A decision-making process includes the series of steps taken by a manager or another individual to initiate specific actions that meet certain needs. Ideally, decisions are made based on analyses of objective facts, supported by various tools and business intelligence (BI). Decision-making processes play an important role in determining both organizational and management activities. Decisions are made at every management level that affect whether or not business goals are met. In addition, decisions reflect the functional core values that an organization adopts to guarantee optimal controllability and growth.
Different options or directions are possible in every business situation. The variety of alternatives for each action makes the decision-making process a critical element of managing a successful business. It is therefore not surprising that the decision-making process is an integral part of modern management and is seen as the primary function of general management.
Every manager consciously and unconsciously makes hundreds of decisions. For managers it is therefore a reasoning process based on the knowledge, assumptions, preferences and beliefs of the decision maker. Each decision-making moment produces a final choice. The decision-making process is a continuous and indispensable part of the management of organizations and business activities.
Making decisions leads to different types of outcomes, challenges and successes. There are several approaches to decision-making, such as proactive and reactive decision-making. Proactive decision-making involves anticipating problems and events, and taking action to work around those problems and maximize successful outcomes. Reactive decision-making involves taking actions after an incident or problem occurs.
Decision-making process techniques
Techniques to support the decision-making process are divided into two categories: individual and group decision-making techniques. Examples of group decision-making techniques are the consensus method, voting, the Delphi method or participatory decision-making. When difficult decisions have to be made in daily life, many people use a list of pros and cons. This is a tool aimed at individual decision-making. The TDODAR decision-making model is also a decision-making tool. This model was originally developed for pilots in threatening situations.
It is believed that when people are rational beings, free to make their own decisions, they behave according to relational choice theory. This theory states that individuals consistently make choices that lead to the best outcome for that individual, while taking into account all available considerations. An example of a method to support the making of considerations is the cost-benefit analysis. In reality, however, there are multiple factors that can influence the decision-making process and lead people to make irrational choices. A rational decision is generally seen as the best decision to achieve set goals and results.
The decision-making process consists of several steps, depending on the method used. However, the same basic steps are reflected in all methods. The first step involves identifying a problem or issue on which to make a decision. After that, it is important to collect as much relevant information about this issue as possible and to identify the effect of various decisions. In step three, the alternative choices are evaluated and a final choice is made. The decision is then implemented in the organization, after which the situation and the impact of the decision are monitored. A rational decision-making process has several extra steps, such as weighing criteria and assessing options based on data.
Decision-making process tips and tricks
What are the most effective models and methods to support the decision-making process? How can I optimize my individual decision-making process? Or how do I ensure that my team makes better decisions in the workplace? How can I use the different theories of decision-making for my personal development?
The Monte Carlo Simulation is a computer-operated technique in which a physical process is not simulated once, but many times. This way, possible risks in quantitative analysis and decision making come to light.
The Ladder of Inference provides insight into the mental processes that occur within the human brain. It describes the perception starting from senses to the series of mental steps that need to be taken to work towards an action.
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