1. DecisionMakingProcess
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Introduction
Decisionmakingisadailyactivityforanyhuman being.There isnoexceptionaboutthat.Whenitcomes
to businessorganizations,decisionmakingisahabitand a process aswell.
Effective andsuccessfuldecisionsmake profittothe companyandunsuccessful onesmake losses.
Therefore,corporate decisionmakingprocessisthe mostcritical processinanyorganization.
In the decisionmakingprocess,we choose one course of actionfromafew possible alternatives.Inthe
processof decisionmaking,we mayuse manytools,techniquesandperceptions.
In addition,we maymake ourownprivate decisionsormaypreferacollective decision.
Usually,decisionmakingishard.Majorityof corporate decisionsinvolve somelevel of dissatisfactionor
conflictwithanotherparty.
Let's have a lookat the decisionmakingprocessindetail.
Stepsof DecisionMakingProcess
Followingare the importantstepsof the decisionmakingprocess.Eachstepmaybe supportedby
differenttoolsandtechniques.
DecisionMakingProcess

2. Step1: Identificationof the purpose of the decision
In thisstep,the problemisthoroughlyanalysed.There are acouple of questionsone shouldaskwhenit
comesto identifyingthe purposeof the decision.
What exactlyisthe problem?
Why the problemshouldbe solved?
Who are the affectedpartiesof the problem?
Doesthe problemhave a deadlineora specifictime-line?
Step2: Informationgathering
A problemof anorganizationwill have manystakeholders.Inaddition,there canbe dozensof factors
involvedandaffectedbythe problem.
In the processof solvingthe problem,youwillhave togatheras muchas informationrelatedtothe
factors andstakeholders involvedinthe problem.Forthe processof informationgathering,toolssuchas
'CheckSheets'can be effectivelyused.
Step3: Principlesforjudgingthe alternatives
In thisstep,the baseline criteriaforjudgingthe alternativesshouldbe setup.Whenitcomesto defining
the criteria,organizational goalsaswell asthe corporate culture shouldbe takenintoconsideration.
As an example,profitisone of the mainconcernsineverydecisionmakingprocess.Companiesusually
do notmake decisionsthatreduce profits,unlessitisanexceptional case.Likewise,baseline principles
shouldbe identifiedrelatedtothe probleminhand.

3. Step4: Brainstormandanalyse the differentchoices
For thisstep,brainstormingtolistdownall the ideasisthe best option.Before the ideagenerationstep,
it isvital to understandthe causesof the problemandprioritizationof causes.
For this,youcan make use of Cause-and-EffectdiagramsandParetoCharttool.Cause-and-Effect
diagramhelpsyouto identifyall possible causesof the problemandParetocharthelpsyouto prioritize
and identifythe causeswithhighesteffect.
Then,youcan move ongeneratingall possible solutions(alternatives) forthe probleminhand.
Step5: Evaluationof alternatives
Use yourjudgementprinciplesanddecision-makingcriteriatoevaluate eachalternative.Inthisstep,
experience andeffectivenessof the judgementprinciplescome intoplay.Youneedtocompare each
alternative fortheirpositivesandnegatives.
Step6: Selectthe bestalternative
Once you go throughfromStep1 to Step5, thisstepis easy.Inaddition,the selectionof the best
alternative isaninformeddecisionsince youhave alreadyfollowedamethodologytoderiveandselect
the bestalternative.
Step7: Execute the decision
Convertyourdecisionintoaplanor a sequence of activities.Execute yourplanbyyourself orwiththe
helpof subordinates.
Step8: Evaluate the results
Evaluate the outcome of yourdecision.See whetherthere isanythingyou shouldlearnandthencorrect
infuture decisionmaking.Thisisone of the bestpracticesthatwill improve yourdecision-makingskills.
Conclusion

4. Whenit comesto makingdecisions,one shouldalwaysweighthe positive andnegative business
consequences andshouldfavourthe positive outcomes.
Thisavoidsthe possible lossestothe organizationandkeepsthe companyrunningwithasustained
growth.Sometimes,avoidingdecisionmakingseemseasier;especially,whenyougetintoalot of
confrontationaftermakingthe toughdecision.
But, makingthe decisionsandacceptingitsconsequencesisthe onlywaytostay incontrol of your
corporate life andtime.
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Advertisements7StepDecisionMakingProcessInfographic
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Thisfree infographicwillhelpyouunderstandanduse the 7 stepdecisionmakingprocess.Theseare the
essential phasesof structureddecisionmakingactivity,especiallyforbigorimportantdecisions.
Our colourinfographicisagreat tool for managersandtrainersto use inteam meetingsorteam
buildingsessions.Orit’sa fabulouslearningresource forteachersandstudents.
Clickon the image belowandstart to improve yourdecisionmaking…in justa minute!
Thisis one of our Manage ina Minute pages.These containpractical tipsonessential management
topics.
No fussor side-tracks,theygetstraighttothe point.
The 7 stepdecisionmakingprocessinfographic
The rational decisionmakingprocessconsistsof asequence of stepsdesignedtorationallydevelopa
desiredsolution.Typicallythese stepsinvolve:
7 StepDecisionMakingProcessInfographic

5. 1 Identifyaproblemoropportunity
2 Gather information
3 Analyze the situation
4 Developoptions
5 Evaluate alternatives
6 Selecta preferredalternative
7 Act on the decision
To downloadyourfree 7 stepdecisionmakinginfographic,justclickonthe image >>>>>
More on the 7 steps indecisionmaking
7 Stepsindecisionmaking

6. You’ll findmore onthese andotherpractical techniquesinoure-guide:MakingBetterDecisions.
It’spackedwithpractical tools,clearprocesses,greattools,usefultips,thoughtful insights,and
emergingideason“nudging”decisions.
Use the toolsinthisguide to helpyourdecisionmaking:
Tool 1: Do youneedto make a decision?
Tool 2: The POCA decisionmakingmodel
Tool 3: Decisionlevels
Tool 4: 7 stepdecisionmakingprocess
Tool 5: Team decision making
Tool 6: Evaluatingalternatives
See foryourself howtouse the 7 stepsindecisionmaking,tohelpyoube abettermanager.
_----------------------------------------------------------------------------------------------------------------------------
Instructor:Rob Wengrzyn
We will be discussingthe formal decisionmakingprocessformanagers.The processwill show youhow
to lookat a problemanduse a seriesof stepstoaddressthatproblem.Itisa keyelementof managerial
decisionmakingandone thatisverypractical forthe businessenvironment.
DecisionMaking
Decisions,decisions,decisions - seemslikewe have tomake themall day,everyday.Whatto wear,
whatwe have to doat work,whatdo to withthe childrenwhenwe pickthemupfromschool andso on
and so on?let'sface it - our livesare full of decisions.
Some we can make on autopilotastheyare simplynotthatinvolved,while otherstake careful planning
and thoughtprocessestoensure we make the bestdecisionpossible.Usuallythisisbecause the
decisionthatneedstobe made isone that has significantimpactif we make the incorrectone.Having
saidthat, letustake a lookat the decisionmakingprocessassociatedwithmanagement.

7. Definingthe Problem
The firststepis to define the problem,orwe couldsay,'What are we tryingto fix?'Forour purposes,we
will use someone whowantstopurchase theirfirsthome,aprettybigstepina person'slife and
somethingthatwe have togive a lot of thoughtto inorder to make sure we pickthe righthouse.
Justwantingto purchase yourfirsthome isnot reallyaproblem;thus,the problemneedstobe defined
more.So,in thiscase,the problemiswe are tiredof rentinganapartmentand wanta place of our own
so we can get some equityandnotjustpay renteach monthand getnothingfromit.
IdentifyingLimitingFactors
Nextwe have toidentifylimitingfactors.Forthisstep,we needtoreview all the factorsthatcouldstop
us fromactuallysolvingthe problem - basically,things thatwouldgetinourwayto stopus from fixing
the issue thatwe want to fix.
It isimportantto understandthat,at times,we come acrossa limitingfactorthatstopsour processdead
inits tracks.For example,if youhadnomoneyto putdownon a house as a downpayment,thenyou
wouldnotbe able to move forward,asyou have to putsomethingdowninorderto purchase the house.
For our purposes,we will assume youhave the moneytoputdownand are readyto become a
homeowner.
Now,let'ssaywe have the followinglimitingfactors:
You can onlyafford$600.00 a monthfor a mortgage payment.
You do notown a car andhave to take the busto work,so the house needstobe near a busstation.
You needthree bedroomsandtwobathrooms.
DevelopPotential Alternatives
Nowthat we have the limitingfactors,we have todeveloppotential alternatives.Here youwill be
lookingatwhat alternativesare availabletohelpyougettoyour goal.Since we know our limiting
factors,we can nowdevelopalternativesto helpusaddressthose factorsandhelpuswithourproblem.

8. For example,we couldreviewthe followingpotentialalternatives:
Stay where youare and notbuy a home (thoughthat'sreallynotsolvingthe problemordealingwith
alternatives).
If the house youreallylike ismore moneythanyoucanafford,youcan cut backon otherexpensesor
geta roommate tohelppaythe monthlymortgage.
You couldpurchase a bike andride to the bus stopif it's not close enoughandtake yourbike to work
withyouif you finda home youlike andcan affordthat isnot neara busstop.
Reduce yourdesire toonlytwobedroomswiththe thoughtthata smallerhome will be lessmoney.
Nowyouwoulduse those criteriatolookfor homesthattake intoaccount your limitingfactorsbutalso
take intoaccount the alternativesyou've thoughtthrough.Youare weighingyourlimitingfactorsagainst
your alternativestosee howtheyblendtogethertogetyouthe home you wantthe way youwant it.
Analyze the Alternatives
Nowyouhave to analyze the alternatives.Youwill take eachalternative youhave andtryto determine,
inorder,what isthe most feasible tothe leastfeasible.Lookingatthese alternatives,there are none
reallythatare deal-breakers.However,asIsaid,we need to be realisticaboutthese.Thus:
You mightnot be able to findaroommate youcan actuallylive with.
You mightrealize thattwobedroomsissimplynotgoingtoworkfor the space you need.
Cuttingback onexpensesissomethingyoucoulddoand workwithwhile youfindwaystosolve the
otherissuesastime goesby.
Thus,if you start lookingforhomesandrealize the one youwantthatfitsall your criteriaexceptfor
monthlymortgage ishigherthanyouwouldlike,yourbestalternative istocutback on yourexpensesto
affordthe home.Thus,youhave selectedthe bestalternative,orthe alternative thatbestsuitsyour
problemandhelpsyousolve it.
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Course Navigator
Business101: Principlesof Management
17 chapters| 139 lessons
1 - ManagementBasics
2 - Classical School of Management
3 - Behavioral School of ManagementTheory
4 - ContemporaryandFuture School of ManagementTheory
5 - PlanninginOrganizations
6 - Organizational Change
7 - OrganizinginBusinessManagement
8 - WorkTeams
9 - LeadinginOrganizations
10 - LeadershipTheory
11 - Motivationinthe Workplace
12 - Communicationinthe Workplace
13 - ControllinginOrganizations
14 - Human Resources
15 - StrategicManagementandManagerial DecisionMaking
The StrategicManagementProcess6:45

10. BusinessEnvironments&the FourFunctionsof Management5:28
The DecisionMakingProcessforOrganizations6:36
5:16
NextLesson
DecisionMakingforManagers: Certainty,Risk&UncertaintyDecisionMakingforManagers:Certainty,
Risk& Uncertainty
Quantitative DecisionMakingTools:DecisionTrees,PaybackAnalysis&Simulations5:42
PERT Analysis&ProjectCompletion6:17
What isBenchmarking? - Definition,Types,Process&Examples
Go to StrategicManagementandManagerial DecisionMaking
16 - Production andQualityAssurance
Productivity,Quality,Profitabilityandthe Role of Managers7:42
Five Principlesof Total QualityManagement(TQM)7:23
ImplementingTotal QualityManagement(TQM) inanOrganization6:22
Deming,Juran& Crosby:ContributorstoTQM8:11
ISO9000 Certification10:24
Go to ProductionandQualityAssurance
17 - International ManagementandContemporaryIssues