How to make good decisions
Here are some steps you can use to improve your decision-making skills:
1. Identify your overall goal
Identifying your ultimate goal means articulating the problem that needs to be solved and why it needs to be solved. When you know why you are making a decision, you are better able to evaluate whether a decision allows you to achieve your goal.
2. Evaluate the significance of a decision
Before you consider the options in a decision, first evaluate the impact it may have on you, your work or your team. If it is a decision that impacts multiple people or an important outcome within your organization, it’s worth taking the time and evaluating your options. However, if the outcome does not affect others in a significant way, it may be appropriate to make a fast, instinctual decision.
3. List the positives and negatives
Review the pros and cons of the different decisions you are evaluating. Determine the likely results of each decision and how it may affect the future. This helps you better understand what each option impacts and the possible outcomes.
4. Revisit your decision
If you’re trying to find the right solution, consider making a decision, waiting a day or two and then coming to a decision again. If the second decision is different from the first, search for a compromise between the two. For example, if you’re estimating how much money to allocate to a project, create your initial estimate, wait a day and then create a new estimate. Then you can take the average of your two estimates as your final answer.
Another way to approach the strategy of revisiting your decision is to use your intuition to reach a solution and then using a more systematic approach when you revisit the situation the following day. Using two different methods of reaching a solution can help you feel confident in your ultimate decision.
5. Follow your instincts
While there is enormous value in being able to critically evaluate different options when making decisions, sometimes it’s necessary to make an instinctive choice. While more information ensures that you are well-informed, it can sometimes slow down the decision-making process. Following your instincts is especially important when you are facing a decision that is going to have a low impact on the company and other members of your team. By using your own intuition, you can rapidly reach a decision and move forward.
6. Do a cost-benefit analysis
Cost-benefit analysis is the process of identifying and adding up all the benefits of an action and then subtracting costs associated with each action, the opportunity costs. These are the potential advantages lost when you chose one option over another. Before reaching your ultimate decision, do a cost-benefit analysis to examine the outcome for every possible path you could take, both positive and negative.
7. Set time limits
Make decisions quickly by limiting the amount of time you have to decide. The key to this is setting an appropriate amount of time based on the significance and impact of the decision.
Evaluate the decision and whether there are external factors that impact your timeline. For example, if there are team members waiting for your decision, coming to one more quickly could improve their productivity. If this case, you should set a short timeline for making your decision. Conversely, if you are evaluating options for something that’s going to have a large impact on the company and profitability, you should give yourself ample time to make a decision.
9. Consult with others
If you are having trouble reaching a good decision, consider asking someone with experience in the subject or someone whose opinion you trust, such as your direct supervisor or a fellow manager. Consulting with someone else can provide you with a perspective that you hadn’t considered, which could heavily influence the outcome of your decision. While it’s important to start by doing your own research, once you have narrowed down your options, take the decision to someone with relevant experience who can help you explore which option is ideal.
9. Refer to your past decisions
When you are facing a lot of choices and are unsure which is most appropriate, evaluate decisions that you made in the past and the outcomes for those decisions. Using your past decisions and experience as a guideline can help you eliminate decisions that won’t be beneficial and narrow down your choices to the ones that are most likely to have the best outcome.
Related: How to Motivate Your Employees
Frequently asked questions about making good decisions
Here are a few of the most frequently asked questions about making good decisions:
Why are decision-making skills important?
The ability to make good decisions is a key leadership skill. The ability to make educated, rapid decisions saves time, prevents workplace conflict, fosters respect among team members and empowers employees to work as productively as they can.
What skills are needed for decision-making?
Some examples of decision-making skills include:
- Active listening
- Critical thinking
What are the four methods for making decisions?
There are four common methods you can use to make decisions:
- Command: These are decisions are made with no involvement.
- Consult: This method involves inviting others to offer input.
- Vote: Options are discussed and then a vote is called for.
- Consensus: The entire group discusses until everyone agrees.