Decision Making Skills Start Here

Decision Making Skills Start Here!

How to make good decisions,with James Manktelow & Amy Carlson.

All of us have to make decisions every day. Some decisions are relatively straightforward and simple: Is this report ready to send to my boss now? Others are quite complex: Which of these candidates should I select for the job?

Simple decisions usually need a simple decision-making process. But difficult decisions typically involve issues like these:

Uncertainty - Many facts may not be known.

Complexity - You have to consider many interrelated factors.

High-risk consequences - The impact of the decision may be significant.

Alternatives - Each has its own set of uncertainties and consequences.

Interpersonal issues - It can be difficult to predict how other people will react.

With these difficulties in mind, the best way to make a complex decision is to use an effective process. Clear processes usually lead to consistent, high-quality results, and they can improve the quality of almost everything we do. In this article, we outline a process that will help improve the quality of your decisions.

A Systematic Approach to Decision Making

A logical and systematic decision-making process helps you address the critical elements that result in a good decision. By taking an organized approach, you're less likely to miss important factors, and you can build on the approach to make your decisions better and better.

There are six steps to making an effective decision:

1. Create a constructive environment.

2. Generate good alternatives.

3. Explore these alternatives.

4. Choose the best alternative.

5. Check your decision.

6. Communicate your decision, and take action.

Here are the steps in detail:

Step 1: Create a constructive environment

To create a constructive environment for successful decision making, make sure you do the following:

Establish the objective - Define what you want to achieve.

Agree on the process - Know how the final decision will be made, including whether it will be an individual or a team-based decision. The Vroom-Yetton-Jago Model is a great tool for determining the most appropriate way of making the decision.

Involve the right people - Stakeholder Analysis is important in making an effective decision, and you'll want to ensure that you've consulted stakeholders appropriately even if you're making an individual decision. Where a group process is appropriate, the decision-making group - typically a team of five to seven people - should have a good representation of stakeholders.

Allow opinions to be heard - Encourage participants to contribute to the discussions, debates, and analysis without any fear of rejection from the group. This is one of the best ways to avoid groupthink. The Stepladder Technique is a useful method for gradually introducing more and more people to the group discussion, and making sure everyone is heard. Also, recognize that the objective is to make the best decision under the circumstances: it's not a game in which people are competing to have their own preferred alternatives adopted.

Make sure you're asking the right question - Ask yourself whether this is really the true issue. The 5 Whys technique is a classic tool that helps you identify the real underlying problem that you face.

Use creativity tools from the start - The basis of creativity is thinking from a different perspective. Do this when you first set out the problem, and then continue it while generating alternatives. Our article Generating New Ideas will help you create new connections in your mind, break old thought patterns, and consider new perspectives.

Step 2: Generate Good Alternatives

This step is still critical to making an effective decision. The more good options you consider, the more comprehensive your final decision will be.

When you generate alternatives, you force yourself to dig deeper, and look at the problem from different angles. If you use the mindset there must be other solutions out there,' you're more likely to make the best decision possible. If you don't have reasonable alternatives, then there's really not much of a decision to make!

Here's a summary of some of the key tools and techniques to help you and your team develop good alternatives.

Generating Ideas Brainstorming is probably the most popular method of generating ideas.

Another approach, Reverse Brainstorming, works similarly. However, it starts by asking people to brainstorm how to achieve the opposite outcome from the one wanted, and then reversing these actions.

The Charette Procedure is a systematic process for gathering and developing ideas from very many stakeholders.

Use the Crawford Slip Writing Technique to generate ideas from a large number of people. This is an extremely effective way to make sure that everyone's ideas are heard and given equal weight, irrespective of the person's position or power within the organization.

Considering Different Perspectives The Reframing Matrix uses 4 Ps (product, planning, potential, and people) as the basis for gathering different perspectives. You can also ask outsiders to join the discussion, or ask existing participants to adopt different functional perspectives (for example, have a marketing person speak from the viewpoint of a financial manager).

If you have very few options, or an unsatisfactory alternative, use a Concept Fan to take a step back from the problem, and approach it from a wider perspective. This often helps when the people involved in the decision are too close to the problem.

Appreciative Inquiry forces you to look at the problem based on what's going right,' rather than what's going wrong.'

Organizing Ideas This is especially helpful when you have a large number of ideas. Sometimes separate ideas can be combined into one comprehensive alternative.

Use Affinity Diagrams to organize ideas into common themes and groupings.

Step 3: Explore the Alternatives

When you're satisfied that you have a good selection of realistic alternatives, then you'll need to evaluate the feasibility, risks, and implications of each choice. Here, we discuss some of the most popular and effective analytical tools.

Risk In decision making, there's usually some degree of uncertainty, which inevitably leads to risk. By evaluating the risk involved with various options, you can determine whether the risk is manageable.

Risk Analysis helps you look at risks objectively. It uses a structured approach for assessing threats, and for evaluating the probability of events occurring - and what they might cost to manage.

Implications Another way to look at your options is by considering the potential consequences of each.

Six Thinking Hats helps you evaluate the consequences of a decision by looking at the alternatives from six different perspectives.

Impact Analysis is a useful technique for brainstorming the unexpected' consequences that may arise from a decision.

Validation Determine if resources are adequate, if the solution matches your objectives, and if the decision is likely to work in the long term.

Starbursting helps you think about the questions you should ask to evaluate an alternative properly.

To assess pros and cons of each option, use Force Field Analysis, or use the Plus-Minus-Interesting approach.

Cost-Benefit Analysis looks at the financial feasibility of an alternative.

Our Bite-Sized Training session on Project Evaluation and Financial Forecasting helps you evaluate each alternative using the most popular financial evaluation techniques.

Step 4: Choose the Best Alternative

After you have evaluated the alternatives, the next step is to choose between them. The choice may be obvious. However, if it isn't, these tools will help:

Grid Analysis, also known as a decision matrix, is a key tool for this type of evaluation. It's invaluable because it helps you bring disparate factors into your decision-making process in a reliable and rigorous way.

Use Paired Comparison Analysis to determine the relative importance of various factors. This helps you compare unlike factors, and decide which ones should carry the most weight in your decision.

Decision Trees are also useful in choosing between options. These help you lay out the different options open to you, and bring the likelihood of project success or failure into the decision making process.

For group decisions, there are some excellent evaluation methods available.

When decision criteria are subjective and it's critical that you gain consensus, you can use techniques like Nominal Group Technique and Multi-Voting. These methods help a group agree on priorities, for example, so that they can assign resources and funds.

The Delphi Technique uses multiple cycles of anonymous written discussion and argument, managed by a facilitator. Participants in the process do not meet, and sometimes they don't even know who else is involved. The facilitator controls the process, and manages the flow and organization of information. This is useful where you need to bring the opinions of many different experts into the decision-making process. It's particularly useful where some of these experts don't get on!

Step 5: Check Your Decision

With all of the effort and hard work that goes into evaluating alternatives, and deciding the best way forward, it's easy to forget to sense check' your decisions. This is where you look at the decision you're about to make dispassionately, to make sure that your process has been thorough, and to ensure that common errors haven't crept into the decision-making process. After all, we can all now see the catastrophic consequences that over-confidence, groupthink, and other decision-making errors have wrought on the world economy.

The first part of this is an intuitive step, which involves quietly and methodically testing the assumptions and the decisions you've made against your own experience, and thoroughly reviewing and exploring any doubts you might have.

A second part involves using a technique like Blindspot Analysis to review whether common decision-making problems like over-confidence, escalating commitment, or groupthink may have undermined the decision-making process.

A third part involves using a technique like the Ladder of Inference to check through the logical structure of the decision with a view to ensuring that a well-founded and consistent decision emerges at the end of the decision-making process.

Step 6: Communicate Your Decision, and Move to Action!

Once you've made your decision, it's important to explain it to those affected by it, and involved in implementing it. Talk about why you chose the alternative you did. The more information you provide about risks and projected benefits, the more likely people are to support the decision.

And with respect to implementation of your decision, our articles on Project Management and Change Management will help you get this implementation off to a good start!

Key Points

An organized and systematic decision-making process usually leads to better decisions. Without a well-defined process, you risk making decisions that are based on insufficient information and analysis. Many variables affect the final impact of your decision. However, if you establish strong foundations for decision making, generate good alternatives, evaluate these alternatives rigorously, and then check your decision-making process, you will improve the quality of your decisions.

Take our How Good is Your Decision-Making? quiz to find out how we'll you're doing all of these things now!

How Good Is Your Decision-Making?

You won't always have all the data you'd like.

iStockphoto/Maica

Decision-making is a key skill in the workplace, and is particularly important if you want to be an effective leader.

Whether you're deciding which person to hire, which supplier to use, or which strategy to pursue, the ability to make a good decision with available information is vital. It would be easy if there were one formula you could use in any situation, but there isn't. Each decision presents its own challenges, and we all have different ways of approaching problems.

So, how do you avoid making bad decisions or leaving decisions to chance? You need a systematic approach to decision-making so that, no matter what type of decision you have to make, you can take decisions with confidence.

No one can afford to make poor decisions. That's why we've developed a short quiz to help you assess your current decision-making skills. We'll examine how well you structure your decision-making process, and then we'll point you to specific tools and resources you can use to develop and improve this important competency.

How Good Are Your Decision-Making Skills?

Instructions:For each statement, click the button in the column that best describes you. Please answer questions as you actually are (rather than how you think you should be), and don't worry if some questions seem to score in the 'wrong direction'. When you are finished, please click the 'Calculate My Total' button at the bottom of the test. Top of Form

StatementNotat allRarelySometimesOftenVeryOften

1I evaluate the risks associated with each alternative before making a decision.

2After I make a decision, it's final because I know my process is strong.

3I try to determine the real issue before starting a decision-making process.

4I rely on my own experience to find potential solutions to a problem.

5I tend to have a strong "gut instinct" about problems, and I rely on it in decision-making.

6I am sometimes surprised by the actual consequences of my decisions.

7I use a well-defined process to structure my decisions.

8I think that involving many stakeholders to generate solutions can make the process more complicated than it needs to be.

9If I have doubts about my decision, I go back and recheck my assumptions and my process.

10I take the time needed to choose the best decision-making tool for each specific decision.

11I consider a variety of potential solutions before I make my decision.

12Before I communicate my decision, I create an implementation plan.

13In a group decision-making process, I tend to support my friends' proposals and try to find ways to make them work.

14When communicating my decision, I include my rationale and justification.

15Some of the options I've chosen have been much more difficult to implement than I had expected.

16I prefer to make decisions on my own, and then let other people know what I've decided.

17I determine the factors most important to the decision, and then use those factors to evaluate my choices.

18I emphasize how confident I am in my decision as a way to gain support for my plans.

Total=0

Bottom of Form

Score Interpretation

ScoreComment

18-42Your decision-making hasn't fully matured. You aren't objective enough, and you rely too much on luck, instinct or timing to make reliable decisions. Start to improve your decision-making skills by focusing more on the process that leads to the decision, rather than on the decision itself. With a solid process, you can face any decision with confidence. We'll show you how. (Read below to start.)

43-66Your decision-making process is OK. You have a good understanding of the basics, but now you need to improve your process and be more proactive. Concentrate on finding lots of options and discovering as many risks and consequences as you can. The better your analysis, the better your decision will be in the long term. Focus specifically on the areas where you lost points, and develop a system that will work for you across a wide variety of situations. (Read below to start.)

67-90You have an excellent approach to decision-making! You know how to set up the process and generate lots of potential solutions. From there, you analyze the options carefully, and you make the best decisions possible based on what you know. As you gain more and more experience, use that information to evaluate your decisions, and continue to build on your decision-making success. Think about the areas where you lost points, and decide how you can include those areas in your process. (Read below to start.)

As you answered the questions, did you see some common themes? We based our quiz on six essential steps in the decision-making process:

1. Establishing a positive decision-making environment.

2. Generating potential solutions.

3. Evaluating the solutions.

4. Deciding.

5. Checking the decision.

6. Communicating and implementing.

If you're aware of these six basic elements and improve the way you structure them, this will help you develop a better overall decision-making system. Let's look at the six elements individually.

Establishing a Positive Decision-Making Environment

(Statements 3, 7, 13, 16)

If you've ever been in a meeting where people seem to be discussing different issues, then you've seen what happens when the decision-making environment hasn't been established. It's so important for everyone to understand the issue before preparing to make a decision. This includes agreeing on an objective, making sure the right issue is being discussed, and agreeing on a process to move the decision forward.

You also must address key interpersonal considerations at the very beginning. Have you included all the stakeholders? And do the people involved in the decision agree to respect one another and engage in an open and honest discussion? After all, if only the strongest opinions are heard, you risk not considering some of the best solutions available. Click here to learn more about creating a constructive decision-making environment.

Generating Potential Solutions

(Statements 4, 8, 11)

Another important part of a good decision process is generating as many good alternatives as sensibly possible to consider. If you simply adopt the first solution you encounter, then you're probably missing a great many even better alternatives. Click here to learn about some powerful tools for generating good alternatives, expanding the number of ideas, and considering different perspectives.

Evaluating Alternatives

(Statements 1, 6, 15)

The stage of exploring alternatives is often the most time-consuming part of the decision-making process. This stage sometimes takes so long that a decision is never made! To make this step efficient, be clear about the factors you want to include in your analysis. There are three key factors to consider:

1. Risk Most decisions involve some risk. However, you need to uncover and understand the risks to make the best choice possible.

2. Consequences You can't predict the implications of a decision with 100% accuracy. But you can be careful and systematic in the way that you identify and evaluate possible consequences.

3. Feasibility Is the choice realistic and implementable? This factor is often ignored. You usually have to consider certain constraints when making a decision. As part of this evaluation stage, ensure that the alternative you've selected is significantly better than the status quo.

Click here to see a list of tools that you can use to improve the way you evaluate alternatives.

Deciding

(Statements 5, 10, 17)

Making the decision itself can be exciting and stressful. To help you deal with these emotions as objectively as possible, use a structured approached to the decision. This means taking a look at what's most important in a good decision.

Take the time to think ahead and determine exactly what will make the decision right. This will significantly improve your decision accuracy. Click here to learn about the different tools that you can use to make a good decision.

Checking the Decision

(Statements 2, 9)

Remember that some things about a decision are not objective. The decision has to make sense on an intuitive, instinctive level as well. The entire process we have discussed so far has been based on the perspectives and experiences of all the people involved. Now it's time to check the alternative you've chosen for validity and "making sense."

If the decision is a significant one, it's also worth auditing it to make sure that your assumptions are correct, and that the logical structure you've used to make the decision is sound.

Click here to learn more about tools that you can use to do this.

Communicating and Implementing (Statements 12, 14, 18)

The last stage in the decision-making process involves communicating your choice and preparing to implement it. You can try to force your decision on others by demanding their acceptance. Or you can gain their acceptance by explaining how and why you reached your decision. For most decisions particularly those that need participant buy-in before implementation it's more effective to gather support by explaining your decision.

Have a plan for implementing your decision. People usually respond positively to a clear plan one that tells them what to expect and what they need to do. For more information on developing these types of plans, read our articles about project management and change management.

Key Points

Decision-making is a skill and skills can usually be improved. As you gain more experience making decisions, and as you become more familiar with the tools and structures needed for effective decision-making, you'll improve your confidence. Use this opportunity to think about how you can improve your decision-making and take your skills to the next level. Ultimately, improving your decision-making skills will benefit you and your organization.

Decision-Making Techniques

How to Make Better Decisions

iStockphoto

Decision making is an essential leadership skill. If you can learn how to make timely, well-considered decisions, then you can lead your team to well-deserved success. If, however, you make poor decisions, your time as a leader will be brutally short.

The 40+ techniques explained in this section help you to make the best decisions possible with the information available. These tools help you map out the likely consequences of decisions, balance different factors, and choose the best courses of action to take.

Start by taking our How Good is Your Decision

HYPERLINK "http://www.mindtools.com/pages/article/newTED_79.htm" Making? self-test, and then explore different decision making tools in detail. In particular, take a look at our sections on Choosing Between Options, and Deciding Whether to Go Ahead.

The Browse by Category box will help you target specific skills, while you can look through the list below to find interesting topics.

Browse by Category

Decision-Making ModelsChoosing Between Options Deciding Whether to Go AheadFinancial DecisionsImproving Decision MakingThe Impact of Ethics and ValuesGroup Decision Making

Free ToolsMind Tools Club

Introduction to Decision-Making Skills

How Good is Your Decision Making?Decision-Making Models

The Vroom-Yetton-Jago Decision Model Deciding How to Decide

The Kepner-Tregoe Matrix Making Unbiased, Risk-Assessed Decisions

OODA Loops Understanding the Decision Cycle

The Recognition-Primed Decision (RPD) Process Making Good Decisions Under Pressure

Choosing Between Options

Grid Analysis Making a Choice Balancing Many Factors

Paired Comparison Analysis Working Out Relative Importances

The Analytic Hierarchy Process (AHP) Choosing by Weighing Up Many Subjective Factors

Conjoint Analysis Measuring Buyer Preferences

Pareto Analysis Using the 80:20 Rule to Prioritize

Decision Trees Choosing by Projecting Expected Outcomes

The Quantitative Strategic Planning Matrix (QSPM) Choosing the Best Strategic Way Forward

The Futures Wheel Identifying Future Consequences of a Change

Deciding Whether to Go Ahead

Go/No-Go Decisions Deciding Whether to Go Ahead

Risk Analysis Evaluating and Managing Risks

Plus, Minus, Interesting Weighing the Pros and Cons of a Decision

Force Field Analysis Analyzing Pressures For and Against Change

"What If" Analysis Making Decisions by Exploring Scenarios

Impact Analysis Identifying the Unexpected Consequences of a Decision

Business Experiments Taking Intelligent Risks

Financial Decisions

Cost-Benefit Analysis Deciding, Quantitatively, Whether to go Ahead

Break-Even Analysis Determining When a Product Becomes Profitable

Net Present Value (NPV) and Internal Rate of Return (IRR) Deciding Whether to Invest

Cash Flow Forecasting Forecasting the Impact of a Financial Decision

Improving Decision Making

The Ladder of Inference Avoiding Jumping to Conclusions

Decision Making Under Uncertainty Making the Best Choice with the Information Available

Decision Making - "Cautious" or "Courageous"? Understand Your Risk Preference and Make Better Decisions

Six Thinking Hats Looking at a Decision From All Points of View

Critical Thinking Develop the Skills for Successful Thinking

Blindspot Analysis Avoiding Common Fatal Flaws in Decision Making

Reactive Decision Making Making Good Decisions Under Pressure

Linear Programming Optimizing Your Limited Resources

Monte Carlo Analysis Bringing Uncertainty and Risk Into Forecasting

The Impact of Ethics and Values

The Foursquare Protocol Learning to Manage Ethical Decisions

What Are Your Values?Deciding What's Most Important in Life

Spiral Dynamics Understanding How People's Values May Affect Their Decision Making

Group Decision Making

Organizing Team Decision Making Reaching Consensus for Better Decisions

Multi-Voting Choosing Fairly Between Many Options

The Nominal Group Technique Prioritizing Issues and Projects to Achieve Consensus

The Stepladder Technique Making Better Group Decisions

The Delphi Technique Achieving Well Thought-Through Consensus Among Experts

Avoiding Groupthink Avoiding Fatal Flaws in Group Decision Making

Hartnett's Consensus-Oriented Decision-Making Model Developing Solutions Collectively

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