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7 Steps of the Decision Making Process

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In general, the decision making process helps managers and other business professionals solve problems by examining alternative 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 have a positive impact on 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.

  • 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 make a difference to your customers or fellow employees.
  • Gather information. 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 at hand, along with how you can get it. Ask yourself what you need to know in order 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,” Chron Small Business says.

  • Identify alternatives. Once you have a clear understanding of the issue, it’s time to identify the various solutions at your disposal. It’s likely that you have many different options when it comes to making your decision, so it is important to come up with a range of options. This helps you determine which course of action is the best way to achieve your objective.
  • Weigh the evidence. In this step, you’ll need to “evaluate for feasibility, acceptability and desirability” to know which alternative is best, according to management experts Phil Higson and Anthony Sturgess. Managers need to be able to weigh pros and cons, then select the option that has the highest chances of success. It may be helpful to seek out a trusted second opinion to gain a new perspective on the issue at hand.
  • Choose among alternatives. When it’s time to make your decision, be sure that you understand the risks involved with your chosen route. You may also choose a combination of alternatives now that you fully grasp all relevant information and potential risks.
  • Take action. Next, you’ll need to create a plan for implementation. This involves identifying what resources are required and gaining support from employees and stakeholders. Getting others onboard with your decision is a key component of executing your plan effectively, so be prepared to address any questions or concerns that may arise.
  • 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 explains. If you find 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, along with 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 in order to mitigate this. It will save you time and resources in the long run, Corporate Wellness Magazine says.
  • 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, along with 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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