Decision Making Process Steps

decisionmakingprocessstepsBe it a corporate environment where a team is involved in the process of making a decision, or an individual deciding for himself and or his family, decision making is an important daily task that every human being goes through. Simple decisions as to whether one should have eggs and grits or sandwich for breakfast to whether one should write a report to whether one should go to work rather than call it sick, to complex ones such as whether to buy a second car, all involve a cognitive decision making process.

Speaking of cognitive decision making, there may be instances where a decision making process may not be scientific in the true sense of the word. Humans are emotional beings and it does play an important role in an average human beings life. Resultantly, some decisions can be different to just being ‘simple cognitive’. An automobile design maker would want to push through his new design against those created by others, in spite of the fact that it is fundamentally flawed, just because he is emotionally attached to it. A business may try to launch a new product even though the market conditions are not suitable for it, just because a key-decision maker considers it to be a personal agenda. In another instance an individual may decide to go through with a big purchase even though his financial conditions are not right, just because he has made a promise to someone special.

Decisions made can involve just as much of an average individual’s cognitive abilities as his emotional intelligence. Some decisions are made by our subconscious mind and there are no thinking involved at all in making them. E.g. if you see a train crossing a railroad you immediately press hard on the brakes to avoid ramming into the passing train. If you see a downhill your steps are immediately bigger (or smaller if you are older). There are no thought process, no information gathering and no pause or sigh before the decision is fretted out. You act in an instant, your subconscious mind taking over the decision making process. It is also called as instinct. For other decisions, however, the process is a bit longer and cumbersome and requires a complex information gathering process followed by evaluation of the alternatives.

For a large part the following are the steps that are involved in a typical decision making process. Understandably such decisions are not taken by the subconscious mind.

Steps in a Decision Making Process

1. Identifying the Reason for the Decision Making Process

Identifying the reason for the decision making process is the first cognitive step. In many situations a decision maker may not have been the originator of the process. He may just be a line manager or a junior executive handling documentation in a large corporation. So, the first step in making the process of decision is to identify the reason and ask for clarifications if necessary. To reiterate, a line manager may not have much information as to the reasons of the decision. His decision may only play a small part in a larger scheme of things, but nevertheless individual decisions, such as these, are important.

2. Gathering the Necessary Information

Any decision making process must take into consideration the many aspects that would play a part and or be affected by such decision. A rather ‘harmless’ household decision to go on an overseas vacation may play a major part in the financial aspects of the family. A household may have to cut down on expenses in other areas in order to pull money for such a vacation. A more important decision such as investing in a home can mean a major string of expense cut-down in order to channelize money for the mortgage. The same way a business decision, such as whether to acquire a competitor can affect the core business financial aspects of a business. The business may have to cut down on its manpower in order to streamline its activities and in order to absorb the investment as well as to reduce redundancies appearing in many ranks. Still others may have much wider ramifications than just cost or redundancies. E.g., a change in the training process for new recruits in a business may require not only investment in new training tools but also in the whole mindset of the business. Whatever may be the need for such decisions to be made, it is a pre-requisite to find as much information as possible so that the right choice can be made.

3. Basis for Weighing the Options

What is the basis for weighing the options? If a business or for that matter a household or an individual deciding for himself is engaged in the process of making a decision, the basis for weighing the options has to be established first. A household may be deciding on whether it is prudent to invest in a home. While there is nothing in the world that can beat the convenience and comfort of owning a home, the financial aspects has to be considered too. Does the man of the house qualify for a home on his own salary? Does his spouse also have a job and can she be a co-applier for the loan? Does one go for a fixed interest or an adjustable rate loan? Would he / she believe what the lender says about the APR or he / she decides to do additional investigation?

Again, a business may be deciding on a new plant at a location that is closer to a potential market. The factors that may weigh heavily on the decision making process is whether the products can be easily stored at a nearby storage facility while still being manufactured at the existing manufacturing establishments. They would also want to know whether the transport costs applicable, in the previous steps, would be reasonable, and would not justify a new manufacturing establishment. The business may also have to wonder whether the capacity of the new plant near to the new market would be running in full capacity or there would always be opportunity cost that is wasted. Answers to these questions will decide whether the decision to invest in a new plant be justifiable or not.

Different entities may place different levels of importance to different aspects while weighing the pros and cons. While the sole basis, at the end of the day, for a manufacturing or service business may be profitability a household may look at convenience and other factors when making a decision. Non-profit organizations may only be looking at the solution that provides the greatest benefit to their patrons and members.

4. Assessing the Pros and Cons of Different Choices in Hand

Every business and for that matter every household goes through a process where the many alternatives are weighed and the right solution is selected on the basis of such decision making parameters. This is where each and every individual involved in the decision making process places forth his / her comments and arguments. In a corporate business environment the key decision makers may sit over several sessions and decide after due deliberations the right decision and the ideal course of action based on the information gathered in the earlier steps.

The process as described in the opening paragraphs may be less cognitive at times and more emotional in nature. Sometimes though the process of decision making can be simplified if an experienced person is a part of the process. Experience denotes knowing what the pros and cons of a decision would be and thus being able to discount some alternatives and select the one that is most likely to fit in the scheme of things. An experienced individual is also likely to go with his / her intuition. Although that approach may appear to be less cognitive at times, it is likely to be the best solution in the long run.

5. Applying the Decision and Taking Feedback

The final step of every decision making process is its implementation. If a household has decided in going for an overseas vacation and that means curtailing non-essential expenses for the next 6 months including eating out or using two cars or non-essential purchases, that has to be strictly implemented. If a business has decided to change the recruitment process then the implementation means re-training the onboarding and hiring staff, investing in new training tools and changing the whole outlook of the business in terms of the training process. If a business has decided to invest in a new manufacturing plant closer to a target market that needs to be implemented. Investment into new machinery, additional manpower to man the machines, vehicles for distribution of the finished products to the target market has to be acquired. Training of the hired manpower has to be done and administrative staff needs to be recruited for supervising the establishment.

Decision making doesn’t have to be difficult or stressful. It does not have to be like ordering a cup of coffee at Starbucks in order to get an absolutely defining sense of one’s own self. With proper training, you can learn to make smart and quick business decisions with confidence.