The goal of decision-making process is to lead to a decision, after identifying the problem, opportunities and then resolving them. The decision is followed by a course of action in which the decision-makers are committed. The process may be better to do in groups sometimes because there are times when the result of group work is better than individuals.

However, sometimes the more efficient way to make decision is to make them individually, if the individual has all of the information needed for making the decision.

There are different approaches to decision-making process. The classical approach to is rational decision-making, which includes eight steps; understand the situation, define the problem, define objectives, diagnose the problem, develop alternatives, evaluate alternatives, choose the best alternative and implement alternative.

Let’s take an example of a café. There have been a lot of customers but recently the number of customer has dropped and now you need to figure out what the problem is. First you need to understand the issue which in this case is that customers are not happy, and they are not coming back. The next step is to define the problem which works best when the team comes together and discusses the issue. You find out that the customers are not happy with the quality of your coffee because it varies. Next step is to define the objectives of your solution what are the things that you want your customers to come back and increase the quality of your coffee. In order to reach the objectives, we have to see and unerstand the problem. The problem in this case is that the members of the staff do not have their own field, but everyone does a little bit of everything. The next step would be to develop a list of alternatives from which you can eventually decide the best solution. In this case you could for an example hire a barista or train one of your staff members to be in charge of the coffee making. Once you have all the alternatives, you must evaluate them and the finally select one of them. After making the decision, then you have to implement the decision you have made, and act based on it.

Another approach is to use intuitive decision making, which less structured and is based mostly on an instinctive feel, i.e., what feels right and what feels wrong. In this approach the decision can be made in five different ways; subconscious mental processing, values or ethics-based decisions, experience-based decisions, affect-initiated decisions and cognitive-based decisions. In the subconscious mental processing the decision is made by using the data from the subconscious mind. Values or ethics-based decisions derives from culture and ethical values the person has. Experience-based decisions are made, as the name implies, on the basis of the past experiences. When the decisions are based on feelings or emotions they are called, affect-initiated decisions. Finally, the cognitive-based decisions are decisions based on knowledge, skills and training. These five methods can also be used together.

Why is decision-making important in businesses?

When talking about companies, the decision-making is an everyday occurrence, and the ability to make decisions is an essential feature of business leaders. As a business leader you must be able to make decisions quickly based on the best interests of your business.

Even though you are the leader you must take into consideration the opinions of your staff and other affected by your decisions. However, sometimes the leader has to make key decisions that are good for the business but not necessarily for the staff, for an example, dismissing employees in order to save the company’s financial situation. The leader’s capability to make the most difficult decisions is key element while running a business.

Making quick decisions saves the businesses time and resources. While running a business, time is money, and by being a great decision-maker you can save time. A good decision-maker is able to distinguish between decisions made with instincts and decisions that need more research. The ability to make good, yet fast decisions free up time and increases productivity by allowing employees to start working faster. The more effective the decision-making is the more money can be saved as well as made.

For employees, the leader’s ability to make good decisions is a significant element through which they know their jobs are secured. As a result, it leads to the employees staying motivated and more creative. It is important for the employees to trust the leader’s decisions and to believe in the business’ goals as they are a key part of achieving them.

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