Which of the following is the step in the decision-making process that determine to set decision criteria?

You're a decision-maker every single day.

From the moment you wake up, you start making decisions. You decide what to eat for breakfast, what to wear, and whether to spend 15 minutes on a workout, meditation, or extra sleep. These decisions, large and small, continue all day long.

Some decisions aren't too complicated. We make them with barely a thought.

Other decisions should be more intentional. If you are a manager or want to be one, the decision-making process in management positions demands more attention to detail.

Why is it so hard to make a decision?

If you’re a manager who sometimes dreads making decisions, it's understandable. When you lead the decision-making process, there's a lot at stake. Your team members count on you to be a good leader. Sometimes, you may not have a significant amount of time to best decide.

Other times, the information available to you might not offer a straightforward course of action. The fear of making the wrong decision can loom over your head and fill you with self-doubt. Sometimes, you might struggle with decision fatigue and feel exhausted by even the smallest decision.

Being the decision-maker is filled with opportunities with chances of success and failure. Making a bad decision is always a possibility. The key is to make the best possible decisions you can with the information you have available.

Trust your training and knowledge, but also keep working on improving your decision-making processes.

But trusting your abilities and having confidence in yourself doesn't come without some work. If you're looking for help with your confidence, check out what our BetterUp coaches can do for you. We're here to help you become more comfortable making your managerial decisions.

What are the main steps to take when making a decision as a manager?

The entire process of how and when to decide can seem like a lot. But being prepared and following steps can help you have a rational decision-making process.

You will develop your own process over time, but it helps to build on a basic framework.

Here's a step-by-step process that you can follow when you have to make managerial decisions:

1. Identify the decision that you have to make

It's essential to identify what you need to decide on. This way, you know what problem you're solving. If you don't know the details of what you're dealing with, make sure you take the time to familiarize yourself with them.

2. Review relevant information

You can start brainstorming after you've focused on what decision you must make. To make an informed decision, you need to take stock of all available information.

Reviewing a lot of information can grow chaotic. Try to stay organized by using strategies like flowcharts or colored sticky notes. You don’t want to lose an important document in a stack of hundreds.

3. Think about possible alternatives

How many possible solutions are there to this decision? Since you've reviewed your information carefully, you've probably considered several options. There could be many alternatives, but this isn't the stage where you figure out the best choice.

Ask questions. Then, listen to any feedback you receive about these alternatives from your team members or other trusted individuals. You’ll have plenty to think over, so stick to your organizational methods.

4. Weigh your evidence

Now that you have your possible solutions, it's time to weigh all the pros and cons. Think about your competitors and the outcomes they've had with such decisions. Review the possible wins and losses that you could experience for each possible alternative.

You can also consider how your decision would impact your group members and stakeholders. What kind of change will they have to adapt to? Don’t rush to this stage. You want to make a decision that you feel comfortable with and confident in.

5. Choose between your alternatives

You've arrived at the step where you make your final decision. Review your information and alternatives and weigh your evidence. Then you can make your decision. Trust yourself: you're prepared to make this call. You don't have to make perfect decisions. You need to make good decisions.

6. Take action

The final step is executing your decision. Create a plan that sets you and your business up to succeed. Your strategic planning could take a while, but that's important for your decision’s success. You won't reap as many benefits if you don't execute it properly.

7. Reflect on your decision

Some people consider this a bonus step. But if you want to become a better decision-maker, it's critical. You've followed a decision-making model. You made your decision and executed it.

Now that you're done, think about how well your decision-making skills served you and what you'd do differently.

The goal in reflection isn't to convince yourself that you made all the right choices. The goal is to be honest about what worked and what didn't about how you approached the decision.

Did you solve the problem you first identified? How good were you at gathering information? Are your goals being met?

Taking notes can help you learn from your mistakes and learn more effective decision-making processes for the future. This way you can become a better decision-maker for when the decisions get harder.

Common challenges

The decision-making process involves plenty of challenges that everyone experiences. It doesn't matter if you've been making managerial decisions for one year, five years, or 15 years: these challenges can impact anyone.

Here are four common challenges you may encounter in the decision-making process:

1. Having too much information

With all of the information you've gathered, it's easy to get overwhelmed. Having too little knowledge can be overwhelming, too, and let your biases slip in. With practice, prioritizing and picking the most crucial information to review will become easier.

Don’t hesitate if you need to do some more research to better guide your decisions. Research skills never go out of style, and you’ll know how to prioritize what you find.

Be realistic, though. As a manager, you rarely have all of the time or information you might like. Being 100-percent certain is not the goal.

2. Being overconfidence

Even though you're doing your best to make informed decisions, you could always make the wrong decision. It's part of life. But if you don’t acknowledge this possibility, it could make you more prone to mistakes or failure. Being confident is great, but overconfidence can lead to unnecessary errors.

3. Not identifying the problem correctly

The first step in your decision-making process is an important one. It sets the tone for the rest of your research and consultation. If you don't identify what you're trying to decide on, you can’t reach the best decision in the end.

Some decisions are complex and require a lot of time, so don't rush.

4. Getting everyone on board

The bottom line is that sometimes you're the decision-maker. As a manager, you make the final decision, but hearing feedback and working collaboratively is crucial. Be clear with your team whether or not the decision itself will be collaborative so you don't set the wrong expectations.

Will you be taking a vote as a team? Or, are you getting their input so that you can make the final decision yourself? Be as transparent as possible about the criteria you will use to make the decision and what the process and timeline will be.

If the rest of your team members can't agree on anything, it makes your decision more challenging and clear communication more important. You might need to strengthen your team's communication skills or discuss problem-solving strategies with the rest of your team.

4 pro tips to ace your way of making decisions

There will be both easy-going and challenging moments for every decision you make. Here are four final tips to help you feel confident about the decisions you make:

Take advantage of organizational tools
Communicate clearly and regularly to everyone involved
Find a routine that works for you and stick with it
Don't let your past mistakes make you hesitant about future decisions

Final thoughts

Ready to strengthen your decision-making abilities? There’s always room for improvement — especially in management positions. Leadership is a moving target, and our coaches at BetterUp would love to help you strengthen and refine your decision-making and other leadership skills.

A decision-making process is a series of steps taken by an individual to determine the best option or course of action to meet their needs. In a business context, it is a set of steps taken by managers in an enterprise to determine the planned path for business initiatives and to set specific actions in motion. Ideally, business decisions are based on an analysis of objective facts, aided by the use of business intelligence (BI) and analytics tools.

In any business situation there are multiple directions in which to take a strategy or an initiative. The variety of alternatives to weigh -- and the volume of decisions that must be made on an ongoing basis, especially in large organizations -- makes the implementation of an effective decision-making process a crucial element of managing successful business operations.

There are many different decision-making methodologies, but most share at least five steps in common:

Identify a business problem.
Seek information about different possible decisions and their likely effect.
Evaluate the alternatives and choose one of them.
Implement the decision in business operations.
Monitor the situation, gather data about the decision's impact and make changes if necessary.

Data-driven decision making

Traditionally, decisions were made by business managers or corporate executives using their intuitive understanding of the situation at hand. However, intuitive decision-making has several drawbacks. For example, a gut-feel approach makes it hard to justify decisions after the fact and bases enterprise decision-making on the experience and accumulated knowledge of individuals, who can be vulnerable to cognitive biases that lead them to make bad decisions. That's why businesses today typically take more systematic and data-driven approaches to the decision-making process. This allows managers and executives to use techniques such as cost-benefit analysis and predictive modeling to justify their decisions. It also enables lines of business to build process automation protocols that can be applied to new situations as they arise, removing the need for each one to be handled as a unique decision-making event.

If designed properly, a systematic decision-making process reduces the possibility that the biases and blind spots of individuals will result in sub-optimal decisions. On the other hand, data isn't infallible, which makes observing the business impact of decisions a crucial step in case things go in the wrong direction. The potential for humans to choose the wrong data also highlights the need for monitoring the analytics and decision-making stages, as opposed to blindly going where the data is pointing.

Challenges in the decision-making process

Balancing data-driven and intuitive approaches to decision-making is a difficult proposition. Managers and executives may be skeptical about relying on data that goes against their intuition in making decisions or feel that their experience and knowledge is being discounted or ignored completely. As a result, they may push back against the findings of BI and analytics tools during the decision-making process.

Getting everyone on board with business decisions can also be a challenge, particularly if the decision-making process isn't transparent and decisions aren't explained well to affected parties in an organization. That calls for the development of a plan for communicating about decisions internally, plus a change management strategy to deal with the effects of decisions on business operations.

Decision-making models can also be used to avoid these various challenges by creating a structured, transparent process.

What is a decision-making model?

A decision-making model is a system or process which individuals can follow or imitate to ensure they make the best choice among various options. A model makes the decision-making process easier by providing guidelines to help businesses reach a beneficial conclusion.

Decision models also make the decision-making process visible and easily communicable for everyone involved, including all managers, stakeholders and employees. They can be used for a wide variety of purposes across departments, businesses and industries, but they are especially useful when selecting software vendors or new tools, choosing new courses of action or when implementing changes that effect large amounts of people.

Types of decision-making models

Common types of decision-making models include:

Rational models. Rational decision-making is the most popular type of model. It is logical and sequential and focuses on listing as many alternative courses of action as possible. Once all options have been laid out, they can be evaluated to determine which is best. These models often include pros and cons for each choice, with the options listed in the order of their importance.

A rational decision-making model typically includes the following steps:

Identify the problem or opportunity.
Establish and weigh decision criteria.
Collect and organize all related information.
Analyze the situation.
Develop a variety of options.
Assess all options and assign a value to each one.
Decide which option is best.
Implement the decision.
Evaluate the decision.

Intuitive models. These decision-making models focus on there being no real logic or reason to the decision-making process. Instead, the process is dictated by an inner knowledge -- or intuition -- about what the right option is. However, intuitive models are not solely based on gut feelings. They also look at pattern recognition, similarity recognition and the importance or prominence of the option.

Recognition primed models. These models are a combination of rational and intuitive decision-making. Its defining element is that the decision maker only considers one option instead of weighing all of them.

The recognition primed decision-making process involves:

Identifying the problem, including all its characteristics, problem cues, expectations and business goals.
Thinking through the plan and performing a mental simulation to see if it works and what modifications might be needed.
If the plan seems satisfactory, then the final decision is made, and the plan is implemented.

In recognition primed models, alternative courses of action are only considered if the original plan does not produce the intended results. The success rate of this model correlates to an individual's experience and expertise.

Creative models. In this decision-making model, users collect information and insights about the problem and create some initial ideas for solutions. Then, the decision maker enters an incubation period where they do not actively think about the options. Instead, they allow their unconscious to take over the process and eventually lead them to a realization and answer which they can then test and finalize.

When to use decision-making models

Even when rules and procedures are set up to make business decision-making more systematic, there can still be room for intuition on the part of decision-makers. For example, after gathering data about different alternatives, more than one might seem similarly advantageous, or management might find itself lacking certain information needed to make a decision with full confidence. This is a good use case for incorporating an intuitive decision-making model into the process.

On the other hand, decisions that happen frequently and have clear optimal outcomes benefit from a structured, rational decision-making models. This approach to business problem-solving uses clearly prescribed steps and, usually, data analytics software to evaluate the available options and arrive at a decision.

Sometimes involving more people in the decision-making process can pay off. This is known as participatory decision-making; in the business world, it involves managers seeking input and feedback on decisions from the workers they oversee. The participatory approach has the potential advantage of generating many ideas for solving a business problem; it also helps to engage employees.

Decision management

Decision management -- also known as enterprise decision management (EDM) or business decision management (BDM) -- is a process or set of processes that aims to improve the decision-making process by using all available information to increase the precision, consistency and agility of decisions. The processes also focuses on making good choices by taking known risks and time constraints into consideration.

Decision models and Decision support systems (DSS) are key elements of decision management. Decision management processes also use business rules, business intelligence (BI), continuous improvement, artificial intelligence (AI) and predictive analytics to access the capabilities of big data and meet the needs of modern day user expectations and operational requirements.

Decision management systems treat decisions as reusable assets and introduce technology at decision points to automate the decision-making process. Decisions may be fully automated, or they may be presented as possible choices for a human to select.

Increasingly, organizations who deal with financial services, banking and insurance are integrating decision-making software into their business process systems as well as their customer-facing applications. This approach is especially useful for high-volume decision-making because automating such decisions can enable more efficient, information-based and consistent responses to events.