Decision-Making: Definition, Importance and Principles

Decision-making is the process of making choices by identifying a decision, gathering

information, and assessing alternative resolutions.

A decision is an act of selection or choice of one action from several alternatives.

Decision-making can be defined as the process of selecting a right and effective course of action
from two or more alternatives for achieving a desired result. Decision-making is the essence of
management.

Using a systematic decision-making process can help you make more deliberate, thoughtful
decisions by organizing relevant information and defining alternatives. This approach increases
the chances that you will choose the most satisfying alternative possible.

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of the decision
you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information is
needed, the best sources of information, and how to get it. This step involves both internal and
external “work.” Some information is internal: you will seek it through a process of self-
assessment. Other information is external: you will find it online, in books, from other people,
and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of action, or
alternatives. You can also use your imagination and additional information to construct new
alternatives. In this step, you will list all possible and desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you carried out each
of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or
resolved through the use of each alternative. As you go through this difficult internal process,
you will begin to favor certain alternatives: those that seem to have a higher potential for
reaching your goal. Finally, place the alternatives in a priority order, based upon your own value
system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative that seems to
be best one for you. You may even choose a combination of alternatives. Your choice in Step 5
may very likely be the same or similar to the alternative you placed at the top of your list at the
end of Step 4.

Step 6: Take action

You are now ready to take some positive action by beginning to implement the alternative you
chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether or not it has
resolved the need you identified in Step 1. If the decision has not met the identified need, you
may want to repeat certain steps of the process to make a new decision. For example, you
might want to gather more detailed or somewhat different information or explore additional
alternatives.

The definition of decision-making has three different but inter-related

implications.

These are as follows:

1. When the managers make decisions, they exercise choice. They decide what to do based on
some conscious and deliberate logic or judgement.
2. When making a decision the managers are faced with alternatives. An organization does not
take a wise manager to reach a decision when there are no other possible choices. It does
require wisdom and experience to evaluate several alternatives and select the best one.
3. When taking a decision, the managers have a purpose. They propose and analyze the
alternative courses of action and finally make a choice that is likely to move the organization in
the direction of its goals.

Importance of Decision-Making:
Management is essentially a bundle of decision-making process. The managers of an enterprise
are responsible for making decisions and ascertaining that the decisions made are carried out in
accordance with defined objectives or goals.

Decision-making plays a vital role in management. Decision-making is perhaps the most

important component of a manager’s activities. It plays the most important role in the planning
process. When the managers plan, they decide on many matters as what goals their
organization will pursue, what resources they will use, and who will perform each required task.
When plans go wrong or out of track, the managers have to decide what to do to correct the
deviation.

In fact, the whole planning process involves the managers constantly in a series of decision-
making situations. The quality of managerial decisions largely affects the effectiveness of the
plans made by them.

In organizing process, the manager is to decide upon the structure, division of work, nature of
responsibility and relationships, the procedure of establishing such responsibility and
relationship and so on.

Principles of Decision Making:

Effective decision involves two important aspects—the purpose for which it is intended, and
the environmental situation in which it is taken. Even the best and correct decision may
become ineffective if these aspects are ignored; because in decision-making there are so many
inside and outside chains of unavoidable reactions.

These principles are stated as follows:

1. Subject-matter of Decision-making:
Decisional matters or problems may be divided into groups consisting of programmed and non-
programmed problems. Programmed problems, being of routine nature, repetitive and well
founded, are easily definable and, as such, require simple and easy solution. Decision arrived in
such programmed problems has, thus, a continuing effect. However, in non-programmed
problems, there is no continuing effect because they are non-repetitive, non-routine, and
novel.
2. Organizational Structure:
The organizational structure, having an important bearing on decision-making, should be
readily understood. If the organizational structure is rigid and highly centralized, decision-
making authority will remain confined to the top management level. This may result in delayed
and confused decision and create suspicion among the employees.

On the contrary, if the organizational structure provides scope for adequate delegation and
decentralization of authority, decision-making will be flexible and the decision-making authority
will be close to the operating centers. In such a situation, decision-making will be prompt and
expected to be more effective and acceptable.

3. Analysis of the Objectives and Policies:

Proper analysis of the objectives and policies is needed for decision-making. The clear definition
of objectives and policies is the basis that guides the direction of decision-making. Without this
basis, decision-making will be aimless and unproductive.

4. Analytical Study of the Alternatives:

For decision-making, analytical study of all possible alternatives of a problem with their merits
and demerits is essential. This is necessary to make out a correct selection of decision from
among the alternatives.

5. Proper Communication System:

Effective decision-making demands a machinery for proper communication of information to all
responsibility centers in the organization. Unless this structure is built up, ignorance of decision
or ill-informed decision will result in misunderstanding and loose co-ordination.

6. Sufficient Time:
Effective decision-making requires sufficient time. It is a matter of common experience that it is
usually helpful to think over various ideas and possibilities of a problem for the purpose of
identifying and evaluating it properly. However, in no case a decision can be delayed for an
indefinite period, rather it should be completed well in advance of the scheduled dates.

7. Study of the Impact of a Decision:

Decision is intended to be carried out for the realization of the objectives of the organization. A
decision in any particular area may react adversely in other areas of the organization. As all
business activities are inter-related and require co-ordination, it is necessary that a study and
analysis of the impact of any decision should precede its application.

8. Participation of the Decision-maker:

The decision-maker should not only be an observer while others will perform as per his
decision. He should also participate in completing the work for which he took decision. This
experience will help him in decision-making in future. The principle of participation in work of
the decision-maker will enable him to understand whether the decision taken is practical and
guide him in forthcoming decisional matters.
9. Flexibility of Mind:
This is essential in decision-making, because decisions cannot satisfy everybody. Rigid mental
set-up of the decision-maker may upset the decisions. The flexible mental disposition of the
decision-maker enables him to change the decision and win over the co-operation of all the
diverse groups.

10. Consideration of the Chain of Actions:

There is a chain relationship in all the activities of any organization. Different activities are tied
up in a chain sequence. Any decision to change a particular work brings change in other related
works also. Similarly, decision-making also proceeds following the chain of action in different
activities. Therefore, before taking a decision one should consider the chain relationship among
different activities.

What Can Prevent Effective Decision-Making?

There are a number of problems that can prevent effective decision-making. These include:

1. Not Enough Information

If you do not have enough information, it can feel like you are making a decision without any
basis.
Take some time to gather the necessary data to inform your decision, even if the timescale is
very tight. If necessary, prioritize your information gathering by identifying which information
will be most important to you.

2. Too Much Information

The opposite problem, but one that is seen surprisingly often: having so much conflicting
information that it is impossible to see ‘the wood for the trees’. This is sometimes
called analysis paralysis, and is used as a tactic to delay organizational decision-making, with
those involved demanding ever more information before they can decide.

This problem can often be resolved by getting everyone together to decide what information is
important and why, and by setting a clear timescale for decision-making, including an
information-gathering stage.

3. Too Many People

Making decisions by committee is difficult. Everyone has his or her own views, and their own
values. Moreover, while it is important to know what these views are, and why and how they
are important, it may be essential for one person to take responsibility for making a decision.
Sometimes, any decision is better than none.

4. Vested Interests
Decision-making processes often founder under the weight of vested interests. These vested
interests are often not overtly expressed, but may be a crucial blockage. Because they are not
overtly expressed, it is hard to identify them clearly, and therefore address them, but it can
sometimes be possible to do so by exploring them with someone outside the process, but in a
similar position.

It can also help to explore the rational/intuitive aspects with all stakeholders, usually with an
external facilitator to support the process.

5. Emotional Attachments
People are often very attached to the status quo. Decisions tend to involve the prospect of
change, which many people find difficult.

6. No Emotional Attachment
Sometimes it is difficult to make a decision because you just do not care one way or the other.
In this case, a structured decision-making process can often help by identifying some very real
pros and cons of particular actions, that perhaps you had not thought about before.

Many of these issues can be overcome by using a structured decision-making process. This will
help to:
 Reduce more complicated decisions down to simpler steps;
 See how any decisions are arrived at; and
 Plan decision making to meet deadlines.

Many different techniques of decision-making have been developed, ranging from simple rules
of thumb, to extremely complex procedures. The method used depends on the nature of the
decision to be made and how complex it is.
 How to Become a Better Decision Maker
Making good decisions is a key skill for personal and professional success. Making sound, logical
decisions in your professional life can positively affect you, your colleagues and your
organization. Applying effective strategies and techniques can help you improve your decision-
making skills. In this article, we explain how you can become a better decision-maker.

What is a good decision-maker?

A good decision-maker chooses actions that give the best outcome for themselves and others.
They enter into the decision-making process with an open mind and do not let their own biases
sway them. They make decisions rationally, after researching alternatives and understanding
the consequences.

Good decision-makers involve others when appropriate and use knowledge, data and opinions
to shape their final decisions. They know why they chose a particular choice over another. They
are confident in their decisions and rarely hesitate after reaching conclusions.

Anyone can be a good decision-maker. Making decisions is an integral part of any job, whether
you are in an entry-level position or you make important choices on behalf of your company as
an executive.

How to be a better decision-maker?

Applying proven decision-making strategies should help you become a better decision-maker.
When you must decide on work, take the following steps to determine the best option:

 Consider your personality traits and characteristics.

 Know your goals.
 Collect information.
 Consider all your options.
 Imagine different scenarios.
 Stay open-minded.
 Eliminate options before making a final decision.
 Understand some options have equal value.
 Use your available time.
 Embrace the consequences.
 Learn from past decisions.

1. Consider your personality traits and characteristics

People have natural characteristics that can shape their decision-making. Understanding your
personality can help you identify how you currently make decisions and how you could make
better ones. Some of the personality traits that may affect your decision-making are:
Overconfidence
This common trait can compromise decision-making. Many people overestimate their
performance and knowledge. Timing yourself completing everyday tasks can help you gain a
more realistic understanding of your performance, and this knowledge can help you make
better decisions about the number of assignments you can accept in a given period. Making
decisions into a collaborative process can correct overconfidence. Seeking the opinions of
others will improve your knowledge and help you make better decisions than you can alone.

Risk-taking or risk-averse
Natural risk-takers can make decisions without thoroughly considering the dangers, while
people who are more wary of risks may prefer making safe decisions. Understanding your
natural inclinations can help you identify the type of decisions; you make and learn how to go
against your instincts.

Natural bias
Everyone has biases and concerns that can affect decision-making. Perhaps you have made
assumptions about certain people in your professional or personal sphere. You may feel fearful
of certain situations, like public speaking at meetings or flying for business trips. The media and
the opinions of others can also shape thinking. For example, watching recent news stories
about car accidents may make you more nervous about driving to meet a client. Think carefully
about whether you let your biases and concerns sway your judgment and impair your decision-
making.

2. Know your goals

The decisions you make should help you or your company achieve goals. Identifying your
individual goals and your business’ goals can direct you toward the best choice. When you
know what results you want, making decisions can be more straightforward.
For example, imagine you are considering whether to gain further qualifications. Identifying
your professional goals can help you make the best decision for your future.

3. Collect information

Understanding why you are making decisions, what your options are and the impact of
selecting each option helps you make more informed and better choices. Your colleagues,
industry experts, trusted friends and family members might also be able to guide you towards
the best decisions. While they can be valuable knowledge sources, you should ultimately make
your own decisions.

The most successful decision-makers know when they have collected enough information to
make the best decisions. Once they have, they act decisively and move on; confident their
choice is the best they could have made.
4. Consider all your options

The more alternatives you consider, the more likely you are to make successful decisions.
Carefully considering a wide range of potential choices is best. Speaking to others during your
decision-making process can offer fresh perspectives that may present alternatives you had not
considered.

5. Imagine different scenarios

Imagining what could happen before you act can help guide you toward the best decision.
Consider how your decisions would improve your life and the lives of others close to you. This
approach can be more effective than making a list of pros and cons, as it recognizes not every
benefit or drawback is weighted equally.

6. Stay open-minded

Resisting the urge to draw conclusions and staying open-minded until reaching a final decision
can help you to overcome confirmation bias and make better decisions. It is a natural tendency
to draw conclusions first, and then seek out evidence that supports it. However, this method
can cause overlooking important information.

7. Eliminate options before reaching a final decision

Having a variety of choices early in the decision-making process is important, but in time, a
wide range of choices can be overwhelming and confusing. Eliminating options throughout the
decision-making process reduces these feelings. Discount choices when you learn they are not
the right selections rather than researching them further. As you narrow your options, you can
focus better on each one available and ultimately make the best decision.

8. Understand some options have equal value

The natural tendency to weigh and rank options undermines the concept that sometimes
options have relatively equal value. You could research your options for days or weeks and still
be unclear which a better proposition is. Understanding this and committing to one option or
another is crucial for better decision making.

Consider a decision to work for one company over another. If the roles are similar, your annual
salary and benefits may also be approximately the same. However, an attractive fixed salary
falls relatively low on the list of factors for employee happiness. Other factors like appreciation
for work, good relationships with coworkers and work-life balance are more crucial and harder
to rank empirically, especially before you start working for an organization. When options seem
equally weighted, commit to one option, and then move forward.
Once you are confident your options are relatively equal, you might use a random decision
maker online or a choosing wheel. Only use easy decision-maker tools when you feel all your
options are equal since they cannot substitute your own knowledge.

9. Use your available time

Rushed decisions are rarely the best decisions. When someone makes decisions too quickly,
they are often guided by biases and natural inclinations rather than objective information. Take
advantage of the time you have available to make your decisions.

If someone wants a quick answer, ask whether you can have more time. While this is not
always possible, extra time for gathering information and reflecting usually leads to better
decisions. If you have limited time, try developing a counterargument for the decision you are
considering. Debating with yourself, even for a short time, can help you make better decisions
now.

10. Embrace the consequences

Every decision you make has consequences for you, and potentially for other people as well. Try
to adjust your thinking to make decisions without worrying about making mistakes. Though you
need to consider potential outcomes, the safest option is not always the best one. If you choose
carefully without fear holding you back, you can embrace the consequences to make the best
decisions possible.

11. Learn from past decisions

Every time you make decisions, you can get better at it. Reflect on the choices you make and
their outcomes. Note whether the results were entirely favorable or things could have gone
better. Identify areas for improvement, and consider how you could better the outcome next
time. Every decision you make provides a learning opportunity that should make you a better
decision-maker.

What are time management skills?

Time management skills include a variety of skills that will help you manage your time well.
Some of the most important time management skills include:

Organization
An organized person is able to plan things carefully and keep things tidy. Staying organized can
help you maintain a clear picture of what you need to complete and when. Being well organized
might mean maintaining an up-to-date calendar, being able to locate certain documents easily,
having a tidy environment and taking detailed, diligent notes.
Prioritization
to decide which things are most important to do We don't have enough time to do everything.
Assessing each of your responsibilities for priority is key in being a good time manager. There
are many ways to prioritize what you need to accomplish. You might decide to complete fast,
simple items followed by longer, more involved ones. Alternatively, you might prioritize your
tasks starting with the most time-sensitive, or a combination of both.

Goal setting
Goal setting is a process that starts with careful consideration of what you want to achieve, and
ends with a lot of hard work to actually do it. Setting goals is the first step to becoming a good
time manager. Goal setting allows you to clearly understand your end goal and what exactly
you need to prioritize to accomplish it. Setting both short and long-term goals can lead to
success in your career.

Communication
Developing strong communication skills can allow you to make your plans and goals clear to
people you work with. It also allows you to delegate, which lets you focus on completing the
most important, relevant tasks that align with your goals.

Planning
Planning in management is about what steps you need to take to reach the goal, what changes
and hurdles to anticipate, and how to utilize human resources and opportunities to reach the
expected outcome. A fundamental part of time management is planning. Being efficient in
planning your day, meetings and how you will accomplish things will help you stick to your
schedule.

Delegation
Delegation is commonly defined as the shifting of authority and responsibility for particular
functions, tasks or decisions from one person (usually a leader or manager) to another. Being a
good time manager means only completing work that will help you and your company
accomplish goals. While managers most often do this skill, you can also practice delegating
tasks if you are managing a project. While it can often be difficult to say “no” when someone
asks you to do something at work, it is important to practice having boundaries to manage your
time well and ultimately accomplish your goals.

Stress management
Stress management is a wide spectrum of techniques and psychotherapies aimed at controlling
a person's level of stress, especially chronic stress, usually for the purpose of and for the motive
of improving everyday functioning. When practicing good time management, you should also
be attentive to your mental health. Handling stress in a positive way can help you stay
motivated and perform well when going through your schedule. You might do this by including
small breaks throughout your day, or by rewarding yourself in small ways as you accomplish
tasks.
Taking time to develop each of these skills will help you organize your daily work, whether you
are in a job, searching for a job or trying to develop a new competency.

Why are time management skills important?

Time management skills are important because they help you structure your work in a way that
allows you to accomplish goals. For example, if your goal is to get a job, you need time to
update your resume, search for openings, apply research companies and prepare for
interviews. Setting aside specific amounts of time per day will help you complete the necessary
steps to getting a job.

Alternatively, if you already have a job, you likely have a variety of responsibilities to help the
company achieve certain goals. Maintaining your calendar, meetings and tasks is necessary to
be successful in your role.

Being present and focused results from strong time management skills. For example, if you are
running late to a meeting and must work on a project you forgot was due while people are
speaking, you might miss important information that could help you be better at your job.
Managing your time well also allows you to have space to be creative and proactive with your
goals. When you have a specific time set aside to complete your tasks, you can also allow time
to think about the big picture for yourself and your company.

How to improve time management skills

Working on your time management skills can help you be a better employee and strong
candidate when you apply for new opportunities. Here are a few ways you can improve your
time management skills:

1. Set short and long-term goals

Practicing regular goal setting can help you clearly understand exactly what you need to
accomplish to achieve certain results. To hit larger, long-term goals, identify smaller milestone
goals along the way. For example, if you have a goal to be promoted within six months, you
might need to set smaller goals to improve on certain skills. Your goals should be specific,
measurable, achievable, relevant and time-based.

2. Manage your calendar

Setting time aside to complete the most important tasks on your list is important for managing
your time. You might consider blocking off certain brackets of time on your calendar on a
regular basis so you are guaranteed to have time in your schedule without distractions or
meetings. You should also consider whether or not attending certain meetings is beneficial. If
you feel you will not add value or contribute in any certain way, you should feel empowered to
decline certain meetings. If you do this, use discretion and be polite–you might consider
sending the meeting owner an email letting them know why you have declined.
3. Prioritize your assignments
Prioritization is a difficult skill but gets easier with practice. You can practice prioritization by
making to-do lists. Writing or typing out everything you need to be done can help you physically
prioritize the tasks that are most urgent or easy to get out of the way. If you need help, you
might consider asking your manager or a colleague who is good at prioritizing how they would
complete work. Understanding due dates and how the task affects others and business goals
can help you to get certain things done ahead of others. If you are still unable to meet the due
date, you might be able to ask for a deadline extension on a task.

Improving time management skills can help you be a better worker and have the ability to focus
fully as you go about your day. You can be a better time manager by being organized, setting
goals and prioritizing your to-do list.

Setting Goals To Improve Your Career

Setting specific, measurable goals can provide a path to improve your career and achieve
certain accomplishments. You can use goal setting when given a certain task or project, or to
personally advance in some way. You can set goals towards promotions, creativity, education
and many other various ways to improve your life and career.

Why setting goals is important?

Setting goals is important because it gives you a framework to achieve milestones. Wanting to
do or complete certain things in life is a great start. Goal setting provides a path for you to
actually do them. There are two types of goals you should consider setting short term and long
term.

What are the short-term goals?

Short-term goals are more immediate goals you set for yourself to achieve your larger, long-
term goals. You can think of short-term goals as milestones or stepping-stones. Short-term
goals usually exist in a short timeframe, anywhere from days or months to one or two years.
Examples of short-term goals might include completing small tasks or projects, gaining
experience or taking classes. You will use what you accomplished in the short term to complete
your long-term goals.

What are long-term goals?

Long-term goals are usually large goals you want to achieve over several years. You will use
several milestones to achieve long-term goals, setting short-term goals to achieve along the
way. Long-term goals might include getting a job in certain career, being promoted to a certain
level or completing a lengthy, complicated project.

Setting personal goals

Setting goals for your personal life will help you reach personal achievements. You might set
personal goals to advance several categories in your life for things like hobbies, health or
education. Setting personal goals can help you achieve success in your career as well.

Advancing your interests by building experience in hobbies, you enjoy or skills you want to
improve can easily transfer into your professional life. These are often good things to include on
your resume if relevant to the jobs you are applying for. Spending time improving on things you
want in your personal life can also help you be more focused and energetic at work by paying
attention to your work-life balance.

Here are a few personal goals examples:

 Advancing hobbies like playing a musical instrument or playing a sport

 Improving on skills like graphic design or public speaking
 Increasing your knowledge about a certain topic or area of study
 Focusing on building or improving relationships
 Financial goals like saving for a certain purchase
 Physical goals like training for a marathon or completing a certain fitness challenge

Setting professional goals

Setting professional goals can help you both complete certain tasks or projects and achieve any
personal career goals you might have. If your company or manager does not have a specific
framework for you to set goals in your job, you might consider setting your own career goals.
You can also set your own goals if you are self-employed. Your career goals should address both
your current situation and your larger long-term career ambitions.

Here are a few professional goals examples:

 Being promoted to a certain position

 Completing a large project
 Solving a complex problem
 Improving certain soft or technical skills
 Successfully switching careers or industries
 Getting a certain award or recognition
How to set goals
While there are several different ways to set goals, there are a few steps you can take to ensure
the best possibility of success. Your goals should have five key elements to make them
achievable. These five elements make up what is known as the “SMART goal” framework.
SMART stands for specific, measurable, achievable, relevant and time-based. Let us take a
closer look at how to set a SMART goal:

1. Make your goal as clear and detailed as possible

For example, instead of “I want to be better at public speaking,” you can say, “I want to
successfully give a 10–15 minute presentation to an audience of 50 or more people.”

2. Define how you will measure success

For example, if you want to switch from a job in sales to a job in marketing, you might set
milestones along the way that address how to develop the skills and experience-marketing
employers are looking for. To do this, you might set your measurement as learning and focusing
on one skill per month.

3. Check whether your goals are achievable

Setting goals you can accomplish within a reasonable timeframe will help keep you motivated
and focused. You should work to understand the full scope of your goal ahead of time to ensure
it is possible to accomplish.
For example, if you are in your first professional developer job and your goal is to become a
senior-level .NET developer, you might need to set smaller, short-term goals before reaching
this larger goal. If you find that a goal is not achievable because you do not have enough
experience, one of your new goals should be to gain more experience.

4. Make sure your goal is relevant

You should set goals that align with your values and contribute toward your long-term goals.
Each goal you set should be relevant and meaningful to you, moving you closer toward where
you want to be. To make sure you are setting relevant goals, you might ask yourself, "How will
achieving this goal help me?" "Does accomplishing this goal contribute toward my larger, long-
term goals? Why does this goal matter to me?"

5. Set a beginning and end date

Setting a timetable to achieve your goal can both help keep you motivated and on-schedule.
Before setting a goal end-date, be sure to research all the milestones and possible roadblocks
you might run into along the way. For example, if your goal is to be promoted to the next level
at your company, you might give yourself six months. If you have not achieved your goal, you
might give yourself extended time or reconsider whether your goal is achievable and realistic.
Setting both personal and professional goals will help give a structure and path to success.
Many employers value candidates that have a record of setting and achieving goals. This shows
that you can be a focused, goal-oriented employee. Employers often ask about goals in
interviews, so you should prepare to talk about your goals and what you are doing to achieve
them during the hiring process.