Decisions. You’re faced with them from the moment you wake up in the morning (Should I pack a lunch or order Doordash? Stop for a coffee or show up on time?) and throughout the day. And while some decisions aren’t going to matter a lot in the long run, others are much more important.
Choosing something spur of the moment is all well and good when you’re picking out a pair of shoes or deciding what to change your Zoom background to, but things can get more complicated once you get to work. This is especially true if you’re in a leadership position where others count on you to make the best decisions. For managers, lackluster decision-making abilities can be more than just inconvenient; they can harm your job, your team, your projects, and even your organization.
Luckily, making effective decisions is a skill — and like all skills, it can be cultivated. Keep reading to learn more about what decision-making is, common mistakes to avoid, and how to nail it the next time you’ve got to make a choice.
The decision-making process
Did you know that whenever you decide on something, your mind automatically goes through a complicated process that eventually culminates in your choice? Your brain knows how to make great decisions, but when working on a challenging decision, it sometimes helps slow things down and consider each step carefully.
Step 1: Define the problem and desired solution
Ask yourself what problem you’re facing and what you want the outcome to be, then begin looking at the various solutions that present themselves.
Step 2: Utilize data and information
Collect any relevant information that could affect your decision regarding the problem. You may need to reach out to other members of your team or even to other groups or companies.
Step 3: Detail possible solutions
Have a brainstorming session with your team and outline as many possible solutions to your problem as you can. Choosing the first solution you think of is seldom the answer.
Step 4: Analyze your options
Narrow down viable solutions by carefully considering the advantages and disadvantages of each option.
Step 5: Pick the solution most likely to succeed
Once you’ve analyzed your options, choose the one that makes the most sense in your situation and is the most likely to help you meet your goals.
Step 6: Put your plan into action
You may want to create an outline of the steps you’ll need to take and distribute it to your team so everyone’s on the same page.
Step 7: Monitor and evaluate the decision
Make sure to document the decision and its outcomes for future reference. You may wish to include any measurements of your success, such as increased revenue, growth, better brand awareness, retention, improved engagement, satisfaction, etc. Be sure to ask yourself these questions:
- Did the decision solve the problem you were facing?
- Were the outcomes of the decision positive or negative?
- Who benefits from the decision? How?
- Did the decision negatively impact anyone? How?
- What would you do differently if you faced this problem again?
8 decision-making skills every effective manager needs
Anyone can follow a list of steps, so why are some people still better decision-makers than others? Experience can play a role, but so can developing certain skills. If you want to be a better decision-maker, here are eight traits you can cultivate to make it happen.
1. Defining objectives and criteria
How will you make an effective decision if you don’t know why you’re doing it? Always make it a point to clearly outline your goals and objectives before you even start brainstorming solutions.
Quick tip: Outline measures for success, determine what information you already have, and sketch out a plan for achieving your goals.
2. Gathering and analyzing information
Oftentimes the best decisions are those made by well-informed people. While gathering information may be time-consuming, it can help you avoid making less-than-stellar decisions.
Quick tip: Get your team and other people involved, use multiple resources (try chatting with your team over a virtual coffee break or setting up a one-on-one meeting with your boss, for example), and organize your info as you go.
3. Creative problem-solving and brainstorming
Working your way logically through a problem is more likely to result in effective decisions than reactively or emotionally choosing an option and hoping for the best.
Quick tip: Keep a cool head, consider all facets of a problem, and think outside the box to develop creative solutions.
4. Critical thinking and logical reasoning
Facts should inform your business decisions and be carefully considered to ensure the best outcome possible — in other words, look at the problem logically!
Quick tip: Steer away from emotional decision-making and try to look at the problem from every angle.
5. Ethical decision-making and considering consequences
Your problem will have many solutions — but not all of them are ethical. Decision-makers should have the foresight, empathy, and honesty to admit when a certain decision is not ethical and to avoid that decision, even if it is the easiest, most profitable, or most enticing of the bunch.
Quick tip: Examine your choice from every angle, ask others about the decision, and choose options that adhere to your moral values.
6. Effective communication and collaboration
Most problems can’t be solved alone, so working effectively with a team is paramount to great decision-making. But collaboration isn’t only for problem-solving; it’s also necessary for brainstorming solutions and evaluating decisions.
Quick tip: Discuss problems with your team, be open to receiving feedback, practice active listening, and encourage diverse opinions and input.
7. Decisiveness and timely action
Sometimes decisions come with deadlines, which is why truly great decision-makers need to be able to make effective choices without mulling the problem over for weeks. Time management is a must for any leader.
Quick tip: Keep a calm head, stay organized, and don’t be afraid to ask for assistance.
8. Evaluating outcomes and learning from experience
Today’s decisions are tomorrow’s guidelines; even poor choices can help you and future decision-makers choose more effectively in the future. That’s why it’s necessary to acknowledge, take accountability for, and learn from your choices.
Quick tip: Document the problem and decision, the outcome, and what you learned from it.
Applying decision-making skills: examples and scenarios
Decision-making happens every day in every industry and every job. It can look like this:
An IT tech who is choosing new software or hardware for his team.
- A retail team lead who’s working with staff to implement a new training program.
- A marketer who’s choosing the right freelancer to handle content creation.
- Shareholders voting on a merger.
- An HR team using people analytics to determine if the company needs to onboard new team members.
- A small business owner trying to find the perfect virtual office for her team.
Decisions can be as seemingly inconsequential as deciding whether to order additional inventory or something more serious like laying someone off, cutting budgets, or creating new product lines.
Effective decisions consider not just the present but the future as well. Let’s look at the inventory example and ask ourselves: What will happen to that extra inventory? Why are you ordering it? What could go wrong? Consider every angle that you can think of. If the products sell out quickly, great! You just increased sales. But what if you chose wrong and those items weren’t as popular as you thought they’d be? Now you’ve got some unwanted stock on hand, plus you’ve put time and effort into acquiring it.
How can the decision-maker choose correctly here? By implementing some skills like data gathering, analysis, and forecasting, to start with.
And you know what? Sometimes the best decisions are those that other companies would never implement. Take a look at the history of some of the most impactful business decisions, and you’ll find that creativity, flexibility, and empathy often lead to decisions that reshape organizations for the better.
Tips for improving your decision-making skills
- Seek feedback and communicate with others regarding the problem and potential decisions
- Learn from past decisions
- Expand your knowledge and stay informed
- Focus on continuous development
- Understand your situation; if you don’t understand it, gather more information
- Always weigh the pros and cons
- Give yourself a deadline
3 decision-making mistakes and how you can avoid them
Even the most experienced decision-makers can sometimes fall prey to common mistakes. Here are three mistakes to watch out for, and here’s how to make sure they don’t get in the way of making effective decisions.
1. Overconfidence and risk assessment failure
What it looks like: The decision-maker arrives at the solution easily and without seeming to consider other options. They’re confident that the choice is the right one, or they are overly confident in their forecasting or prediction abilities.
How to avoid it:
- Consider the consequences
- Be (or find someone to be) a devil’s advocate
- Ask for feedback
2. Analysis paralysis and delayed decision making
What it looks like: This mistake happens when a decision-makers overthinking prevents them from responding to a problem promptly.
How to avoid it:
- Give yourself deadlines
- Use the decision-making process framework
3. Cognitive biases
What it looks like: Psychological biases subconsciously influence decision-making due to a limited ability to process information. Cognitive biases include the halo effect, confirmation bias, gambler’s fallacy, hindsight bias, and more.
How to avoid it:
- Question your decisions
- Learn about cognitive biases so that you can recognize them
- Take time making decisions
- Focus on facts, not emotions
Tools and techniques for better decision making
We’ve talked about some of the skills involved in effective decision-making, but did you know there are also tried-and-tested tools to help you make better choices?
Decision matrix and weighted criteria
A weighted criteria matrix helps decision-makers analyze potential solutions. It does this by outlining the criteria for the decisions, assigning each measurement a different level of importance, then rating each choice based on the weighted criteria.
This technique can help you determine the strengths, weaknesses, opportunities, and threats of any given decision. This framework will help you understand what parts of the decision work well and what could be problematic.
Cost-benefit analysis and risk assessment
Completing a cost-benefit analysis can help you determine if your decision is financially viable by outlining the costs and benefits you can expect to come from the decision.
Ethical decision making: a closer look
Last but certainly not least is the importance of making ethical decisions. Ethical decision-makers consider everyone’s needs, adhere to the moral values of the organizations, and strengthen their team by making effective and fair choices.
When you’re tasked with making a decision, follow the decision-making framework discussed above, but also consider:
- Whether or not the problem or decision will be harmful or beneficial.
- What effects will the decision have beyond legal or financial ramifications.
- If everyone with a stake in the decision has had an opportunity to voice their opinion.
- Whether the decision respect everyone’s rights.
- If the decision is fair, benefits those it affects, allows you to adhere to your standards, etc.
By focusing on encouraging an ethical culture within the organization and setting clear standards regarding acceptable behaviors, you will create an atmosphere of trust, build team morale, attract customers and clients, and gain a better reputation. Model the ethical behavior you want to see, praise ethical decisions, and gently correct any unethical behavior that happens, then watch how your company changes.
Why making decisions matters
We’ve learned that effective decisions can make or break you in the business world — scary thought, right? Luckily, you can greatly improve your decision-making skills by adopting certain traits, following the example of great decision-makers, and avoiding some of the most common decision-making mistakes.
Will it be easy? Probably not. Developing great decision-making skills takes time and effort, but that’s something that you need to be willing to put in if you want to be a great leader. Take the time to invest in your decision-making skills today, and your future self will thank you.
Want more great tips to help you become a better manager, nail the remote-work gig, or become more productive in general? Check out the rest of our blogs today.
FAQs on decision making
What is decision-making?
The process of gathering information, assessing options, and then making a choice.
What is the first step in the decision-making process?
Identify and define the problem you’re facing and the desired outcome or solution you’re searching for.
What is ethical decision-making?
It is the process of making choices wherein the decision-maker responds sensitively to others’ needs and desires while also prioritizing moral principles rather than making decisions purely for personal gain.
Why is decision-making important?
In the workplace, the different decisions you may make will impact your team in various ways. You must have the relevant knowledge and foresight necessary to ensure that your decisions will positively benefit your team and organization both now and in the future.