Steps in Decision Making

The various steps in the management process are really a series of decisions. Decision making is nothing but the choice making. The making of a decision or choice making is the selection of one action out of many actions; or selecting one course of action from number of courses of action or choosing no action.

In our daily life we are taking decisions and making choices. The making of decisions implies the existence of objectives toward which decisions are oriented. It is considered as the heart or crux of management. In solving each and every problem in our life we depend on good decisions. However not everything called management requires decisions. Sometimes action rests upon habitual behavior. Decision making process is important in managing the things. Nickel & Dorsey say that “The concept of decision making involves defining the problem, finding, comparing, and choosing a “ course of action.” Thus decision making is the process of selecting one course of action from a number of possible alternatives in solving a problem or in meeting a situation. From these alternative actions one proper action is selected.

According to Gross and Crandall “Decision making is the crux of management.”

Esther Crew Bratton considers a decision the smallest unit in management and likens it to the atom in physical science.


Decision making is nothing but problem solving.

Decision making is not done all at once but requires time for its completion.

H. L. Hunt
Decide what you want, decide what you are willing to exchange for it. Establish your priorities and go to work.

A decision is a choice between two or more alternatives. If you only have one alternative, you do not have a decision.

Webster’s 9th Dictionary adds some richness to the idea of choice by introducing the idea of uncertainty. It has this to say about the word “decide”, the root of “decision”

Decide: to arrive at a solution that ends uncertainty or dispute. From Latin decidere which means to cut off.

A typical thesaurus might use words like accommodation, agreement, arrangement, choice, compromise, declaration, determination, outcome, preference, resolution, result, and verdict to try and give the concept of “decision” some dimension.

We use our decision making skills to solve problems by selecting one course of action from several possible alternatives. Decision making skills are also a key component of time management skills.

Decision making is a mental process. Although no physical work is involved in the making of a decision, it is not an easy job. Barzun says “the hardest work of all is to think. Thinking requires much more mental energy or mental effort.”

It is particularly difficult for the managers who had a greater number of and more kinds of decisions. However not everything called management requires decisions. Sometimes action rests upon habitual behavior. A situation arises which is so familiar that a person simply follows an established habit, even a reflex, though nominally ”choice “takes place.

How decisions are made

Decision making process consists of the following steps:

1. Defining the problem to be decided

2. Seeking alternative solutions

3. Thinking through each alternatives

4. Selecting one alternative

5. Accepting the consequences or responsibility for the decision


1.Defining the problem:-

The first step of decision making process is defining the problem. This consists of identification of any problem, like what to do? Where to take admission, in which college, in which course of study? What to select? What to wear? etc. etc….

2.Finding or seeking alternatives:- after identifying the problem next step is to find the available alternatives or solutions. Managing resources or things requires a great deal of knowledge in seeking alternatives and recognizing

3.Thinking through each alternative:-before taking any decision it is necessary to think and take into consideration each and every point regarding various alternatives available. After giving due thought to to each one it will be easy to select one alternative from the many which are in front of us for selection.

4.Selecting one alternative:-This is the main and important step of decision making process.It is based on knowledge and information and thoughtful consideration and deleberations.We have to one thing out of many things available all around..

5.Accepting the consequences of the decision taken:-

Once the decision taken one has to accept it’s consequences whether good or bad,right or wrong.

Decision-making is one of the defining characteristics of leadership. It’s core to the job description. Making decisions is what managers and leaders are paid to do. Yet, there isn’t a day that goes by that you don’t read something in the news or the business press that makes you wonder, “What were they thinking?” or “Who actually made that decision?” That’s probably always been the case, but it seems exponentially more so in the opening decade of the new millennium where everything seems marked with, “too big, too fast, too much, and too soon.”

The reality seems to be that most organizations aren’t overrun by good decision makers, yet alone great ones. When asked, people don’t easily point to what they regard as great decisions. Stories of bad decisions and bad decision-making come much more readily to mind.

Some of that is due to our tendency to notice and recall exceptions vs. all the times things go as planned. For example, you’ve walked along side buildings more times than you could possibly count. Yet you remember vividly the one time you got nailed by a pigeon overhead.

That’s how we are about bad decisions. We’re also that way because the really bad ones tend to really hurt.

It’s not that people don’t have the capacity to make high-quality decisions in them. Decision-making is a distinctly human activity. It’s what that great, big frontal lobe is for. We all make decisions all the time.

But the fact that we’re hard-wired to make decisions doesn’t by itself make us good decision-makers. That takes discipline: discipline to do at least four things all the time and well.

1.Realize when and why you need to make a decision.

2.Declare the decision: decide what the decision is, how you’ll work it, and who should be involved.

3.Work the decision: generate a complete set of alternatives, gather the information you need to understand the possibilities and probabilities, and ultimately make a choice that best fits your values.

4.Commit resources and act.

Not everyone does those four things consistently or consistently well. We’ve worked with a lot of leaders and managers in some of the most widely regarded companies in the world and our observation is that most people don’t. In fact, the distribution generally looks something like this:

• There are some really wretched decision makers. For them, a good outcome is usually a matter of luck.

• There are a lot of people who are reasonably competent decision makers. Their decision processes aren’t great, but they’re not bad, and the outcomes they experience track accordingly.

• There is a small group of people who could be described as “good decision makers” These people are proactive and decision oriented. They’re able to focus attention on what’s important and critical. They know how to break a decision down into logical parts. They know how to work each of those parts in a high quality way. They know how to deal with possibilities and probabilities. They’re able to see opportunities where others see problems. They’re able to make quality choices in the face of uncertainty. They’re able to turn thought into action.

• There is a sprinkling of people we’d describe as great decision makers. Like other good decision makers, these people consistently make high quality decisions. Their “greatness”, a word that is probably way overused, comes from their ability to create the dynamics needed to ensure that the people in their organizations can do the same.

Good and great decision makers expect high quality outcomes and they’re generally not disappointed. When they are, it’s usually because of some random thunderbolt or some unforeseen dynamic, not because they didn’t do a good job of working the problem. There are exceptions to this syllogism. But over the long-term, we think the good decision/good outcome connection holds up, and the outliers have either not been in the job long enough for their bad decisions to catch up, or have been extraordinarily lucky.

What is a Decision?

A decision is a choice between two or more alternatives. If you only have one alternative, you do not have a decision.

Webster’s 9th Dictionary adds some richness to the idea of choice by introducing the idea of uncertainty. It has this to say about the word “decide”, the root of “decision”

Decide: to arrive at a solution that ends uncertainty or dispute. From Latin decidere which means to cut off.

A typical thesaurus might use words like accommodation, agreement, arrangement, choice, compromise, declaration, determination, outcome, preference, resolution, result, and verdict to try and give the concept of “decision” some dimension.

In our minds Webster’s definition and these potentially illuminating synonyms seem to miss the driving idea behind a decision. A decision as an irrevocable allocation of resource.

This is where the concept of attention comes in. Attention implies the use of resource. It means you actually allocate some time, money, effort—something—to turning your intentions into action.

The concept of irrevocability means commitment: putting time, money, and/or resource on the line to put your decision into action. Having decided, you’re not going to re-litigate your decision every time someone has a new thought. Getting to that point with confidence is what separates low quality decisions from high quality decisions, and mediocre decision makers from good and great ones.

Making High Quality Decisions

A high quality decision comes with a warrant: a guarantee. Not a guarantee of a certain outcome—remember this is the real world we’re talking about, and there are certain things that just aren’t knowable until after they happen—but a warranty that the process you used to arrive at a choice was a good one.

This level of confidence implies a process: a set of steps and rules that provide an assurance of thoroughness and rigor. This means breaking decisions down into component parts and doing one thing at a time.

Unless you’re unlike most people, it is your nature to do what you know how to do and to avoid what you don’t. That’s why you want a rational decision process: To defeat the natural behaviors and tendencies that can lead to low quality decisions.

Without a process, you are likely to drag decisions into your comfort zone, handling “this one” in exactly the same way you handled “that one,” even though this one and that one may have little in common. Without an organizational decision process, that same “stimulus/response, stay in your comfort zone” dynamic can easily become the predominate driver of your organization’s culture and effectiveness. As a leader, you’re either doomed to inspecting every decision, or to hoping that people don’t decide to do something stupid while you’re not watching.

With a process or framework, you have the mechanism you need to warrant the quality of your own decisions. Perhaps more importantly, you also have a common language and set of mental models that makes conversations about decisions more efficient and effective. This common understanding of decision processes, criteria, and roles avoids many of the common organizational decision traps, allowing people in your organizations to spend their conversational energies on creating better alternatives and validating assumptions and ultimately warranting their own decisions.

The framework we use for breaking down and working decisions of virtually any size and complexity begins with two large ideas: declaring a decision and working a decision. Each of those larger elements is then broken down into three sub components, or what we call Decision Points, which are illustrated in the following diagram.



Decision Point 1: Frame the problem. What are you deciding and why? What shouldn’t you be deciding and why? What’s not in the box is as important as what is. Without a good definition of the problem or opportunity to be worked, there is no possibility that you’ll reliably reach a high quality decision.

Frames are mental structures we create to simplify and organize our lives. They help us reduce complexity. That’s the good news and the root of another set of problems. Says J. Edward Russo in his book, Winning Decisions, “Frames have enormous power. The way people frame a problem greatly influences the solution they will ultimately choose. And the frames that people or organizations routinely use for their problems control how they will react to almost everything they encounter.”

Decision Point 2: The Right People. If you’re a single actor, or hold all the prerogatives of a dictator, this one is easy. It’s just you. In other cases, you’ll want to put some thought into declaring who needs to be involved in what steps of this decision. Too few, or miss some, and you risk the problems of rework, low adoption rate and poor buy in. Too many—too much inclusion—and you invite the possibility of an unnecessarily painful or drawn out decision process.

Decision Point 3: The Right Process. Will you flip a coin? Throw darts? Check with your boss? Make decision tables? Use a decision tree or a bubble chart? Build a business case? It would depend on the decision situation. Making a high quality decision doesn’t have to be time consuming. In some cases, the best process might just be a coin toss or relying on some rules of thumb. In other cases, the only way to work a decision is to really work it, and that will take time.

The only rule is that the mechanics of how you’ll work the decision to conclusion need to be appropriate to the size, significance, and complexity of the decision. How long is too long? When the cost of working the decision any further outweighs the benefits of making a choice. This element of declaration pulls the frame and people together into a coherent whole that will govern how you will reason this decision through.


Decision Point 4: A complete set of alternatives. “The more options you generate, the greater your chance of finding an excellent one . . . You should only stop generating more options when the cost and delay of further search are likely to exceed the benefit.” (Russo)

What is the right number of alternatives? That depends on how you’ve framed the question. Two terms are helpful in this regard. “Collectively exhaustive” means that the alternatives you’re considering fill the frame: a rational observer would conclude that you’ve thought of everything that matters. “Mutually exclusive” means that the alternatives are unique and different from each other: they’re not just restatements of the same choice.

Decision Point 5: Values against which to make tradeoffs. Values define your preferences among alternatives. They are your criteria. Values can be expressed by “attributes.”Attributes are characteristics of the outcomes that we find desirable or undesirable. They typically occur over time and may have some degree of uncertainty associated with them.

For each decision, particularly those involving others, you need to make your definition of value visible, clear, and distinct. In commerce, the acid test of a value is often that you can measure it.

Decision Point 6: Information that describes the value of each alternative. Good decision-making requires not only knowing the facts, but understanding the limits of your knowledge. The most valuable insights are often found in exploring uncertainties and “disconfirming” information. “The effective decision does not, as so many texts on decision-making proclaim, flow from a consensus on the facts. The understanding that underlies the right decisions grows out of the clash and conflict of divergent opinions and out of the serious consideration of competing alternatives.” (Peter Drucker, The Effective Executive)

You can wear yourself out gathering and analyzing information. What you want is insight that will help you judge the relative and comparative value of the alternatives you’re considering.

Leaders should focus on creating the dynamics that support organizational decision quality—on putting in place a decision framework and process that supports organizational decision quality—rather than raking through the detailed minutia of specific decisions. A high quality decision process highlights the frame, potential alternatives, and key assumptions the drive value. This allows leaders to spend their time declaring the right decisions, providing a set of common criteria, and testing the key assumptions of each decision.

We all make decisions of varying importance every day, so the idea that decision making can be a rather sophisticated art may at first seem strange. However, studies have shown that most people are much poorer at decision making than they think. An understanding of what decision making involves, together with a few effective techniques, will help produce better decisions.

What is Decision Making?

Some Definitions

A good place to start is with some standard definitions of decision making.

1. Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker.

Making a decision implies that there are alternative choices to be considered, and in such a case we want not only to identify as many of these alternatives as possible but to choose the one that (1) has the highest probability of success or effectiveness and (2) best fits with our goals, desires, lifestyle, values, and so on.

2. Decision making is the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them.

This definition stresses the information-gathering function of decision making. It should be noted here that uncertainty is reduced rather than eliminated. Very few decisions are made with absolute certainty because complete knowledge about all the alternatives is seldom possible. Thus, every decision involves a certain amount of risk. If there is no uncertainty, you do not have a decision; you have an algorithm–a set of steps or a recipe that is followed to bring about a fixed result.

Kinds of Decisions

There are several basic kinds of decisions.

1. Decisions whether. This is the yes/no, either/or decision that must be made before we proceed with the selection of an alternative. Should I buy a new TV? Should I travel this summer? Decisions whether are made by weighing reasons pro and con. The PMI technique discussed in the next chapter is ideal for this kind of decision.

It is important to be aware of having made a decision whether, since too often we assume that decision making begins with the identification of alternatives, assuming that the decision to choose one has already been made.

2. Decisions which. These decisions involve a choice of one or more alternatives from among a set of possibilities, the choice being based on how well each alternative measures up to a set of predefined criteria.

3. Contingent decisions. These are decisions that have been made but put on hold until some condition is met.

For example, I have decided to buy that car if I can get it for the right price; I have decided to write that article if I can work the necessary time for it into my schedule. OR even, We’ll take the route through the valley if we can control the ridge and if we detect no enemy activity to the north. Most people carry around a set of already made, contingent decisions, just waiting for the right conditions or opportunity to arise. Time, energy, price, availability, opportunity, encouragement–all these factors can figure into the necessary conditions that need to be met before we can act on our decision. Some contingent decisions are unstated or even exist below the awareness of the decision maker. These are the type that occur when we seize opportunity. We don’t walk around thinking, “If I see a new laser printer for $38, I’ll buy it,” but if we happen upon a deal like that and we have been contemplating getting a new printer, the decision is made quickly. Decisions made in sports and warfare are like this. The best contingent and opportunistic decisions are made by the prepared mind–one that has thought about criteria and alternatives in the past.

Decision Making is a Recursive Process

A critical factor that decision theorists sometimes neglect to emphasize is that in spite of the way the process is presented on paper, decision making is a nonlinear, recursive process. That is, most decisions are made by moving back and forth between the choice of criteria (the characteristics we want our choice to meet) and the identification of alternatives (the possibilities we can choose from among). The alternatives available influence the criteria we apply to them, and similarly the criteria we establish influence the alternatives we will consider. Let’s look at an example to clarify this.

Suppose someone wants to decide, Should I get married? Notice that this is a decision whether. A linear approach to decision making would be to decide this question by weighing the reasons pro and con (what are the benefits and drawbacks of getting married) and then to move to the next part of the process, the identification of criteria (supportive, easy going, competent, affectionate, etc.). Next, we would identify alternatives likely to have these criteria (Kathy, Jennifer, Michelle, Julie, etc.). Finally we would evaluate each alternative according to the criteria and choose the one that best meets the criteria. We would thus have a scheme like this:

decision whether … select criteria … identify alternatives … match criteria to alternatives … make choice

However, the fact is that our decision whether to get married may really be a contingent decision. “I’ll get married if I can find the right person.” It will thus be influenced by the identification of alternatives, which we usually think of as a later step in the process. Similarly, suppose we have arrived at the “identify alternatives” stage of the process when we discover that Jennifer (one of the girls identified as an alternative) has a wonderful personality characteristic that we had not even thought of before, but that we now really want to have in a wife. We immediately add that characteristic to our criteria. Thus, the decision making process continues to move back and forth, around and around as it progresses in what will eventually be a linear direction but which in its actual workings is highly recursive.

Key point, then, is that the characteristics of the alternatives we discover will often revise the criteria we have previously identified.

The Components of Decision Making

The Decision Environment

Every decision is made within a decision environment, which is defined as the collection of information, alternatives, values, and preferences available at the time of the decision. An ideal decision environment would include all possible information, all of it accurate, and every possible alternative. However, both information and alternatives are constrained because the time and effort to gain information or identify alternatives are limited. The time constraint simply means that a decision must be made by a certain time. The effort constraint reflects the limits of manpower, money, and priorities. (You wouldn’t want to spend three hours and half a tank of gas trying to find the very best parking place at the mall.) Since decisions must be made within this constrained environment, we can say that the major challenge of decision making is uncertainty, and a major goal of decision analysis is to reduce uncertainty. We can almost never have all information needed to make a decision with certainty, so most decisions involve an undeniable amount of risk.

The fact that decisions must be made within a limiting decision environment suggests two things. First, it explains why hindsight is so much more accurate and better at making decisions that foresight. As time passes, the decision environment continues to grow and expand. New information and new alternatives appear–even after the decision must be made. Armed with new information after the fact, the hindsighters can many times look back and make a much better decision than the original maker, because the decision environment has continued to expand.

The second thing suggested by the decision-within-an-environment idea follows from the above point. Since the decision environment continues to expand as time passes, it is often advisable to put off making a decision until close to the deadline. Information and alternatives continue to grow as time passes, so to have access to the most information and to the best alternatives, do not make the decision too soon. Now, since we are dealing with real life, it is obvious that some alternatives might no longer be available if too much time passes; that is a tension we have to work with, a tension that helps to shape the cutoff date for the decision.

Delaying a decision as long as reasonably possible, then, provides three benefits:

1. The decision environment will be larger, providing more information. There is also time for more thoughtful and extended analysis.

2. New alternatives might be recognized or created. Version 2.0 might be released.

3. The decision maker’s preferences might change. With further thought, wisdom, and maturity, you may decide not to buy car X and instead to buy car Y.

And delaying a decision involves several risks:

1. As the decision environment continues to grow, the decision maker might become overwhelmed with too much information and either make a poorer decision or else face decision paralysis.

2. Some alternatives might become unavailable because of events occurring during the delay. In a few cases, where the decision was between two alternatives (attack the pass or circle around behind the large rock), both alternatives might become unavailable, leaving the decision maker with nothing. And we have all had the experience of seeing some amazing bargain only to hesitate and find that when we go back to buy the item, it is sold out.

3. In a competitive environment, a faster rival might make the decision and gain advantage. Another manufacturer might bring a similar product to market before you (because that company didn’t delay the decision) or the opposing army might have seized the pass while the other army was “letting the decision environment grow.”

The Effects of Quantity on Decision Making

Many decision makers have a tendency to seek more information than required to make a good decision. When too much information is sought and obtained, one or more of several problems can arise. (1) A delay in the decision occurs because of the time required to obtain and process the extra information. This delay could impair the effectiveness of the decision or solution. (2) Information overload will occur. In this state, so much information is available that decision-making ability actually declines because the information in its entirety can no longer be managed or assessed appropriately. A major problem caused by information overload is forgetfulness. When too much information is taken into memory, especially in a short period of time, some of the information (often that received early on) will be pushed out.

The example is sometimes given of the man who spent the day at an information-heavy seminar. At the end of the day, he was not only unable to remember the first half of the seminar but he had also forgotten where he parked his car that morning.

(3) Selective use of the information will occur. That is, the decision maker will choose from among all the information available only those facts which support a preconceived solution or position. (4) Mental fatigue occurs, which results in slower work or poor quality work. (5) Decision fatigue occurs where the decision maker tires of making decisions. Often the result is fast, careless decisions or even decision paralysis–no decisions are made at all.

The quantity of information that can be processed by the human mind is limited. Unless information is consciously selected, processing will be biased toward the first part of the information received. After that, the mind tires and begins to ignore subsequent information or forget earlier information. (Have you ever gone shopping for something where you looked at many alternatives–cars, knives, phones, TVs–only to decide that you liked the first one best?)

Decision Streams

A common misconception about decision making is that decisions are made in isolation from each other: you gather information, explore alternatives, and make a choice, without regard to anything that has gone before. The fact is, decisions are made in a context of other decisions. The typical metaphor used to explain this is that of a stream. There is a stream of decisions surrounding a given decision, many decisions made earlier have led up to this decision and made it both possible and limited. Many other decisions will follow from it.

Another way to describe this situation is to say that most decisions involve a choice from a group of preselected alternatives, made available to us from the universe of alternatives by the previous decisions we have made. Previous decisions have “activated” or “made operable” certain alternatives and “deactivated” or “made inoperable” others.

For example, when you decide to go to the park, your decision has been enabled by many previous decisions. You had to decide to live near the park; you had to decide to buy a car or learn about bus routes, and so on. And your previous decisions have constrained your subsequent ones: you can’t decide to go to a park this afternoon if it is three states away. By deciding to live where you do, you have both enabled and disabled a whole series of other decisions.

As another example, when you enter a store to buy a DVD player or TV, you are faced with the preselected alternatives stocked by the store. There may be 200 models available in the universe of models, but you will be choosing from, say, only a dozen. In this case, your decision has been constrained by the decisions made by others about which models to carry.

We might say, then, that every decision (1) follows from previous decisions, (2) enables many future decisions, and (3) prevents other future decisions. People who have trouble making decisions are sometimes trapped by the constraining nature of decision making. Every decision you make precludes other decisions, and therefore might be said to cause a loss of freedom. If you decide to marry Terry, you no longer can decide to marry Shawn. However, just as making a decision causes a loss of freedom, it also creates new freedom, new choices and new possibilities. So making a decision is liberating as well as constraining. And a decision left unmade will often result in a decision by default or a decision being made for you.

It is important to realize that every decision you make affects the decision stream and the collections of alternatives available to you both immediately and in the future. In other words, decisions have far reaching consequences.

Concepts and Definitions

1. Information. This is knowledge about the decision, the effects of its alternatives, the probability of each alternative, and so forth. A major point to make here is that while substantial information is desirable, the statement that “the more information, the better” is not true. Too much information can actually reduce the quality of a decision. See the discussion on The Effects of Quantity on Decision Making above.

2. Alternatives. These are the possibilities one has to choose from. Alternatives can be identified (that is, searched for and located) or even developed (created where they did not previously exist). Merely searching for preexisting alternatives will result in less effective decision making.

3. Criteria. These are the characteristics or requirements that each alternative must possess to a greater or lesser extent. Usually the alternatives are rated on how well they possess each criterion. For example, alternative Toyota ranks an 8 on the criterion of economy, while alternative Buick ranks a 6 on the same criterion.

4. Goals. What is it you want to accomplish? Strangely enough, many decision makers collect a bunch of alternatives (say cars to buy or people to marry) and then ask, “Which should I choose?” without thinking first of what their goals are, what overall objective they want to achieve. Next time you find yourself asking, “What should I do? What should I choose?” ask yourself first, “What are my goals?”

A component of goal identification should be included in every instance of decision analysis.

5. Value. Value refers to how desirable a particular outcome is, the value of the alternative, whether in dollars, satisfaction, or other benefit.

6. Preferences. These reflect the philosophy and moral hierarchy of the decision maker. We could say that they are the decision maker’s “values,” but that might be confusing with the other use of the word, above. If we could use that word here, we would say that personal values dictate preferences. Some people prefer excitement to calmness, certainty to risk, efficiency to esthetics, quality to quantity, and so on. Thus, when one person chooses to ride the wildest roller coaster in the park and another chooses a mild ride, both may be making good decisions, if based on their individual preferences.

7. Decision Quality. This is a rating of whether a decision is good or bad. A good decision is a logical one based on the available information and reflecting the preferences of the decision maker.

The important concept to grasp here is that the quality of a decision is not related to its outcome: a good decision can have either a good or a bad outcome. Similarly, a bad decision (one not based on adequate information or not reflecting the decision maker’s preferences) can still have a good outcome.

For example, if you do extensive analysis and carefully decide on a certain investment based on what you know about its risks and your preferences, then your decision is a good one, even though you may lose money on the investment. Similarly, if you throw a dart at a listing of stocks and buy the one the dart hits, your decision is a bad one, even though the stock may go up in value.

Good decisions that result in bad outcomes should thus not be cause for guilt or recrimination. If you decide to take the scenic route based on what you know of the road (reasonably safe, not heavily traveled) and your preferences (minimal risk, prefer scenery over early arrival), then your decision is a good one, even though you might happen to get in an accident, or have a flat tire in the middle of nowhere. It is not justified to say, “Well, this was a bad decision.”

In judging the quality of a decision, in addition to the concerns of logic, use of information and alternatives, three other considerations come into play:

A. The decision must meet the stated objectives most thoroughly and completely. How well does the alternative chosen meet the goals identified?

B. The decision must meet the stated objectives most efficiently, with concern over cost, energy, side effects. Are there negative consequences to the alternative that make that choice less desirable? We sometimes overlook this consideration in our search for thrills.

C. The decision must take into account valuable byproducts or indirect advantages. A new employee candidate may also have extra abilities not directly related to the job but valuable to the company nonetheless. These should be taken into account.

8. Acceptance. Those who must implement the decision or who will be affected by it must accept it both intellectually and emotionally.

Acceptance is a critical factor because it occasionally conflicts with one of the quality criteria. In such cases, the best thing to do may be to choose a lesser quality solution that has greater acceptance.

For example, when cake mixes first were put on the market, manufacturers put everything into the mix–the highest quality and most efficient solution. Only water had to be added. However, the mixes didn’t sell well–they weren’t accepted. After investigation, the makers discovered that women didn’t like the mixes because using the mixes made them feel guilty: they weren’t good wives because they were taking a shortcut to making a cake. The solution was to take the egg and sometimes the milk out of the mix so that the women would have something to do to “make” the cake other than just adding water. Now they had to add egg and perhaps milk, making them feel more useful. The need to feel useful and a contributor is one of the most basic of human needs. Thus, while the new solution was less efficient in theoretical terms, it was much more acceptable. Cake mixes with the new formula became quite popular.

Thus, the inferior method may produce greater results if the inferior one has greater support. One of the most important considerations in decision making, then, is the people factor. Always consider a decision in light of the people implementation.

A decision that may be technologically brilliant but that is sociologically stupid will not work. Only decisions that are implemented, and implemented with thoroughness (and preferably enthusiasm) will work the way they are intended to.

Approaches to Decision Making

There are two major approaches to decision making in an organization, the authoritarian method in which an executive figure makes a decision for the group and the group method in which the group decides what to do.

1. Authoritarian. The manager makes the decision based on the knowledge he can gather. He then must explain the decision to the group and gain their acceptance of it. In some studies, the time breakdown for a typical operating decision is something like this:

make decision, 5 min.; explain decision, 30 min.; gain acceptance, 30 min.

2. Group. The group shares ideas and analyses, and agrees upon a decision to implement. Studies show that the group often has values, feelings, and reactions quite different from those the manager supposes they have. No one knows the group and its tastes and preferences as well as the group itself. And, interestingly, the time breakdown is something like this: