Researchers have studied the managerial decision-making process and have identified six stages that go into making an informed decision. The initial step is simply to understand that a choice must be made because the status quo no longer holds or something external has forced a change in the organization. Whatever the cause, you realize that a decision must be made. Good management techniques are based on considering the options and making an informed decision. In your career, being able to quickly understand and move through the six steps of the managerial decision-making process could make you the next star of the boardroom.
1. Gathering Information and Establishing Your Objective
Evaluate the purpose of the decision you're facing. The more questions you can answer at this stage, the better. Ask yourself:
- What is the problem that needs to be solved?
- What is affecting the situation as it stands now?
- What is the timeline in which the decision must be made?
- Can anyone else help me make this decision?
- Who will be affected by this decision?
- Should I involve them in the process?
This is an important step in growing your management style, because the answers to the questions you put forth will help you determine if the decision should be made individually or through teamwork. If the objective is best approached individually, consult those who have a stake in the decision or those with expertise on the information to be used. If you're gathering a team, get the right people together and encourage everyone to voice their opinions and express their ideas.
2. Identifying Alternatives Without Choosing One
This is the open-minded part of the process. You’re simply searching for alternatives by looking at all sides of the problem you’re facing. At this stage, it’s important not to focus on coming up with the right answer, but to identify all the possible alternatives. Look at alternatives from different perspectives, such as marketing or financial viewpoints. Organize the ideas into common themes to make them easier to sort.
3. Comparing and Evaluating Alternatives
This step of the managerial decision-making process is where you will get into the nitty-gritty of each alternative you identified as a possible solution. Evaluate them in terms of feasibility, risk, impact and benefit. Anticipate the outcomes of each solution and the impact it will have on other sectors. If one choice does not stand out as better than others, or there are similar outcomes for a few different choices, sort them as best you can into a list of pros and cons.
4. Making a Choice
At this stage, you have thought the problem through from every angle, sought input where needed and established a list of possibilities and outcomes. You should be well-armed to make a choice. It’s time to show your management style, put your decision-making power to the test and choose a course of action. Since you have thought through all of the factors, you’ll be well-prepared to defend the choice you’ve made with a reasoned argument.
5. Implementing Your Decision
Now that you have made the choice, it is time to implement the infrastructure to support your decision. This is where your well-considered, fully informed decision emerges as it is transformed from an abstract idea into a concrete plan of action.
6. Checking Your Decision
Just because you've finally made a choice does not mean it has to stand etched in stone. The final step in the managerial process is where you evaluate your choice to see whether or not it is answering the problem identified in Step 1. Perhaps this is the most important stage, because this is where you will take credit for something that worked well or admit that your reasoning was flawed.
If it has not met the need you identified in Step 1, go back to a previous stage and reevaluate. For instance, the decision may have been the correct one, but the plan in Step 5 was implemented poorly. Or, perhaps there were consequences you did not anticipate. In that case, go back to Steps 2 or 3 and identify some additional alternatives.
In all high-level decision-making, the choices you make could affect the future path of the company and its employees, both individually and as a group. You want to make the most informed choices at each step of the way, so working through the six steps of the managerial decision-making process ensures that you don’t get stuck on the wrong alternative, or on an alternative that can’t actually be implemented.
Since 2006, Vanessa has written for a variety of website development agencies and private clients on topics related to growth for new and underperforming businesses. Her work can be found in print publications and on websites such as Palo Alto Software and business accelerators and Chambers of Commerce in her state.