Making the right decision every time is the goal of those who practice management. Doing so requires deep knowledge and extensive experience in the field.
Decision-making happens at all levels of a business, moving in a pyramidal way from the mundane decisions made every day by low-level employees to far-reaching executive decisions that can require years of deliberation.
This process can be divided into scheduled and unscheduled decisions. Many will be pre-organized,executed by an employee under some kind of rule book or companyguidelines. However, it is unscheduled decisions that can have many more consequences.
Well, then, how can we make the best decision? Here’s the five-step guide to get you a better idea.
- Identify your goal. This may sound like a no-brainer for personal goals, but for business goals, the more stakeholders, the more likely your goals are to misalign.
- Collect relevant information. This includes identifying courses of action, identifying alternatives, and investigating both.
- Evaluate your options. At this point, decision makers must weigh the evidence.
- Make your choice.
- Evaluate your decision. This includes both short-term and long-term evaluation.
You may also be thinking, «well, this isn’t as easy as it sounds, maybe I need different tools, I don’t even understand myself.» That is why we have the following methodology to achieve this.
Tools and techniques
With most of the decision-making work condensed into steps two and three above, there are also dozens of tools and techniques for organizing your thoughts during these stages. We’ve put together some of the most popular options:
- Decision matrix: A decision matrix helps you evaluate all the options in a decision. When using the matrix, create a table with all the options in the first column and all the factors that affect the decision of the first row. Then score each option and weigh which factors are of greatest importance. A final score is then counted to reveal which option is best.
- T Chart – This chart is used when weighing the pluses and minuses of the options. It ensures that all positive and negative aspects are taken into account when deciding. This is also known as creating a list of pros and cons.
- Decision tree– This is a graph or model that involves looking at each option and the results of each. Statistical analysis is also carried out with this technique.
- Multivoting – Used when multiple people are involved in the decision. It helps narrow down a large list of options to a smaller group for eventually the final decision.
- Pareto Analysis – This technique is useful when many decisions need to be made. This helps prioritize which ones should be made first when determining which decisions will have the greatest overall impact.
- Cost-benefit analysis – This technique is used when weighing the financial ramifications of each possible alternative to determine what makes the most sense from an economic perspective.
- Joint analysis – This is a method used by business leaders to determine consumer preferences when making decisions.
- SWOT Analysis – SWOT means strengths, weaknesses, opportunities and threats, which is exactly what this planning tool evaluates.
- PEST Analysis – An acronym for political, economic, social and technological, PEST can improve decision-making and time by analyzing external factors. This method considers present trends to help predict future ones.