What is the first step in decision making process

February 10, 2017  |  5 Min Read

In general, the decision making process helps managers and other business professionals solve problems by examining choices and deciding on the best route to take. Using a step-by-step approach is an efficient way to make thoughtful, informed decisions that positively impact your organization’s short- and long-term goals.

The business decision making process is commonly divided into seven steps. Managers may utilize many of these steps without realizing it, but gaining a clearer understanding of best practices can improve the effectiveness of your decisions.

Steps of the Decision Making Process

The following are the seven key steps of the decision making process.

1. Identify the decision

The first step in making the right decision is recognizing the problem or opportunity and deciding to address it. Determine why this decision will benefit your customers or fellow employees.

Next, it’s time to gather information so that you can make a decision based on facts and data. This requires making a value judgment, determining what information is relevant to the decision, and how you can get it. Ask yourself what you need to know to make the right decision, then actively seek out anyone who needs to be involved.

“Managers seek out a range of information to clarify their options once they have identified an issue that requires a decision. Managers may seek to determine potential causes of a problem, the people and processes involved in the issue, and any constraints placed on the decision-making process,” according to Chron Small Business.

3. Identify alternatives

Once you have a clear understanding of the issue, it’s time to identify the various solutions at your disposal. You likely have many options when deciding, so it is essential to come up with a range of options. This helps you determine which course of action is the best way to achieve your objective.

4. Weigh the evidence

In this step, according to management experts Phil Higson and Anthony Sturgess, you’ll need to “evaluate for feasibility, acceptability and desirability” to know which alternative is best. Managers need to be able to weigh the pros and cons, then select the option that has the highest chance of success. It may be helpful to seek a trusted second opinion to gain a new perspective on the issue.

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5. Choose among alternatives

When it’s time to make your decision, be sure you understand the risks involved with your chosen route. You may also select a combination of alternatives now that you fully grasp all relevant information and potential risks.

6. Take action

Next, you’ll need to create an implementation plan. This involves identifying what resources are required and gaining support from employees and stakeholders. Getting others on board with your decision is a key component of executing your plan effectively, so be prepared to address any questions or concerns.

7. Review your decision

An often-overlooked but important step in the decision making process is evaluating your decision for effectiveness. Ask yourself what you did well and what can be improved next time.

“Even the most experienced business owners can learn from their mistakes … be ready to adapt your plan as necessary, or to switch to another potential solution.”

CHron Small Business

If your decision didn’t work out the way you planned, you may want to revisit some of the previous steps to identify a better choice.

Common Challenges of Decision Making

Although following the steps outlined above will help you make more effective decisions, there are some pitfalls to look out for. Here are common challenges you may face and best practices to help you avoid them.

• Having too much or not enough information. Gathering relevant information is key when approaching the decision making process, but it’s important to identify how much background information is truly required. “An overload of information can leave you confused and misguided, and prevents you from following your intuition,” according to Corporate Wellness Magazine.

In addition, relying on one single source of information can lead to bias and misinformation, which can have disastrous effects down the line.

• Misidentifying the problem. In many cases, the issues surrounding your decision will be obvious. However, there will be times when the decision is complex and you aren’t sure where the main issue lies. Conduct thorough research and speak with internal experts who experience the problem firsthand to mitigate this. Corporate Wellness Magazine says it will save you time and resources in the long run.
• Overconfidence in the outcome. Even if you follow the steps of the decision making process, there is still a chance that the outcome won’t be exactly what you had in mind. That’s why it’s so important to identify a valid option that is plausible and achievable. Being overconfident in an unlikely outcome can lead to adverse results.

Decision making is a vital skill in the business workplace, particularly for managers and those in leadership positions. Following a logical procedure like the one outlined here and being aware of common challenges can help ensure both thoughtful decision making and positive results.

If you are interested in business management topics like these, consider Concordia University, St. Paul’s online MBA program. You can also download our free guide, “Climbing the Corporate Ladder: Your Guide to the MBA and Beyond,” for an in-depth look at the value of the MBA.

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Robert Frost wrote, “Two roads diverged in a wood, and I—I took the one less traveled by, and that has made all the difference.” But unfortunately, not every decision is as simple as “Let’s just take this path and see where it goes,” especially when you’re making a decision related to your business.

Whether you manage a small team or are at the head of a large corporation, your success and the success of your company depend on you making the right decisions—and learning from the wrong decisions.

Use these decision-making process steps to help you make more profitable decisions. You'll be able to better prevent hasty decision-making and make more educated decisions.

The business decision-making process is a step-by-step process allowing professionals to solve problems by weighing evidence, examining alternatives, and choosing a path from there. This defined process also provides an opportunity, at the end, to review whether the decision was the right one.

7 decision-making process steps

Though there are many slight variations of the decision-making framework floating around on the Internet, in business textbooks, and in leadership presentations, professionals most commonly use these seven steps.

1. Identify the decision

To make a decision, you must first identify the problem you need to solve or the question you need to answer. Clearly define your decision. If you misidentify the problem to solve, or if the problem you’ve chosen is too broad, you’ll knock the decision train off the track before it even leaves the station.

If you need to achieve a specific goal from your decision, make it measurable and timely.

2. Gather relevant information

Once you have identified your decision, it’s time to gather the information relevant to that choice. Do an internal assessment, seeing where your organization has succeeded and failed in areas related to your decision. Also, seek information from external sources, including studies, market research, and, in some cases, evaluation from paid consultants.

Keep in mind, you can become bogged down by too much information and that might only complicate the process.

3. Identify the alternatives

With relevant information now at your fingertips, identify possible solutions to your problem. There is usually more than one option to consider when trying to meet a goal. For example, if your company is trying to gain more engagement on social media, your alternatives could include paid social advertisements, a change in your organic social media strategy, or a combination of the two.

4. Weigh the evidence

Once you have identified multiple alternatives, weigh the evidence for or against said alternatives. See what companies have done in the past to succeed in these areas, and take a good look at your organization’s own wins and losses. Identify potential pitfalls for each of your alternatives, and weigh those against the possible rewards.

5. Choose among alternatives

Here is the part of the decision-making process where you actually make the decision. Hopefully, you’ve identified and clarified what decision needs to be made, gathered all relevant information, and developed and considered the potential paths to take. You should be prepared to choose.

6. Take action

Once you’ve made your decision, act on it! Develop a plan to make your decision tangible and achievable. Develop a project plan related to your decision, and then assign tasks to your team. 

7. Review your decision

After a predetermined amount of time—which you defined in step one of the decision-making process—take an honest look back at your decision. Did you solve the problem? Did you answer the question? Did you meet your goals?

If so, take note of what worked for future reference. If not, learn from your mistakes as you begin the decision-making process again.

Tools for better decision-making

Depending on the decision, you might want to weigh evidence using a decision tree. The example below shows a company trying to determine whether to perform market testing before a product launch. The different branches record the probability of success and estimated payout so the company can see which option will bring in more revenue.

A decision matrix is another tool that can help you evaluate your options and make better decisions. Learn how to make a decision matrix and get started quickly with the template below. 

You can also create a classic pros-and-cons list, and clearly highlight whether your options meet necessary criteria or whether they pose too high of a risk.

With these 7 steps we've outlined, plus some tools to get you started, you will be able to make more informed decisions faster. 

Explore additional strategies to help with your decision-making process.