Decision making Process

It is the process of making choices by identifying a decision, gathering information, and

assessing alternative resolutions. Using a step-by-step decision-making process can help one
make more deliberate, thoughtful decisions by organizing relevant information and defining
alternatives. This approach increases the chances of choosing the most satisfying alternative
possible. They include;
Step 1: Identify the decision
You realize that you need to make a decision. Try to clearly define the nature of the decision you
must make. This first step is very important.
Step 2: Gather 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. This step involves both internal and external
“work.” Some information is internal: you’ll seek it through a process of self-assessment. Other
information is external: you’ll find it online, in books, from other people, and from other sources.
Step 3: Identify the alternatives
As you collect information, you will probably identify several possible paths of action, or
alternatives. You can also use your imagination and additional information to construct new
alternatives. In this step, you will list all possible and desirable alternatives.
Step 4: Weigh the evidence
Draw on your information and emotions to imagine what it would 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. 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.
Step 5: Choose among alternatives
Once you have weighed all the evidence, you are ready to select the alternative that seems to be
best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may
very likely be the same or similar to the alternative you placed at the top of your list at the end of
Step 4.
Step 6: Take action
You’re now ready to take some positive action by beginning to implement the alternative you
chose in Step 5.
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. If the decision has not met the identified need, you may want to
repeat certain steps of the process to make a new decision. For example, you might want to
gather more detailed or somewhat different information or explore additional alternatives.
The following are the main types of decisions every organization need to take:
1. Programmed and non-programmed decisions:
Programmed decisions are concerned with the problems of repetitive nature or routine type
matters A standard procedure is followed for tackling such problems. These decisions are taken
generally by lower level managers. Decisions of this type may pertain to e.g. purchase of raw
material, granting leave to an employee and supply of goods and implements to the employees,
etc. Non-programmed decisions relate to difficult situations for which there is no easy solution.

2. Routine and strategic decisions:

Routine decisions are related to the general functioning of the organization. They do not require
much evaluation and analysis and can be taken quickly. Ample powers are delegated to lower
ranks to take these decisions within the broad policy structure of the organization. Strategic
decisions are important which affect objectives, organizational goals and other important policy
matters. These decisions usually involve huge investments or funds. These are non-repetitive in
nature and are taken after careful analysis and evaluation of many alternatives. These decisions
are taken at the higher level of management.

3. Tactical (Policy) and operational decisions:

Decisions pertaining to various policy matters of the organization are policy decisions. These are
taken by the top management and have long term impact on the functioning of the concern. For
example, decisions regarding location of plant, volume of production and channels of
distribution (Tactical) policies, etc. are policy decisions. Operating decisions relate to day-to-day
functioning or operations of business. Middle and lower level managers take these decisions. An
example may be taken to distinguish these decisions. Decisions concerning payment of bonus to
employees are a policy decision. On the other hand if bonus is to be given to the employees,
calculation of bonus in respect of each employee is an operating decision.

4. Organizational and personal decisions:

When an individual takes decision as an executive in the official capacity, it is known as
organizational decision. If decision is taken by the executive in the personal capacity (thereby
affecting his personal life), it is known as personal decision. Sometimes these decisions may
affect functioning of the organization also. For example, if an executive leaves the organisation,
it may affect the organization. The authority of taking organizational decisions may be delegated,
whereas personal decisions cannot be delegated.

5. Major and minor decisions:

Another classification of decisions is major and minor. Decision pertaining to purchase of new
factory premises is a major decision. Major decisions are taken by top management. Purchase of
office stationery is a minor decision which can be taken by office superintendent.

6. Individual and group decisions:

When the decision is taken by a single individual, it is known as individual decision. Usually
routine type decisions are taken by individuals within the broad policy framework of the
organization. Group decisions are taken by group of individuals constituted in the form of a
standing committee. Generally very important and pertinent matters for the organization are
referred to this committee. The main aim in taking group decisions is the involvement of
maximum number of individuals in the process of decision- making.

Common Challenges of Decision Making

Although following the steps outlined above will help you make more effective decisions, there
are some pitfalls to look out for. Here are common challenges you may face, along with best
practices to help you avoid them.
• Having too much or not enough information. Gathering relevant information is key when
approaching the decision making process, but it’s important to identify how much
background information is truly required. “An overload of information can leave you
confused and misguided, and prevents you from following your intuition,” according
to Corporate Wellness Magazine.
In addition, relying on one single source of information can lead to bias and misinformation,
which can have disastrous effects down the line.
• Misidentifying the problem. In many cases, the issues surrounding your decision will be
obvious. However, there will be times when the decision is complex and you aren’t sure
where the main issue lies. Conduct thorough research and speak with internal experts who
experience the problem firsthand in order to mitigate this. It will save you time and resources
in the long run, Corporate Wellness Magazine says.
• Overconfidence in the outcome. Even if you follow the steps of the decision making
process, there is still a chance that the outcome won’t be exactly what you had in mind.
That’s why it’s so important to identify a valid option that is plausible and achievable. Being
overconfident in an unlikely outcome can lead to adverse results.
Decision making is a vital skill in the business workplace, particularly for managers and those in
leadership positions. Following a logical procedure like the one outlined here, along with being
aware of common challenges, can help ensure both thoughtful decision making and positive
results.