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Blog > 10 Steps to Make Effective Decisions

The Arootah Return Blog

10 Steps to Make Effective Decisions

Believe it or not, effective decision-making is a skill that can be improved upon. Here is a simple 10 step process you can follow to make impactful decisions.
thinking businessman in suit making decision

The quality of your life is directly proportional to the quality of your decisions. In the workplace, the quality of your work and the success of your organization are also directly proportional to the decisions of you and your teammates.

If you are a team leader, you must develop your decision-making skills for the sake of your team and organization as a whole. Leaders are decisive and have a well-thought-out process for making decisions. They carry out their decisions decisively once made, and they don’t look back and second guess themselves. After making these decisions, they measure the results and refine the process to make it even better for future decisions.

Many people struggle to make decisions throughout the day. In fact, there is a form of burnout that comes from making too many decisions, known as decision fatigue. This psychological phenomenon occurs when a person loses their ability to make decisions after they’ve been required to do so beyond their capacity.

A person experiencing decision fatigue may become overwhelmed, may start to avoid making decisions altogether, or may use unhealthy coping mechanisms to avoid stress. Within the workplace, a person experiencing decision fatigue could negatively impact the work of others. It’s vital to avoid decision fatigue by implementing an effective decision-making process.

Following an effective decision-making process allows you to make the best possible decisions to optimize every area of your life.

Why Do People Have Trouble Making Decisions?

Many people put off decision-making, but getting to the root of this behavior is the first step in combating it. Here are some popular trip falls for decision making:

  1. Fear—People often fear making the wrong decision because they know that decisions have consequences.
  2. Process—Most people haven’t developed a well-honed process for making decisions.
  3. Busy—People are busy and distracted.

It’s essential to have an accurate understanding of why you have difficulty making decisions. Once you understand the why behind this difficulty, you can determine the type of decision you need to make next.

The 3 Types of Decisions

A big part of an effective decision-making process is knowing what type of decision you need to make. In a McKinsey Global Survey on this topic, researchers discovered that only 20% of surveyed companies reported that their organization excelled at decision making. Ineffective or prolonged decision-making can take a lot of time out of an organization.

  1. Instantaneous

Some decisions are made so fast that your conscious mind doesn’t even get a chance to weigh in. There’s no time for reasoning, and the subconscious mind takes over and makes the decision for you. These decisions are referred to as instantaneous.

You may, for example, pull your hand away from a hot stove reflexively or immediately react to an emergency situation with a family member. You don’t sit around and analyze the different options in these situations…you just act! In making instantaneous decisions, you won’t need a decision-making process, and it’s important to trust your gut in these situations.

  1. Pause and Reflect Decisions

Some situations provide strong stimuli that lead you to experience strong emotions. These emotions allow you to pause and reflect before acting. It’s challenging to do this, but the rewards are astronomical. Developing this habit can help you make conscious, intellectual decisions instead of impulsive, emotional ones.

For instance, if somebody yells at you during a meeting with investors or prospective clients, you can decide to yell back and escalate the argument (which may be your initial reaction), or you can pause and reflect on a response that will help you accomplish your objective more effectively than yelling back.

The key here is to understand the objective and react mindfully, not emotionally. The reaction should help you get closer to your objective rather than further from it.

  1. Conscious Deliberate Decisions

There are situations in life and business where you have time to make a well-thought-out decision. Theoretically, the consequences are higher for these decisions, but the positive impact of making the right decision will be higher too.

Examples of these types of conscious decisions are:

  • Choice of career
  • Choice of a Senior Executive to hire
  • Choice of where to invest
  • Choice to terminate an employee
  • Choice of life partner
  • Choice of home to purchase
  • Choice to get your MBA
  • Choice of college

When making a decision that could result in fairly significant consequences for an individual or a business, you must use a well-thought-out and well-developed decision-making process that you consistently improve over time. You should not just rely on your gut to make these decisions.

10 Step Process: Making Impactful Decisions

Most people were never taught how to make decisions. In fact, when it comes to two of the biggest decisions in your life (life partner and career), you get virtually no guidance in decision-making at all.

For a simple yet effective process, these ten steps comprise a comprehensive plan that you can use to make major decisions. Keep in mind that these decisions aren’t meant to be made overnight and require analytical thinking.

  1. Outcome – Clarify Objectives: What is the desired outcome?
  2. Purpose – Clarify Purpose: What purpose does this outcome serve?
  3. Criteria – Identify: What does this outcome involve?
  4. Weighting – Rank Criteria: What are the most important elements?
  5. Cognitive Biases – Root Out Hidden Biases: What are some blind spots in the analysis?
  6. Options – Generate: Brainstorm options for achieving this outcome.
  7. Evaluate – Dig into the Options: Understand the pros and cons of each option.
  8. Mitigation – Mitigate the Cons: What can be done to reduce the risks?
  9. Intuition – Gut Check and Tweak: Check-in on how this decision feels.
  10. Decision – Decide Based on Final Scoring: A decision will reveal itself.

For many major decisions, you will have the luxury of time and the opportunity to consult with others. Don’t let outside factors rush your decision-making when your decisions could have significant, lasting effects. Whether you are making a major decision for your hedge fund or deciding which gym to sign up for, it’s important to feel confident in your decision and not second-guess yourself.

The Bottom Line

By following an effective decision-making process, you can avoid decision fatigue and make the best possible decisions to optimize every area of your life.

This decision-making process is one of many tools you can use to make yourself and your team successful. Take a look at our free e-book, The 10 Step Arootah Success Formula, to learn more!

How would you describe your current decision-making process? What are you going to do to improve your process? Let us know in the comments!

 

Sources

https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/decision-making-in-the-age-of-urgency

https://www.psychologytoday.com/us/blog/laugh-cry-live/201706/how-mindfully-make-important-life-decisions

Disclaimer: This article is for general informational purposes only and is not intended to be and should not be taken as professional medical, psychological, legal, investment, financial, accounting, or tax advice. Arootah does not warrant or guarantee the accuracy, reliability, completeness, or suitability of its content for a particular purpose. Please do not act or refrain from acting based on anything you read in our newsletter, blog or anywhere else on our website.

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