Decision Making (Meaning and Explanation)

We explain what decision-making is and what the steps of this process are. Also, characteristics and importance.

What is decision making?

Decision making it's a process that people go through when they must choose between different options. Every day each individual is faced with situations in which they must choose something, and that decision is not always simple. The decision-making process is activated when conflicts arise in various areas of life for which the best possible solution must be found.

In the field of human behavior and psyche this is a fundamental issue, since people do not respond in the same way to a problematic situation due to various elements such as personality structure, development, maturity and the stage of life in which one is.

Decision making process

When facing a situation to be resolved, it is important that the individual follow certain steps:

Define the problem. Analysis of the situation faced.
Detect possible alternatives Definition and recognition of the combinations of actions that can be taken.
Forecast the results. Association and detection of the possible consequences of each of the alternatives and study of the context in which the decision is carried out.
Choose an alternative. Choosing one of the options.
Control. Monitor the results of the chosen option, you must be responsible and have a participatory attitude in the process.
Assessment. Analysis of the advantages and disadvantages of the decision made, this step is essential for learning and making future decisions.

Types of decision making

The decision-making process occurs periodically and constantly in the life of an individual. Many times it responds to conflicts that arise daily and others are occasional; some occur within the private sphere and others within companies or organizations.

Depending on the different characteristics, the decision-making process can be:

Rational. Process in which possible alternatives are analyzed using reasoning based on verifiable sources and evidence.
Intuitive. Process in which the individual takes into account intuition and personal experience to turn towards one of the alternatives.
Staff. Decision-making process of an individual within the private sphere.
Routine. Process that an individual or group carries out periodically, they tend to be situations that do not withstand much analysis nor do they deal with complex issues.
Emergency. Process that an individual or group carries out to make a decision in the face of a new and exceptional situation.
Group Process that is carried out jointly among the members of a group in which consensus prevails and the alternative that generates the most adhesion is taken.
Individual. Process that a person executes autonomously within a context such as an organization or company.
Organizational. Process carried out by one or several individual members of an organization to make a decision that affects the future of the institution.

Decision-making characteristics

Clarity. It refers to the importance of being clear about the objective to be achieved in the process and the situation to be resolved.
Impact. It refers to the consequences that each of the alternatives to choose can bring. It is important to keep in mind that all options will have consequences, so you should choose the alternative that generates the most favorable impact.
Periodicity. It refers to the regularity with which individuals or groups make decisions. There are some decisions that are daily, and others that occur every certain period of time that can be random or determined.
Actors. It refers to the individuals who are part of the decision-making process, which can be made individually or in groups depending on each case.
Reversibility. It refers to whether or not you can reverse the choice of an alternative. The more irreversible the consequences of any of the alternatives to be chosen, the more attention should be paid to the decision process.

Components of decision making

To solve a problem, certain elements are needed that are important to find an initial result, to learn and improve problem solving, and to detect one's own tools (skills).

Decision. Possible combinations that include both the actions to be carried out and the situations.
Result Hypothetical situations that would take place if one or another of the aforementioned decisions is taken.
Consequence. Evaluation based on subjectivity.
Uncertainty Confidence in the face of the unknown, especially when you do not have experience in a particular problem.
Preferences. Tendency to take one alternative and not another is conditioned by experience.
Decision making Action of deciding.
Judgment Assessment.

Decision making in a company

Decision making is one of the key processes within business and organizations. This is because the consequences of decisions can have a direct impact on the structure or profits of a company.

The most important decisions are usually in the hands of top management, who chooses an alternative based on the available information, knowledge on the subject, and personal or company experience.

Competition and market demands lead to continuous innovation in companies who must make strategic decisions that improve their reputation. Decisions must be effective and agile, and must reduce the margin of error as much as possible, since a decision made at the wrong time or with a poor analysis of the context can have irreversible consequences for the company.

The study of the context is key in the decision-making process; the same decision may or may not be appropriate depending on each specific case. That is why it is important not to rely only on intuition and past experiences, but to know and inform yourself about the impact that the decision has on the current state of the company and the market.

Importance of decision making

Making decisions is one of the most important processes in the life of a human being, since it is through the choices made that the individual marks his personal and professional path. For this, it is advisable to define clear objectives on which to base daily decisions and recognize what is the most effective way to carry out the decision-making process.

Since there are different ways to deal with this process, which in some cases can lead to blockage or indecision, techniques and tools were developed that help individuals develop and enhance decision-making. You must work on the fear of error, tolerance for frustration and uncertainty and in the recognition of the desire to achieve the proposed personal or professional objectives.

What makes the decision-making process difficult?

There are individual or group characteristics that make decision-making processes difficult, among the most significant are:

Cognitive dissonance It happens when what you want to do and what you do do not coincide.
Halo effect. It occurs when the shadow of other experiences causes one to make wrong deductions, presupposing and hastily anticipating a decision.
Thought of cluster . It occurs when a group of people decides for others, despite the latter disagreeing. There is no group consensus in decision-making, but rather fear, fear of making mistakes, fear of rejection or group questioning.
Hedonistic adaptation It occurs when the individual is immersed in a state of well-being and pleasure that does not allow him or her to adequately relate to the conflict.
Confirmation bias It occurs when one does not have enough cognitive flexibility to modify some beliefs when necessary. This causes the same mistakes to be made by continuing to maintain the same position on an issue while rejecting new content.
Authority bias. It happens when you blindly follow what experts propose, without taking your own desires into account.