Running a business requires the ability to make good decisions. Proper decision-making methods set a benchmark for the victorious. Are you a good decision maker? One wrong choice can affect the entire company. It is crucial for business owners to understand the weight behind each decision and continually improve their decision-making skills.
Do you struggle to make timely decisions? It’s nothing to be ashamed of – everyone gets to a point where they get stuck in a problem and don’t like it. This is especially true for a business owner or manager who is forced to make different decisions every single day. Trying to make the right call in all situations can be frustrating, especially when the decisions have serious consequences.
To help you make some important business decisions, you’ll want to return to one of the six decision-making strategies listed below. Each of these strategies has many offers in the right location, so you can learn how to use them so can position them at the right time. Let’s take a closer look at each of these six viable options.
The University of Massachusetts-Dartmouth outlines seven basic steps for effective decision-making:
- Weight of evidence
- Choose between options
- Take action
- Review decisions and results
- Identify the decisions made
- Collect relevant information
- Identify alternatives
Decision-making tools and methods
The basic principles may be the same, but dozens of different techniques and tools can be used when trying to make a decision. Here are some of the more popular options, some of which use graphs, models, or charts. You can use this strategy combination to arrive at your final decision.
Decision tree: This is a graph or model that thinks about each option and each outcome. Statistical analysis was conducted with these methods.
Conjoint analysis: This is a method used by business leaders to determine consumer preferences when making decisions.
SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities, and threats that exactly evaluate this planning tool. This is one of the vital decision-making methods.
Multivating: This is used when multiple people are involved in making decisions. It also helps to reduce the size of a large list to a smaller final decision.
Decision Matrix: A decision matrix is used to evaluate all alternatives to a decision. When using the matrix, create a table with all the options in the first column and all the elements that influence the first-row decision. Users then score each option and which factors matter the most. A final score is then the best option which is the tallest to publish.
T-Chart: This chart is used when weighing the options plus the minus. This ensures that all the positives and negatives are considered when making a decision.
The Kepner-Trego matrix
Given the importance of business decisions, only tools such as the Kepner-Trego matrix can be used to assist the process. Especially when you use this matrix to guide your thinking when making important decisions, you will be able to frame the question in several important ways. Instead of just ‘going with your gut,’ this tool helps you solve all the important issues before making your final choice. No tool guarantees that you will make the right decision every time – no one makes the right choice every time – but being familiar with such tools is a big step in the right direction.
To use the Kepner-Trego matrix, you’re going to work through a four-step process. We quickly outlined the four steps below.
Situational analysis. This is the high level of decision, where you need to choose which weighs everything involved. You’re not going to get into specifics at this point. Instead, you will think about broad decisions, trying to decide what you want to accomplish, and what success will look like.
Problem Analysis. The details of the decision are beginning to come into focus in this step. An in-depth analysis of the problem is a step that is often omitted, but if you want to be confident in reaching a final decision, it will be a mistake.
With your decision, you are now going to imagine that you made the decision right – before you actually do it. Do you see any potential issues coming up as a result of this choice? What can you do to reduce those problems?
When it comes to making important business decisions for your business, the Kepner-Trego matrix is a great tool to have on hand.
Decision analysis. Here you are actually going to make your choice. Present yourself – or your decision-making team – with different options on the table at this time. Not only should the potential benefits of each decision be assessed, but the potential risks need to be considered as well.
Decision matrix analysis
As you are probably aware, the best way to make important decisions is to work through several options at once, based on a number of factors before concluding. The decision-making style that is commonly used in a business is presented in the Decision Matrix Analysis Model. Instead of using a pre-designed matrix – which may or may not fit your needs – you’re going to create your own matrix when using this model. This way, the matrix will be fully customized to your needs and will be sure to help you reach a successful conclusion. The process can take a lot of work upfront, but it’s actually relatively quick and easy to perform. Once you practice creating this kind of matrix, you will come back time and time again to make your big decision.
To create a decision-making matrix, you need to gather different options for decision-making. You have to be open for the first time with all the options on the table – even if you don’t think they’ll win in the end. On the left side of your matrix, list the options you have for this decision and the factors that influence the top. Rate each combination of options and factors on a 1-5 scale within the matrix. Once you’ve filled out each square of the matrix, add the scores and see which option comes up at the top. If you can’t go with the highest-scoring option to consider other issues, this matrix would be a great way to list your options in terms of functionality.
Force Field Analysis
In business, this is often the simplest tool that is most effective. This is certainly true in this case because force field analysis has been going on for decades and yet it remains a powerful tool today. You may want to consider creating a force field analysis to determine if you want to continue with your plan once you are faced with the decision to influence the way your business moves forward. Doing such an analysis is a great way to see both sides of the potential change, which is important in determining how the change will work. Wrong decisions are made when the only aspect of a decision is considered, but it does not happen when force field analysis is used correctly.
Now the plan is, you’re going to create your Force Field Analysis by creating a simple chart with two columns – one with the items working on the plan and one with the working items. You are going to list all the relevant ‘forces’ listed here for your idea and both here. Once you complete the lists, you’re going to assign a value to each of these forces based on these strengths. Add those scores to get the final tally in the ‘For’ and ‘against’ columns. If you find that the ‘for’ column gets a significantly higher score, it may be wise to follow this plan. If the ‘Reverse’ column wins, you may want to table this idea now.
This is a strategy that requires a large number of decisions. Deciding whether these decisions will have the greatest overall impact helps to prioritize which ones should be prioritized first. This is one of the vital decision-making methods.
Pareto analysis is based on the famous Pareto principle, which says that 20% of the work you do will make up 80% of the results. In other words, there is no direct 1: 1 relationship between your work and the results you get. If you pick the right job, you can achieve most of your desired results without having to work anywhere near all the jobs. Clearly, 20% – 80% of the relationship is not an accurate measure, but it does highlight the unexpected nature of the connection between work and outcomes.
This is related to decision-making because you have to decide how much time you are going to spend each day – your own time, or the time of your team members. Efficiency directly relates to the bottom line, as you spend time each day, that organization is going to determine how productive it is as a whole. In order to use Pareto analysis effectively, you are going to follow the steps below.
Find your problem. Make a complete list of the problems your organization wants to solve.
The root cause is up to match. For each problem, do your best to identify and highlight a root cause.
Give the problem a score. Not all problems are created equal – rate the problems you want to solve, the most important ones have the highest scores.
Create a group Takes some time to classify your problems into a hierarchy so you can try to solve multiple problems at the same time.
Group score. The problematic groups have the highest scores that should be their first. This simple process will help you ensure that your time and attention are spent on the issues that affect the business in the most important way.
Analytical hierarchy process
The analytical hierarchy process requires the application of a mathematical approach to any decision. Using mathematics at its core, this model is able to help you make an impartial, logical decision based on the factors that have been determined to be important in the selection process. This system lacks precision in how it builds accuracy and robustness – the numbers are not false and the best available option will be identified when AHP is used correctly.
The mathematical details used to complete this process are beyond the scope of this article, but it is a particularly useful decision-making tool when you are faced with a complex problem. Beginning the process by identifying the goal of the decision, you can use the mathematical process suggested in this analysis to make an analytical choice that will lead your organization in the right direction.
It is a tool that was created in the early 70s and is very relevant today. Before making your next big decision, consider assembling a Future Wheel to determine if you’re heading in the right direction. This is one of the vital decision-making methods.
The whole reason for thinking about how it will affect the future is because of what kind of change you are considering. Perhaps it is a change that is being emphasized to you by market factors or other conditions, or it is a change that you are starting to see as a way to improve your company.
Using this model, start writing a suggested change in the middle of a sheet of paper – it will become the center of your wheel. From there, you are going to write changes at the bottom level that will need to happen in order to achieve the major changes that are focused on this process. The concept here is to move to a deeper and deeper level, one step at a time. With the mask longer you are slowly building a wheel as you think about more changes that could support major changes in the middle.
This strategy is used when weighing the financial constraints of each of the possible options as a way to come to a final decision that makes the most sense from an economic perspective. This is one of the vital decision-making methods.
An acronym for political, economic, social, and technical, PEST can improve decision-making and time by analyzing external factors. This is one of the vital decision-making methods. This method considers the current trends to help predict more in the future.
Decision-making is wrong
There are some common mistakes made during the decision-making process that can lead to poor choices. Jeff Miller, director of corporate training and development for human resources and business performance solutions provider companies, said leaders often make decisions or are delayed in making them.
“As well as being uncomfortable or time-consuming, avoiding decisions can damage your reputation,” Miller wrote on the inspiration website. “Your staff understands this as a lack of care for their well-being, which can create a lack of respect.”
Another mistake you can make when trying to make a decision is not to believe in your own emotions. Business leaders often underestimate the value and the value of the information they receive from others. Instead of steering your faith in one way or another, the US Small Business Administration advises leaders to put others’ opinions in perspective.
“Our society teaches us to ignore [our hearts], but by pulling your insights, you will see that you make much better decisions,” the SBA website wrote.
When consulting with expert advice on particularly difficult decisions, SBA advises leaders not to rely too heavily on these opinions when evaluating their views.
“Often, experts say that people have a tendency to emphasize what people are saying,” says the SBA article. “Remember, experts are only human and like the rest of us, they have their own biases and set of ancestors.”
How do I stop making bad decisions?
- Find good information
- Avoid common issues
- Take time to think
- Analyze well
- See your history
- Check-in with yourself
- Take care of yourself
Every decision-making strategy we include in this article has the potential to lead your business. Of course, you need to know when to use it at the right time and when to use it. For example, you do not need to use complex methods for a decision that you make several times a day – doing so will make it unnecessary and unnecessary.
Instead, such strategies should be reserved for those choices that are going to have a meaningful and lasting impact on your business. When it comes to making these kinds of decisions, pick your favorite of these valuable strategies, and work to make the best possible choice.
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