Decision-Making – Definition, Types, Skills and Strategy

Published by: Madhubala Minda

What is Decision-Making?

Decision-making is a structured approach that involves choosing a course of action amongst different options. It can be a simple act or a difficult one depending upon an individual’s mental strength

Decision-making is an organized approach where an individual form an opinion and decide on an action plan through a mental process.

Taking some decisions is quite easy but at other times is time-consuming and as difficult as possible. The thing about decisions is that the right one will yield better results but the wrong ones come with consequences. Decisions can make or break projects hence it is important to be good decision-makers in both personal life and professional life.

In an organization, too many people want to climb to the top but only a few manage and it is a hard fact that most of them are excellent at making decisions

Decision-making refers to a process where a person has to gather facts, weigh the available options, look at possible solutions, remove personal biases, identify alternatives and eventually take control and arrive at a conclusion.

According to social psychology, the decision-making process is never easy but if handled properly can offer effective results. Business entities are on the look-out for employees who are excellent decision-makers

Understanding the Term Decision-Making

The mental process involved in an effective decision-making process is often influenced by memories, emotions, reason and biases. People mentally weigh the benefits and cost of the option if things go south.

Some factors that can limit an individual’s ability in making a good decision include limited emotional resources, urgent deadlines and incomplete facts

Type of Decisions

Decisions can be either intuitive or reasoned or a combination of both

1. Intuition

Intuition refers to the gut feeling that urges people to make a specific choice even if the facts are not in favour

2. Reasoning

Reasoning refers to the choice a person makes after looking at all the facts at his disposal

What is Informed Decision-Making

Informed Decision-Making

Informed decision-making refers to making decisions based on hard facts. Some tasks are complex with a lot of risks involved. Informed decision-making gives people a better chance of successful outcomes

Executives in a company have to make informed decisions about several tasks. They have to keep an open mind, look at possible sources of information and decide on facts without submitting to bias or error

What are Good Decision-Making Skills

Some of the decision-making skills are

  1. Problem-solving
  2. Identifying critical factors
  3. Active listening
  4. Establishing priorities
  5. Navigating risks
  6. Anticipating outcomes
  7. Intuition
  8. Reasoning
  9. Brainstorming
  10. Collaboration
  11. Finding facts
  12. Project implementation
  13. Discussion
  14. Project management
  15. Time management

7-Step Decision-Making Strategy

A decision-making strategy includes the following seven steps

1. Investigate the situation

Why do some decisions fail irrespective of doing everything right is a common question that has haunted individuals in both personal and professional life? The most common reason for failure is because key factors are either ignored or missed from the beginning itself.

Investigate the situation in detail to understand the basic groundwork if you are looking for an effective decision-making strategy. Find past data, look at the context of the problem and now consider the decision based on the issue.

This is the time to look past the obvious and find the interrelated factors. Changes in one unit can have an impact on other departments within a business entity hence investigate the situation thoroughly to get to the real issue

2. Create a constructive environment

Spend some time with the issue and become familiar. Every problem needs due attention hence prepare yourself by creating a positive atmosphere. Every decision has an impact hence explore the situation and gain support

Identify people you need in your team and include them in the decision-making process. Let the group remain short because too many people can create confusion. Encourage the core group members to speak up and contribute to the discussion

Create a constructive environment if you are looking for an effective decision-making strategy. Let the group members know that the objective is to make the best possible decision without any blame or bias

3. Generate good options

Do not get stuck in one place or set limitations to your thinking method. This is the time to let the thoughts flow, find various options and gather facts. Look at the available information, discuss, debate, review and rethink.

Generate good options if you are looking for ways to find an effective decision-making strategy. At the onset finding too many options might look complicated but it will also give you a chance to dig deep and encourage the creative juices to flow

This is the step where you can employ several creative thinking techniques and tools as it will allow the team to step outside their normal patterns of thinking and come up with innovative solutions. Begin with brainstorming sessions as it is one of the most popular methods of generating ideas and looking at situations from new perspectives.

4. Explore available options

You have several options at your disposal and now is the time to organize them into manageable themes. Evaluate the implication, feasibility and benefits of the realistic alternatives.

Remember every decision will have a degree of risk hence weigh the options carefully. Take a structured approach to assess threats and the probability of adverse events. Examine the ethical impact of each option, what might they cost to manage and how will they align with personal life and organizational values.

Making good decisions is a responsibility that every individual must take seriously as it will have a direct impact on the future of a company. Explore available options if you want to decide and create an effective decision-making strategy

5. Select the best solution

You have looked at all the possible solutions, removed personal biases, stayed away from decision fatigue and evaluated the alternatives. This is the step where you have to make a final choice and decide.

Take the help of different tools if you need to make comparisons, find errors and see the difference between the alternatives. Determine which one carries the most weight and reach an agreement with your team for a fair and impartial decision. Make sure the team is aware of their responsibility to achieve the best for the future of the company

Making decisions is not easy but this is the time to act and decide on the one option you find the best and determine, select and accept the best solution if you are looking for ways to find an effective decision-making strategy

6. Evaluating the plan

You have looked at the alternatives and made your decision. Review and accept this is the right choice. Look at the facts dispassionately once again, go through the difference between the various alternatives, weigh the options once again and find the benefits of your choice.

Evaluate the plan before you implement it as it will help to sense check your decision and find any errors that you might have overlooked. According to social psychology, the research, data, facts and tools will help in making the right decision. Evaluate the plan and discuss the conclusions with important stakeholders as it will enable them to spot errors, support your conclusion and make recommendations.

Listen to your intuition and methodically test your assumptions against your experience which is the best tool to guide you. Consider the logical structure of the planning process to evaluate the plan if you are looking for ways to find the most effective strategy

7. Communicate the decision and take an action

The decision is made and now is the time to communicate it in an inspiring and informative way. Get everyone on board to implement the course of action plan successfully

According to social psychology, the more information you provide about risks and projected benefits the chance of people offering support becomes higher.

How to Make Good Decisions?

Making good decisions is important in life as it builds confidence, helps to avoid negative consequences and makes effective choices. Decisions have a profound impact on the present as well as the future.

1. Stop looking for perfection

Stop looking for the perfect solution instead look for satisfying outcomes. Individuals who make good decisions act quickly as they sense the right opportunity.

2. Get a handle on yourself

In some cases, two or more choices look equally appealing on the surface. Get a handle on yourself, collect facts, consider all the possible alternatives, look at options, avoid decision paralysis, find appropriate tools and take the time to sleep on weightier decisions to make consistently good choices

How to Avoid Bad Decisions

Avoid Bad Decisions

Avoiding bad decisions is sometimes more important than making good ones. Individuals must avoid the common mistakes that lead to poor decisions like too much research, decision fatigue, failure to learn from past errors and not identifying the difference between opinion and facts.

Some of the common errors that prevent effective decisions are

1. Not enough information

One of the common errors is not giving yourself enough time to collect information. If you want to achieve success then information is the key otherwise it will lead to mistakes

2. Too many ideas and analysis paralysis

Unlimited access to information results in a combination of innumerable ideas. Analysis paralysis is common enough tactic to delay the organizational decision-making process. Conflicting information helps in errors in the course of action

3. Too many invested parties

The nature of making decisions is such that everyone wants to do it right but it will have negative consequences if many people are associated with the endeavour. For example, if every employee is asked to help then escalating commitment will only lead to confusion and disarray

4. Vested interest

These are crucial blockages which are hard to address

5. Emotional attachments

Emotional attachments lead to bias as it is human nature to support the things you like and oppose the ones you do not favour

6. No emotional attachment

If an individual does not care for the outcomes he will not have any interest in going through all the steps diligently. This will lead to negative consequences


The decision-making process is a framework that requires developed tools, a mature thought process and enough zeal to achieve success. It is important to give credence to a combination of reasoning and intuition to arrive at the correct possible solution.

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Madhubala Minda

Madhubala Minda is a content writer for Digiaide. She writes unique and research-driven content on various Brands, Competitors, Management topics and wellness. With years of content writing under her belt, Madhu Bala is one of the strengthening pillars of Digiaide content team.