Friday, February 22, 2013

Decision Making

Introduction to Decision Making

People often find it hard to make decisions.  Some people put off making decisions by endlessly searching for more information or getting other people to offer their recommendations.  Others resort to decision making by taking a vote, sticking a pin in a list or tossing a coin.
Regardless of the effort that is put into making a decision, it has to be accepted that some decisions will not be the best possible choice.  This article looks at one technique that can be used in decision making that should help you to make effective decisions in the future.  Although the following technique is designed for an organisational or group structure, it can be adapted to an individual level.

What is Decision Making?

In its simplest sense, decision making is the act of choosing between two or more courses of action.  However, it must always be remembered that there may not always be a 'correct' decision among the available choices.  There may have been a better choice that had not been considered, or the right information may not have been available at the time.  Because of this, it is important to keep a record of all decisions and the reasons why decisions were made, so that improvements can be made in the future.  This also provides justification for any decision taken when something goes wrong.  Hindsight might not be able to correct past mistakes, but it will aid improved decision making in the future.

Effective Decision Making

Although decisions can be made using either intuition or reasoning, a combination of both approaches is often used.  Whatever approach is used, it is usually helpful to structure decision making in order to:
  • Reduce more complicated decisions down to simpler steps.
  • See how any decisions are arrived at.
  • Plan decision making to meet deadlines.

Stages of Decision Making

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.  The method described in this article follows a number of stages.  These are:
  • Stage One:  Listing all possible solutions/options.
  • Stage Two:  Setting a time scale and deciding who is responsible for the decision.
  • Stage Three:  Information gathering.
  • Stage Four:  Weighing up the risks involved.
  • Stage Five:  Deciding on values, or in other words what is important.
  • Stage Six:  Weighing up the pros and cons of each course of action.
  • Stage Seven:  Making the decision.

Framework for Decision Making

Listing Possible Solutions/Options

Generally, the possible solutions will have been thought up during the earlier problem solving process, either through brainstorming or some other 'idea generating' process (see my article on: Problem Solving).  In addition, a decision will have to be made from a selection of fixed choices.  Always remember to consider the possibility of not making a decision or doing nothing and be aware that both options are actually decisions in themselves.

Setting a Time Scale and Deciding Who is Responsible for the Decision

In deciding how much time to make available for the decision making process, it helps to consider the following:
  • How much time is available to spend on this decision?
  • Is there a deadline for making a decision and what are the consequences of missing this deadline?
  • Is there an advantage in making a quick decision?
  • How important is it to make a decision?  How important is it that the decision is right?
  • Will spending more time improve the quality of the decision?
Responsibility for the Decision:  Before making a decision, it needs to be clear who is going to take responsibility for the decision.  Remember that it is not always those making the decision who have to assume responsibility for it.  Is it an individual, a group or an organisation?  This is a key question because the degree to which responsibility for a decision is shared can greatly influence how much risk people are willing to take.
If the decision making is for work then it is helpful to consider the structure of the organisation that you are in.  Is the individual responsible for the decisions he or she makes or does the organisation hold ultimate responsibility?  Who has to carry out the course of action decided?  Who will it affect if something goes wrong?  Are you willing to take responsibility for a mistake?
Finally, who can take the decision?  When helping a friend, colleague or client to reach a decision, in most circumstances the final decision and responsibility will be taken by them.  Whenever possible, and if it is not obvious, it is better to make a formal decision as to who is responsible for a decision.  This idea of responsibility also highlights the need to keep a record of how any decision was made, what information it was based on and who was involved.  Enough information needs to be kept to justify that decision in the future so that, if something does go wrong, it is possible to show that your decision was reasonable in the circumstance and given the knowledge you held at the time.

Information Gathering

Before starting on the process of making a decision, all relevant information needs to be gathered.  If there is inadequate information then a wrong decision might be made.  If there is too much irrelevant information the decision will be difficult to make.  There is a need for up-to-date, accurate information on which to make decisions.  Information needs to be gathered so that an informed decision can be made.  The amount of time spent on information gathering has to be weighed against how much you are willing to risk making the wrong decision.  In a group situation, such as in a business or voluntary organisation, it may be appropriate for different individuals to research different aspects of the information required, for example different people might be allocated to concentrate their research on costs, facilities, availability, and so on.

Weighing up the Risks Involved

One key question is how much risk should be taken in making the decision? Generally, the amount of risk an individual is willing to take depends on:
  • The seriousness of the consequences of taking the wrong decision.
  • The benefits of making the right decision.
  • Not only how bad the worst outcome might be, but also how likely that outcome is to happen.

It is also useful to consider what the risk of the worst possible outcome occurring might be, and to decide if the risk is acceptable.  The choice can be between going 'all out for success' or taking a safe decision

Deciding on Values

Each individual has his or her own unique set of values - what they believe to be important. Many people decide to buy a car for themselves but different people buy different cars based on their own personal values.  One person might feel that price is the most important feature, whereas another person might be more concerned with its speed and performance.  Others might value safety, luggage space or the cars impact on the environment.
Depending on which values are considered important, different opinions may seem more or less attractive.  If the responsibility for a decision is shared it is possible that one person might not have the same values as the others.  In such cases, it is important to obtain a consensus as to which values are to be given the most weight.  It is important that the values on which a decision is made are understood because they will have a strong influence on the final choice.
People do not make decisions based on just one of their values.  They will consider all their values which are relevant to the decision and prioritise them in order of importance.

Weighing up the Pros and Cons

It is possible to evaluate the pros and cons of each possible solution/option by considering the possible advantages and disadvantages.  One aid to evaluating any solution/option is to use a 'balance sheet', weighing up the pros and cons (benefits and costs) associated with that solution. For example, a small business that regularly hires vehicles from an external company might consider buying a vehicle for their exclusive use. The business could list the pros and cons of the purchase in the following way:
Pros Cons
Saving on hire charges Cost of purchase
Would make it easier to organise staff travel Potential driver(s) could require training
Will always be available Insurance and maintenance costs

Having listed the pros and cons, it may be possible to immediately decide whether this option is a viable.  However, it is also possible to rate each of the pros and cons on a simple 1 to 10 scale (with 10 high and 1 low):
Pros Cons
Saving on hire charges 9 Cost of purchase 6
Would make it easier to organize staff travel 7 Potential drivers could require training 4
Will always be available 6 Insurance and maintenance costs 8
Total 22 Total 18

In this case the cons (disadvantages) have the lower score while the pros (benefits) are higher and purchase of a car is therefore a strong possible choice.
In scoring each of the pros and cons it helps to take into account how important each item on the list is in meeting values.  Thus, for example, if the most important value was the potential saving, then the fact that a particular car has high insurance and maintenance costs will increase its score on the con side.  This balance sheet approach allows both the information to be taken into account as well as values, and presents them in a clear and straight forward manner.

Making the Decision

There are many techniques that can be used to help in reaching a decision.  The pros and cons method is just one way of evaluating each of the possible solutions/options available.

There are other techniques which allow for more direct comparisons between possible solutions.  These are more complicated and generally involve a certain amount of calculation.  These can be particularly helpful when it is necessary to weigh up a number of conflicting values and options.
For example, how would you decide between a cheap to buy but expensive to run car and another more expensive car, that is more economical to keep on the road?
Intuitive Judgements:  In addition to making reasoned decisions using the techniques shown above, in many cases people use an intuitive approach to decision making.  When making a decision many influences, which have not been considered, may play a part.  For example, prejudice or wishful thinking might affect judgement.  Reliance is often placed on past experience without consideration of past mistakes.  Making a decision using intuition alone should be an option and not done merely because it is the easy way out, or other methods are more difficult.
Intuition is a perfectly acceptable means of making a decision, although it is generally more appropriate when the decision is of a simple nature or needs to be made quickly.  More complicated decisions tend to require a more formal, structured approach.  It is important to be wary of impulsive reactions to a situation and remember to keep a record of the decision for future reference, no matter whether the decision was made intuitively or after taking a reasoned approach.
If possible, it is best to allow time to reflect on a decision once it has been reached.  It is preferable to sleep on it before announcing it to others.  Once a decision is made public, it is very difficult to change.


Decision making is the act of choosing between a number of alternatives.  In the wider process of problem solving, decision making involves choosing between possible solutions to a problem.  Decisions can be made through either an intuitive or reasoned process, or a combination of the two.  There are usually a number of stages to any structured decision making.

We have outlined one simple method, which involves: listing all possible solutions; setting a time scale; gathering relevant information; weighing up risks; looking at values and then weighing up the pros and cons of each alternative before making the decision.  There are also more sophisticated decision making techniques available. However, it should be remembered that no decision making technique should be used as an alternative to good judgement and clear thinking.  All decision making involves individual judgement, and systematic techniques are merely there to assist those judgements.




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