Decision-making is the bedrock of business success. It influences almost every aspect of corporate life, from investment to customer service. A good decision maker helps a business succeed and boosts profit. A poor decision maker, on the other hand, could jeopardize not only business growth but also sustainability.
Businesses make complex decisions all the time. Managers decide whether to hire or fire staff; sales managers determine the most lucrative sales leads; senior IT administrators choose the best software for their purposes. All of these people make choices before finding a solution to a problem. They are decision makers. “A decision can be defined as a course of action purposely chosen from a set of alternatives to achieve organizational or managerial objectives or goals,” says the Management Study Guide.
The Cambridge English Dictionary defines a decision maker as a “person who decides things, especially at a high level in an organization.” A decision maker might be responsible for strategic decisions like acquisitions, business expansion or capital investment.
According to the University of Massachusetts Dartmouth, there are seven stages of effective decision-making. First, a decision maker realizes he or she needs to make a decision. Then, the person gathers relevant information, identifies the alternatives, weighs up all of the evidence, selects the alternatives that are best for his or her situation, and takes action. Finally, the decision maker reviews his or her choice and its consequences.
Decision makers prevent companies from making rash decisions that hinder business growth. They are an essential part of every business because they optimize communication, human resources and supply chain management. Effective decision makers navigate complicated situations and choose the right solution that provides their company with the most benefits in the long term. In short, a good decision maker can transform a business.
Poor decision-making can have serious consequences for businesses in every niche. Good decision-making in management helps companies secure sales, generate new leads, improve their marketing processes and increase the visibility of their brand. It is useful for policy planning, too. Ultimately, the best decision makers ensure business success in the future.
Various factors influence decision-making in business. One study suggests that smaller groups of decision makers are more competent at making resolutions than larger groups. The research, from Princeton University, says that people make decisions based on correlated information — the facts known to all members of a group, and uncorrelated information — the things known only to a few members of a group. The larger the group, the more the uncorrelated information gets “drowned out.”
Psychological and physiological factors also impact decision makers. Long days, fatigue and eating habits could affect someone’s decision-making process, for example. The National Academy of Sciences found that a judge was more likely to grant a criminal parole after a food break.
Research from Stanford University says that good decision-making happens in the morning when serotonin levels in the brain are at their highest. This, they say, makes it easier for people to take risks.
The decision-making process in management comes with multiple benefits. Great decision makers influence almost every business-related situation, and companies that have proper decision makers are more effective at strategic planning. These companies improve sales, boost productivity and increase morale, too.
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