Which of the following is not a common error in the first step of the decision-making process?

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:

1. Take advantage of organizational tools
2. Communicate clearly and regularly to everyone involved
3. Find a routine that works for you and stick with it
4. 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. 

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Bad decisions can often be traced back to the way the decisions were made–the alternatives were not clearly defined, the right information was not collected, the costs and benefits were not accurately weighed. But sometimes the fault lies not in the decision-making process but rather in the mind of the decision maker. The way the human brain works can sabotage the choices we make. In this article, first published in 1998, John Hammond, Ralph Keeney, and Howard Raiffa examine eight psychological traps that can affect the way we make business decisions. The anchoring trap leads us to give disproportionate weight to the first information we receive. The status quo trap biases us toward maintaining the current situation–even when better alternatives exist. The sunk-cost trap inclines us to perpetuate the mistakes of the past. The confirming-evidence trap leads us to seek out information supporting an existing predilection and to discount opposing information. The framing trap occurs when we misstate a problem, undermining the entire decision-making process. The overconfidence trap makes us overestimate the accuracy of our forecasts. The prudence trap leads us to be overcautious when we make estimates about uncertain events. And the recallability trap prompts us to give undue weight to recent, dramatic events. The best way to avoid all the traps is awareness–forewarned is forearmed. But executives can also take other simple steps to protect themselves and their organizations from these mental lapses. The authors describe what managers can do to ensure that their important business decisions are sound and reliable.

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Making business decisions is your most crucial job—and your riskiest. New product development, mergers and acquisitions, executive hirings—bad decisions about any of these can ruin your company and your career.

Where do bad decisions come from? Mostly from distortions and biases—a whole series of mental flaws—that sabotage our reasoning. We all fall right into these psychological traps because they’re unconscious—hardwired into the way we all think. Though we can’t get rid of them, we can learn to be alert to them and compensate for them—monitoring our decision making so that our thinking traps don’t cause judgment disasters.

The Idea in Practice

The higher the stakes of your decision, the higher the risk of getting caught in a thinking trap. Worse, these traps can amplify one another—compounding flaws in our reasoning. Here are five of the nine traps:

Anchoring:

Giving disproportionate weight to the first information you receive Example: 

A marketer projects future product sales by looking only at past sales figures. In a fast-moving marketplace, poor forecasts result.

Avoiding the Trap:

• Pursue other lines of thought in addition to your first one.

• Seek information from a variety of people and sources after thinking through the problem on your own.

Status quo:

Favoring alternatives that perpetuate the existing situation Example: 

A key merger stumbles because the acquiring company avoids imposing a new management structure on the acquired company.

Avoiding the Trap:

• Ask if the status quo really serves your objectives.

• Ask if you’d choose the status quo if it the status quo.

• Downplay the effort or cost of switching from the status quo.

Sunk costs:

Making choices in a way that justifies past, flawed choices Example: 

Bankers who originate problem loans keep advancing more funds to the debtors, to protect their earlier decisions. But the loans fail anyway.

Avoiding the Trap:

• Get views of people who involved in the original decisions.

• Remind yourself that even the best managers make mistakes.

• Don’t encourage failure-fearing.

Confirming evidence:

Seeking information that supports your existing point of view Example: 

A CEO considering canceling a plant expansion asks an acquaintance, who canceled such an expansion, for advice. She, of course, says to cancel.

Avoiding the Trap:

• Check whether you’re examining all evidence with equal rigor.

• Ask a respected colleague to argue your potential decision.

Estimating and forecasting:

Being overly influenced by vivid memories when estimating Example: 

Lawyers overestimate probability of large awards because the media aggressively publicizes massive awards. Lawyers then offer too large settlements.

Avoiding the Trap:

• Be very disciplined in forecasting.

• Start by considering extremes, and then challenge those extremes.

• Get actual statistics, not just impressions.

Making decisions is the most important job of any executive. It’s also the toughest and the riskiest. Bad decisions can damage a business and a career, sometimes irreparably. So where do bad decisions come from? In many cases, they can be traced back to the way the decisions were made—the alternatives were not clearly defined, the right information was not collected, the costs and benefits were not accurately weighed. But sometimes the fault lies not in the decision-making process but rather in the mind of the decision maker. The way the human brain works can sabotage our decisions.

A version of this article appeared in the September–October 1998 issue of Harvard Business Review.

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