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Decision-making is a very important skill. All of us have to make and implement decisions which affect our lives and work. It's very easy to procrastinate when making decisions so having a process to follow can be very useful.
What is Decision Making?
The Decision-making Process
However, you arrived at the need to make a decision, effective decision-making involves a structured process:
Step 1. - Define decision
- What is the purpose of my decision?
Step 2. Set criteria
- What criteria must be satisfied?
- Which are essential criteria?
- Which are desirable criteria?
Step 3. Evaluate options
- What options are available?
- Which options meet the essential criteria?.
- Are some desirable criteria more important than others?
Step 4. Assess risks
- What risks are associated with each option?
- What might go wrong?
Step 5. Select the best option
- Which is the best-balanced choice?
1. Define decision
The first step is to define the decision. This should be a short, precise statement of the purpose of the decision - i.e. what is the decision aimed at achieving? The decision statement should indicate the scope of the decision. Typical decision statements are:
To recommend which of ten readily available models of diesel trucks should be bought by the transport department.
To decide which adjustments should be practised on the technical training course.
To decide which Greek resort should be chosen for this year's family holiday.
2. Set criteria
Setting the criteria is the key to effective decision-making because the criteria are the standards by which our decision will be judged.
For example, in choosing a holiday the criteria might be:
- The price
- Type of accommodation
- Number of bedrooms
- Journey time
- Distance from the sea
- Indoor swimming pool
With something like criteria for a holiday, you will likely know and understand all the criteria. With more complex subjects you will probably have to refer to sales brochures, experts, libraries and online searches.
The next task is to separate the criteria into those which are essential (i.e. must be satisfied) and those that are desirable (i.e. you would like to be satisfied).
Essential criteria are those which are so important that if they are not achieved, the decision must be regarded as a failure.
Some essential criteria are mandatory, in that they are legal, safety, or company policy requirements. Failure to meet these could result in dire consequences!
Essential criteria must be measurable because, if they are essential, the absolute minimum of performance must be clearly defined.
For example, 'Complete within six weeks' or 'Cost less than £1000' are both measurable and therefore could describe essential criteria. 'Complete the report as soon as possible' cannot be an essential criterion as it does not have a defined limit.
Any option which does not satisfy an essential criteria will be rejected. Therefore, the essential criteria must be set at the minimum level to avoid ruling out good options.
Desirable criteria can help you choose between options which meet all the essential criteria. Although not having an indoor swimming pool would not necessarily stop you from choosing only one holiday, it might help you to choose between two otherwise equal options.
It's a good idea to sort out your desirable criteria into priority order. One method of doing this is Paired Comparisons'. Using this method you compare every criterion with every other criterion, taking them two at a time. Every time a criterion 'wins' a comparison it is given a point. The criterion with the most points is the most important, and so down the list until you reach the criterion with the least points. An example of using Paired Comparisons is given below.
3. Evaluate Options
All you have to do here is to see how the options measure up against the criteria. Start with the essential criteria. Reject any option that does not meet the minimum requirements of these criteria. There is no need to continue any evaluation of the rejected options.
In the interests of objectivity, we must evaluate across the sheet and not down, by taking each criterion and judging all the options against it in turn. In this way, we ensure that they are all evaluated using the same standard.
Not only does this approach allow rational evaluation by comparing like with like, but it also focuses attention on the key information needed to make the evaluation.
If you are left with more than one option, then you need to see whether these options exceed the minimum requirements of the essential criteria and meet the most important desirable criteria. Again work across the sheet.
If after working through this process, you still cannot decide which option to choose, the most rational approach is to use chance. Toss a coin or draw a number from a hat. Many people feel nervous about doing this - but there is no reason to be anxious - as long as you were rigorous in selecting the essential criteria. By following this decision-making process you have already ensured that every one of the remaining options will be a good decision.
4. Assess Risks
A risk is something that might happen which will make an option undesirable. So, before you make your final decision you need to assess the probability and seriousness of the risk. Use 'High', 'Medium', and 'Low' to assess the probability and seriousness of the risks. It is important to assess each option against each risk, in turn, working across the sheet.
5. Select the best option
Following the evaluation of the options against the criteria, you will probably choose the option which not only meets the essential criteria but also meets the most important desirable criteria, as well as exceeding some of the essential criteria.
However, before you settle for this choice, you must check it against your risk assessment. If the risks associated with your initial choice are insignificant, then that option becomes your final choice.
If, however, there are significant risks attached to it, then you need to see whether there are ways of preventing or reducing these risks.
If you cannot minimise or eliminate the risks then you should consider your second option - even if this means reducing the overall benefit.
You may have been using a benchmark decision-making process and your thinking may have been faultless, but you still hit problems: you were overtaken by events; you were unaware of a vital piece of information; the decision was not implemented. The cause of these problems can often be traced to using the wrong decision-making style for the situation.
Good decision-makers will not only be aware of their preferred decision-making style but will also be able to change their style to suit a particular situation. There are three types of decision-making styles:
An independent style is one in which the individual decision-maker decides without reference to anyone else. This is the right style to use in an emergency — you don’t have a meeting to decide whether you should evacuate a building during a fire.
A consultative style is one where other people are consulted, but the final decision is still taken by the decision-maker. A consultative style is often used when you don’t have all the information to hand.
A consensus style is one where the final decision is taken by the group as a whole. You use this style when you need commitment to the decision. Please see our resource on consensus for more information about consensus and a consensus exercise.
The following table summarises the main characteristics of each of the decision-making styles.
Problems and objectives are not shared.
Opinions, ideas and information are not sought.
Little time is spent in reaching a decision.
Decision is made by the decision maker.
Problems and objectives are shared.
Opinions, ideas and information are sought.
More time is spent in reaching a decision.
Final decision is made by the decision-maker.
Problems and objectives are shared and discussed.
Opinions, ideas and information are sought and discussed.
Considerable time spent in reaching decision.
Decision is made by the group.
Choosing the right decision-making style
Choosing the right decision-making style depends on the situation which can be analysed by applying four criteria:
- Level of commitment required.
- Distribution of information.
- Urgency of the situation.
- Decision-making responsibility.
The table below describes these criteria for each of the decision-making styles:
|Commitment is not important.
|Commitment is important.
|Commitment is very important.
|All information is held by the decision-maker.
|Some information is held by the decision-maker.
|Information is dispersed throughout the group.
|Situation is very urgent.
|Situation is fairly urgent.
|Situation is not urgent.
|Responsibility is the decision-makers alone.
|Responsibility is still the decision-maker's.
|Responsibility is shared.
If you search the web, you will find dozens of different tools that can be used when making a decision. However, there does seem to be some confusion between decision-making and problem-solving.
A problem exists when there is a difference between ‘what is’ and ‘what should be’ and problem-solving involves finding a solution that closes this gap. Decision-making is an important part of the problem-solving process.
An example of this confusion is the Pareto Analysis which is often referred to as a decision-making tool. Although this tool is good for identifying the most significant causes of the problem, it doesn't help you choose between different courses of action.
The following is a selection of tools that I have found useful for decision-making.
Paired Comparisons is a method of ranking items by comparing every item with every other item, taking them two at a time. Every time an item ‘wins’ a comparison it is given a point. The item with the most points is the most important/favourite item.
For example, if you wanted to decide which was your favourite colour out of Red, Yellow, Blue and Green you would first compare Red with Yellow; then Red with blue and so on...
The following table gives a complete example:
|Red v Yellow
|Red v Blue
|Red v Green
|Yellow v Blue
|Yellow v Green
|Blue v Green
The number of comparisons increases quite quickly with the number of items. The actual number of comparisons you have to make is given by the following formula (where n is the number of items):
My Paired Comparisons Program takes some of the effort out of the Paired Comparisons process.
The Importance-Urgency Matrix, also known as the Eisenhower Matrix or the Covey Matrix, is a visual tool used to prioritize tasks or activities based on their level of importance and urgency. It helps individuals or teams determine which tasks should be addressed first and which ones can be deferred or eliminated.
T-Charts are used in education, research, problem-solving and decision-making. They are helpful when comparing two concepts, listing pros and cons, outlining arguments or organising data for analysis.
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