Basics of Decision Making Skill

 

DECISION MAKING

 

Decision-Making skills are those Management and Leadership skill which is important for almost everyone because every organization or Individual has to take a lot of Decisions on a daily basis.

Also, when you are stuck in a choice between various alternatives; then you have to make decision.

This seems to be quite simple but one thing which we often forget is that:-

“EVERY DECISION HAS CONSEQUENCES”                         

So if you feel that, you are confused and stuck while taking any decision and you need to develop your decision making ability; then you are in the right place.

In this article, I am going to explain about one of the most essential skills for life -Decision Making.

 The article contains:-                                                   

1. Orientation of Decision Making                        

2. Need for Decision Making

3. Why good decisions are important.

4. Basic criteria of taking good decisions

5. Error or Biasness in Decision Making.

 Orientation of Decision Making                            

  Orientation of Decision Making is:-

1.  Based on Intuition  
2.  Based on Rationality
3.  Based on Bounded Rationality

1. Based on Intuition

Sometimes we make decisions on Gut feeling. These decisions look quite impulsive. It is important to understand, what intuition is. Our intuition depends upon our values, beliefs, emotions, experience, and education.

2. Based on Rationality

Decision Makers who are quite objective and Logical; they would define a problem quite well they would develop alternatives and based on Alternatives, they choose the best alternative. In the real world, it is quite difficult to follow rationality.

3. Based on Bounded Rationality

Most of the times in the real world; it is quite difficult to know all the alternatives.Although as a manager or as an Individual, we want to be rational. That's why we take good enough decision.

 

Need for Making Decisions 

Decision-making is required to:-     

1.  Solve a problem
2. Move an organization forward.
3. Gloss over a mistake
4. Improve your standing
5. To fit into a new peer group
6. To achieve a goal and the list is too long…………………………………

In today’s world, there is a high demand for people; who can make a decision quickly and rationally. This is why it is so important to learn good decision-making skills.                                           

Why good decisions are important?

1. Good Decision-Making skill is crucial for:-
2. Personal and Professional Success
3. Career Advancement
4. Effective use of Time and Resource; and
5. Achieving goals. 

Basic criteria of taking good decisions

There are three most important criteria for making good decisions:-

Values:- Your value determines your behavior. Your beliefs produce attitudes, attitudes produce feelings and feelings lead to behavior. 

Experience:- We all learn to make decisions through experience.

Common sense:- Without common sense; good decision-making is just impossible.

Errors or Biasness in Decision Making

Most of the managers have a tendency to make decisions based on the rule of thumb; because the rule of thumb makes decision-making quick and easy. However, this rule of thumb may not be reliable and may lead to errors and biases.

Types of Error or Biasness in Decision Making:-

                                            

1.  Overconfidence:-This error occurs when the decision-maker believes that they know more than what they actually do. Another cause is holding too many positive views of themselves. In simple words “I can’t go wrong”.

2.  Immediate Gratification:-Decision Makers who can’t wait and want immediate results of their action. They even don't care about the cost. For them, any choice that provides a quick payoff is more appealing.

3.   Anchoring effect:- Some decision-makers have a tendency to give more weightage to the first piece of information. They tend to ignore the information received in the later stage. The first impression is their priority.

4.   Confirmation:- There are decision-makers who seek out information that reaffirms their past judgments and leave out information that challenges their preconceived views.

5.  Representation Bias:-The comparison did not work all the time. Some people have a tendency to create analogies and see identical situations where they do not exist.

6.  Randomness:-There are so many events that happen by chance and there is no way you can predict them.

So, these are some of the Error or Biasness in Decision Making; so, identify your error and start working on that.

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