances that you will choose the
most satisfying alternative possible.
Decision Making Process – 7 Steps
Step 1: Identify the decision that you have to make

• You cannot solve a problem without knowing what it is, so start

by familiarizing yourself with the issue so you know precisely
what you’re deciding on. If someone has presented you with the
issue, ask open-ended questions to get detailed answers.

• If there are multiple decisions involved in solving a problem,

break them down into single steps and go through this process
for each, eliminating decisions if one step solves one of them.

• Simpler example, if your goal is to buy a new laptop, you need

to consider your budget, your needs, and your preferences.
Decision Making Process – 7 Steps
Step 2: Gather & Review relevant information
• Collect some pertinent information before you make your
decision: what information is needed, the best sources of
information, and how to get it.

• Some information is internal: you have to seek it through a

process of self-assessment. Other information is external: you
have to find it online, in books, from other people…

• Try to stay organized by using strategies like flowcharts or

colored sticky notes – do not lose an essential documents. For
fresh perspectives get other team members involved.

• Simpler example, if you are deciding whether to pursue a

master's degree, you need to research the costs, benefits,
requirements, and opportunities of different programs.
Decision Making Process – 7 Steps
Step 3: Identify the alternatives

• You can also use your imagination and additional information to

construct new alternatives. Then, identify several possible paths
of action, or alternatives.

• How many possible solutions are there to this decision after

your review? Several options? Many alternatives?

• The best choice is still not there. Focus on listing possibilities

by asking questions and listening to feedback.

• Simpler example, if you are choosing a vacation destination, you

need to weigh the factors such as distance, cost, weather, and
activities.
Decision Making Process – 7 Steps
Step 4: Weigh the evidence
• Draw on your information and emotions to imagine what it will
be like if you carried out each of the alternatives to the end.

• Evaluate whether the need identified in Step 1 would be met or

resolved through the use of each alternative.

• Think about your competitors and the outcomes they will have
with such decisions.

• As you go through this difficult internal process, you’ll begin to

favor certain alternatives: those that seem to have a higher
potential for reaching your goal.

• Finally, place the alternatives in a priority order, based upon your

own value system. Don’t rush to this stage. Feel comfortable.
Decision Making Process – 7 Steps
Step 5: Choose among alternatives

• You've arrived at the step where you make your final decision.
Review your information and alternatives and weigh your
evidence. Then, make your decision. Trust yourself.

• You may even choose a combination of alternatives.

• Simpler Example, if you are hiring a new employee, you need to

pick the candidate that has the best skills, experience, and fit
for the role.
Decision Making Process – 7 Steps
Step 6: Take action

• The final step is executing your decision. Create a plan that sets
you and your business up to succeed.

• Strategic planning could take a while, but you will only reap the
benefits of a successful decision, such as - satisfied team
members and mental clarity if you execute your action plan
properly.

• Simpler example, if you are launching a new product, you need

to develop a marketing strategy, a budget, and a launch date.
Decision Making Process – 7 Steps
Step 7: Review your decision & its consequences

• In this final step, consider the results of your decision and

evaluate whether or not it has resolved the need you identified
in Step 1.

• Reflecting on your step-by-step process and the result of your

decision is important to internalize your work and set yourself
up for continued success.

• The goal when reflecting is not to convince yourself you made

all the right choices. It is to be honest about what worked and
what did not so you can learn from each decision.
Decision Making Process – 7 Steps
• Did you solve the problem you first identified?
• How good were you at gathering information?
• Are your goals being met?
• Did you take advantage of all the resources at your disposal?

• Tapping into the knowledge of co-workers and colleagues helps

you identify what your options are.

• Take notes when creating your post-mortem, jotting down what

you learned from the process and whether you’d make any
changes. This way, you’ll be prepared when decisions get
harder.

• Simpler example, if you are moving to a new city, you need to

assess your quality of life, social network, and career prospects.
Challenges in Process
• The decision-making process can be challenging in the project
management world. It does not matter if you've been making
managerial decisions for decades: hiccups happen to everyone.

Here are four common challenges you may encounter in the

decision-making process:
Challenges in Process
1. Having too much information

• With all of the information gathered, it's easy to get

overwhelmed. Having too little knowledge can be overwhelming,
too, and let your biases slip in. With practice, prioritizing and
picking the most crucial information will become easier.

• Do not hesitate if you need to do some more research to better

guide your decisions. Research skills never go out of style, and
you’ll know how to prioritize what you find.

• Be realistic, though. As a manager, you rarely have all of the time

or information you might like. Being 100% certain is not the
goal. The goal is to give yourself the resources necessary to make
an educated decision.
Challenges in Process
2. Being overconfident

• Even though you are doing your best to make informed

decisions, you could always make the wrong decision. It's part
of life. But if you don’t acknowledge this possibility, it could
make you more prone to mistakes or failure.

• Being confident is great, but overconfidence can lead to

unnecessary errors.

• Too much self-confidence can cause you to alienate others, have

tunnel vision when making decisions, or take on too much
responsibility.
Challenges in Process
3. Not identifying the problem correctly

• The first step in your decision-making process is an important

one. It sets the tone for the rest of your research. If you don't
identify what you are trying to decide on, you cannot reach the
best decision in the end.

• Some decisions are complex and require a lot of time, so do not

rush.
Challenges in Process
4. Getting everyone on board

• The bottom line is that sometimes you are the decision-maker.

As a manager, you have the final word, but hearing feedback
and working collaboratively are crucial. Be clear with your team
whether the decision will be collaborative or not to set
transparent expectations.

• Will you be taking a vote as a team? Or are you getting their

input so you can make the final decision yourself? Be as
transparent as possible.

• If the rest of your team members cannot agree on anything, it

makes your decision more challenging and clear communication
more important. Being a good manager means focusing on how
your whole team operates. You might need to strengthen your
team's communication or problem-solving skills.
Decision Making Process – Basis
Managers can make decisions on the basis of rationality, bounded
rationality, or intuition.

1. Rational decision making. Managerial decision making is

assumed to be rational—that is, making choices that are consistent
and value-maximizing within specified constraints.

Rational manager would be completely logical and objective and

not in his/her own interests.

Rationality can be met if the manager is faced with problem where:

(1) goals are clear and alternatives limited
(2) time pressures are minimal and the cost of finding and
evaluating alternatives is low
(3) organizational culture supports innovation and risk taking, and
outcomes are concrete and measurable.
Decision Making Process – Basis
2. Bounded rationality. As the perfectly rational model of
decision making is not realistic, managers tend to operate under
assumptions of bounded rationality, which is decision-making
behavior that is rational, but limited (bounded) by an individual’s
ability to process information.

Under bounded rationality, managers make satisfying decisions, in

which they accept solutions that are “good enough.”
Decision Making Process – Basis
3. Intuitive decision making. Managers also regularly use their
intuition.

Intuitive decision making is a subconscious process of making

decisions on the basis of experience and accumulated judgment.

Although intuitive decision making will not replace the rational

decision-making process, it does play an important role in
managerial decision making.
What are decision-making styles?
According to Rowe and Boulgarides’ Decision Style Theory (DST),
decision-making styles work along two axes:

• The Rowe and Boulgarides Decision Style Theory examines the

context for decisions across two continua.

• One side relates to the decision-makers tolerance of uncertainty

(high tolerance to low) and the other relates to whether the
individual is more oriented to the completing the task or to
social accomplishment.

• The Decision Style Inventory (DSI) developed by Rowe, classifies

respondents into four decision styles:
Directive, Analytic, Conceptual, and Behavioral.
What are decision-making styles?
Combining these two fields creates four decision-making styles:

1. Directive decision-makers have a low tolerance for ambiguity

and a technical value orientation

2. Analytic decision-makers have a high tolerance for ambiguity

and a technical value orientation

3. Behavioral decision-makers have a low tolerance for

ambiguity and a social value orientation

4. Conceptual decision-makers have a high tolerance for

ambiguity and a social value orientation
Decision Making Styles
• Managers have different styles in making decisions and solving
problems.

• One perspective proposes that people differ along two

dimensions in the way they approach decision making.

• One dimension is an individual’s way of thinking—rational or

intuitive.

• The other is the individual’s tolerance for ambiguity—low or

high.

• Diagramming these two dimensions lead to a matrix showing

four different decision-making styles.
Decision Making Styles
Directive or Autocratic Decision Making

• The directive style is characterized by low tolerance for

ambiguity and a rational way of thinking.

• Managers who follow this style assess few alternatives and

consider limited information while taking any decision.

• Directive. If you are an autocratic leader, you likely favor the

directive decision-making style. Those who prefer this style
make judgments based on their own experiences and opinions
without the input of others
Decision Making Styles
Directive or Autocratic Decision Making

• Former Apple CEO Steve Jobs was a classic directive decision-

maker.

• For most of his working life, Jobs was an opinionated manager

who went with his gut, rarely consulted, and micromanaged
everything — even the food in the cafeteria. Jobs didn’t do
market research since he believed customers didn’t know what
they wanted.

• Under his leadership, Apple released the iMac, iPod, iPhone, and
iPad, reversed the company’s previous decline, and grew into a
business with one of the largest market capitals in the world.
Decision Making Styles
Analytical Decision Making
• The analytic style is one characterized by a high tolerance for
ambiguity and a rational way of thinking.

• Managers using analytic decision making style would like to

have more information and consider more alternatives before
coming to a conclusion.

• Analytical decision-making is the psychological concept of

cognitive process, which means the ability of the knowledge
gathered by the brain and implementation of knowledge
according to the understanding of employees.

• Such managers are careful decision makers as they have the

ability to adapt or cope with unique situations.
Decision Making Styles
Analytical Decision Making

• Billionaire investor Warren Buffett is an example of an analytic

decision-maker.

• Buffett famously does careful homework on every stock he

invests in by reading as many annual reports as possible.

• He assimilates massive amounts of data relating to thousands of

companies and picks only the very few he expects will be
runaway successes in the long term, an approach that’s made
him the wealthiest investor in the world.
Decision Making Styles
Behavioural Decision Making

• The behavioural style is characterized by a low tolerance for

ambiguity and an intuitive way of thinking.

• It focuses on relationships more than the task. It evaluates the

feelings of others as part of their decision-making process.
Behavior decision-makers have a low tolerance for ambiguity
and a social focus as they evaluate solutions.

• Leaders who follow this model believe in participative

management and consider the achievement of subordinates and
always take suggestions from them.

• They try to get inputs from subordinates through meetings and

discussions. They try to avoid/resolve conflicts as acceptance by
others is important to them.
Decision Making Styles
Behavioural Decision Making

• Former New Zealand Prime Minister Jacinda Ardern promoted

consensus throughout her leadership term and demonstrated
outstanding behavioral decision-making during the country’s
COVID-19 response.

• Ardern conferred with her advisors to determine the best way to

proceed during the pandemic.

• Then, she used empathy, honesty, and humor (noting, for

example, that the Easter Bunny and the Tooth Fairy were
considered essential workers) to build bipartisan political
support and virtually unanimous public favor for strict isolation
policies.
Decision Making Styles
Conceptual Decision Making

• The conceptual style is characterized by a high tolerance for

ambiguity and an intuitive way of thinking.

• A conceptual decision-making style is a problem-solving

approach involving multiple people coming together to
brainstorm potential solutions. This style of decision-making is
characterized by looking at the big picture, taking into account
potential future variables and opinions, and ideas.

• Such managers are careful decision makers as they have the

ability to adapt or cope with unique situations.
Decision Making Styles
Conceptual Decision Making

• Nobel Peace Prize winner Ellen Johnson Sirleaf, President of

Liberia from 2006–2018 and Africa’s first female head of state,
is an excellent example of a conceptual decision-maker.

• Sirleaf is famed for her ability to relate to people from diverse

cultures, educational backgrounds, and walks of life, from
diplomats to farmers.

• She navigated the difficult position of being a female leader in a

deeply patriarchal society, ultimately turning around a country
that was in significant debt. She met with foreign heads of state,
conferring with them and petitioning for aid and debt relief,
and introduced novel solutions to widespread food
insecurity following an extended consultation process.
Decision Making Styles
• In reality, most managers have both a dominant style and
alternate styles, with some managers relying almost exclusively
on their dominant style and others being more flexible,
depending on the particular situation.
Adapt your decision-making to the situation at
hand
Great leaders are self-aware: they know when to play to their
strengths and when situations call for a different approach.

Use the directive style when:

• You have to make a quick decision
• There are limited options
• There aren’t any complicated ethical issues to tease out
• You’re in a stable situation with predictable cause-and-effect
results
Adapt your decision-making to the situation at
hand
Use the analytical style when:
• You want to examine multiple options in detail before deciding
• There’s a lot of relevant data available
• There’s enough time to think things through
• You need to do some digging to understand the relationships
between cause and effect

Use the behavioral style when:

• The decision will have a big impact on stakeholders’ lives
• There’s enough time to reach a consensus
• You’re looking for practical rather than creative solutions
• It’s important that team members feel included in the decision
Adapt your decision-making to the situation at
hand

Use the conceptual style when:

• There’s an environment of psychological safety (people feel safe
offering unusual or half-formed ideas)
• A novel solution could lead to a significant breakthrough in how
the company does things
• You need to plan for the long term and prepare for uncertainty
• Your decision is ethically complex and will have a broad social
impact
• You want to create a new option instead of choosing between
existing ones
Types of Problems & Decisions
• Managers encounter different types of problems and use
different types of decisions to resolve them. Problems can be
structured problems or unstructured problems and decisions
can be programmed decisions or non-programmed decisions.

• Structured problems are straightforward, familiar, and easily

defined. In dealing with structured problems, a manager may
use a programmed decision, which is a repetitive decision that
can be handled by a routine approach.

• Managers rely on three types of programmed decisions:

a. A procedure is a series of interrelated sequential steps that can
be used to respond to a structured problem.
b. A rule is an explicit statement that tells managers what they
can or cannot do.
c. A policy is a guideline for making decisions.
Types of Problems & Decisions
• Unstructured problems are problems that are new or unusual
and for which information is ambiguous or incomplete.

• These problems are best handled by a non-programmed

decision that is a unique decision that requires a custom made
solution.

• At higher levels in the organizational hierarchy, managers

deal more often with difficult, unstructured problems and make
non-programmed decisions in attempting to resolve these
problems and challenges.

• Lower-level managers handle routine decisions, using

programmed decisions.
Problem and opportunity Findings
Problem finding process is often informed and intuitive.
Four situations usually alert managers to possible problems.

1. A deviation from past experience means that a pervious

pattern of performance in the organization has been broken.
Eg.,This year’s sales are falling behind last year’s expenses
have suddenly increased; employee turnover has risen. Such
events signals to the manager that a problem has developed.

2. A deviation from a set plan means, the manager’s

projections or expectations are not being met.
Eg., Profit levels are lower than anticipated; a department is
exceeding its budget; a project is off schedule. Such events tell
the manager that something must be done to get the plan
back on course.
Problem and opportunity Findings
3. Other people often bring problems to the manager.
Eg.,Customers complain about late deliveries; higher level
managers set new performance standards for the
manager’s department employees resign. Many decisions
that managers make daily involve problems presented by
others.

4. The performance of competitors can also create a problem

solving situations.
Eg., When other companies develop new processes or
improvement in operating procedures the managers may
have to reevaluate processes or procedures in his or her
own organization.

Case Study - Identifying a problem at Coca Cola ―If you don’t use
it, you loose it.‖ Atlanta 1989, 1500 employees trained in TQM
Stopping by Woods on a Snowy Evening – Robert Frost
Whose woods these are I think I know.
His house is in the village though;
He will not see me stopping here
To watch his woods fill up with snow.

My little horse must think it queer

To stop without a farmhouse near
Between the woods and frozen lake
The darkest evening of the year.

He gives his harness bells a shake

To ask if there is some mistake.
The only other sound’s the sweep
Of easy wind and downy flake.

The woods are lovely, dark and deep,

But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.