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Small business owners and managers make decisions on a daily basis, addressing everything from day-to-day operational issues to long-range strategic planning. The decision-making process of a manager can be broken down into seven steps. Although each step can be examined at length, managers often run through all of the steps quickly when making decisions. Understanding the process of managerial decision-making can improve your decision-making effectiveness.
The first step in the process is to recognize that there is a decision to be made. Decisions are not made arbitrarily; they result from an attempt to address a specific problem, need or opportunity.
A supervisor in a retail shop may realize that he has too many employees on the floor compared with the day's current sales volume, for example, requiring him to make a decision to keep costs under control.
Managers seek out a range of information to clarify their options once they have identified an issue that requires a decision. Managers may seek to determine potential causes of a problem, the people and processes involved in the issue and any constraints placed on the decision-making process.
Having a more complete understanding of the issue at hand, managers move on to make a list of potential solutions. This step can involve anything from a few seconds of though to a few months or more of formal collaborative planning, depending on the nature of the decision.
There is always more than one option available for moving forward on a given issue or a new project (including, of course, the option of doing nothing). Compile a list of the pros and cons of each alternative, with a particular emphasis on the ease, speed and amount of resources needed for implementation. It pays to have the best information available before moving ahead to the decision-making phase.
After your group weighs the pros and cons of each potential solution, seek additional information if needed and select the option they feel has the best chance of success at the least cost. Consider seeking outside advice if you have gone through all the previous steps on your own; asking for a second opinion can provide a new perspective on the problem and your potential solutions.
There is no time to second guess yourself when you put your decision into action. Once you have committed to putting a specific solution in place, get all of your employees on board and put the decision into action with conviction. That is not to say that a managerial decision cannot change after it has been enacted; savvy managers put monitoring systems in place to evaluate the outcomes of their decisions.
Even the most experienced business owners can learn from their mistakes. Always monitor the results of strategic decisions you make as a small business owner; be ready to adapt your plan as necessary, or to switch to another potential solution if your chosen solution does not work out the way you expected.
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