The 7 Important Steps in the Process of Decision Making (Explained)

What is Decision Making Process?

The decision making process includes a series of steps following which a manager selects the most feasible course of action from the available alternatives. It is the responsibility of the manager to make an effective decision and implement it in the best possible ways for the prosperity of the organization.

Decision-making is an important aspect of management. The decision which is made today, by the manager, decides how will be the future of the organization. And for a rational and effective decision, a manager must go through the 7 steps of the process of decision-making.

1. Identification of Problems
2. Analysis of Problems
3. Development of Alternatives
4. Evaluation of Alternatives
5. Selection of Best Alternative
6. Implementation of Alternative
7. Review of Implementation

7 Steps of Decision Making Process: Defining

Let’s take a deep look at the 7 steps in the decision making process:

Step 1: Identification of Problems

The first and most important step of the decision-making process is to identify the main problems. Problems may arise due to the internal and external factors of an organization.

It is believed that the identification of problems is the completion of half of the decision-making process. Identifying the problem is similar to diagnosing a disease, which helps in providing the right medicine to the patients. And when a problem is correctly understood, it becomes easy to solve.

The manager should uniformly monitor the working environment, symptoms of problems, and the root cause of the problem. For this, he has to consider a progress report from subordinates, compare the actual performance, and study the factors affecting regular work. Besides, he has to use his skills, knowledge, experience, and judgment to conclude.

Step 2: Analysis of Problems

After completing the first step another step of the decision making process is analyzing the identified problems. For this, a decision-maker has to accumulate all the facts, data, and information related to problems.

Analyzing the problems is a part of the decision-maker to study the main reasons for problems and their impact on short as well as long-term organizational performance. A quick analysis of the problem by accumulating all the related facts, data, and information is a must to find out the actual source of the problem.

Also Read: SWOT Analysis: Definition, Components, Process, Examples, and Pros/Cons

Step 3: Development of Alternatives

A problem may have various alternative solutions. The decision-maker has to identify and study all the possible solutions. A decision-maker should be creative and innovative to identify all the alternative solutions.

He can identify alternatives from various sources like records and files of problems, opinions, and views of experts, discussions with subordinates, creditors, customers, etc.

The more clearly identified alternatives provide more freedom for brainstorming. A manager should concentrate on developing and finding those alternatives, which are strategic to the problems. Therefore, the development of alternative solutions is mental and creative work that requires discussion and creativity.

Step 4: Evaluation of Alternatives

Here every alternative is evaluated and studied in terms of the decision-making process. All alternatives should be studied by considering the efforts involved and the outcome expected.

Generally, the following queries are taken into consideration while evaluating any alternative solution, firstly, whether the alternative solution is feasible in terms of costs, time, legal, constraints, human and other resources, secondly, whether the alternative is satisfactory for solving problems, thirdly, whether the consequences of alternative are favorable to the organization.

Also Read: The 3 Levels of Management: Top, Middle, and Lower

Considering the above factors help select a course of action. Besides it, the decision-maker has to consider both costs and benefits of each alternative.

Step 5: Selection of Best Alternative

This is the final stage of the decision-making process after the evaluation of various alternatives. Here the best feasible alternative is being selected. For the best alternative manager should consider short-term as well as long-term impacts on organizational performance.

Following approaches are followed to select the best course of action;

• Experience
• Experimentation
• Research and Analysis
• Personal Values and Aspirations

The decision-maker has to consider the above approaches to analyze and select the best solution. He has to select an alternative considering the feasibility, satisfactoriness, and financial soundness of the organization. The selection of the best solution helps with implementation and to gain positive outcomes in organizational objectives.

Step 6: Implementation of Alternative

This is the operational part of the decision-making process. A decision can be made by evaluating the alternatives with the help of available resources but implementing them is quite difficult. The efficiency of the decision-maker is measured in terms of effective implementation of the decision.

A decision-maker has to provide instructions to the operational authorities and communicate them from time to time. He should use his alternatives and communication skills for the successful implementation of the decision.

For this, he has to delegate authority to the subordinates based on the weightage of the responsibility. Management has to consider the organizational objectives that can be achieved if the course of action is implemented in the best possible way.

Step 7: Review of Implementation

Reviewing the implementation means knowing its actual performance it. As decision-making is a continuous process it is necessary to evaluate the performance from time to time.

A follow-up and review of actual achievement are essential. In case the implementation does not give the desired results, it is necessary to involve in the modification of procedures and techniques that can be made to bring the work to the desired track. It also helps in taking an appropriate decision at the right time.

Note: Steps to 1-to-5 are the main steps in the decision making process and the steps from 6-to-7 are the supporting steps for the better performance of the selected course of action.