Blog_Banner_Asset
    Homebreadcumb forward arrow iconBlogbreadcumb forward arrow iconBusiness Analyticsbreadcumb forward arrow icon5 Decision-Making Techniques You Must Know as a Manager

5 Decision-Making Techniques You Must Know as a Manager

Last updated:
1st Apr, 2023
Views
Read Time
8 Mins
share image icon
In this article
Chevron in toc
View All
5 Decision-Making Techniques You Must Know as a Manager

Back in the day, managers used to make most of their decisions based on intuition or experiences they had gathered, but with changing times, relying on guts may not bring the best results. 

Markets are only getting more competitive, and each decision taken by managers needs to be the most efficient one to give the business a desired edge. 

Depending on the severity of the situation and how broadly it can impact the organisation, the decision-making processes can swing from intuition-based decision-making to more formal and systematic approaches. 

Today we will discuss the top 5 decision-making techniques managers must know in 2023, which can help them make decisions of any level and difficulty.

Ads of upGrad blog

What is Decision Making In Management?

Decision-making in management, as the phrase suggests, can be defined as the process of making a choice between diverse options. The process involves multiple steps, such as problem recognition, information gathering, and then evaluating the pros and cons to devise a feasible solution or alternative. 

In the management field, the manager of an organisation carries it out in sync with the goals and objectives of the organisation. This means whatever decisions they take must be the best option to achieve the desired goals. 

For example, the manager may choose to make changes in the logistics. Still, they need to analyse the decision well to ensure that the costs, benefits, and risks associated with it are the organisation’s best course of action. 

Moreover, they may need to set goals and provide solid guidelines to ensure the plan’s accurate implementation and evaluate its effectiveness. Keep reading to learn how decision making methods can make a manager’s job easier. 

Top Decision-Making Techniques For Managers 

Here are the best decision-making techniques suitable for different scenarios. 

1. Pro/Con Technique For Comparing Two Options

As a manager, if you have to decide between two options, this pros and cons technique can be used. Here are the steps to implement this decision making technique

  • Asking questions: Ask yourself very clear questions that can be answered with yes or no. Such as, “will this decision reduce the expenses” or “will this step reduce the turnaround time?”. 

Don’t ask questions like “Should I hire new talents or train the present employees.” 

  • Jolt down the pros and cons: Once you have your question, make a regular pros and cons list, where on the pros side, you put the benefits, and on the cons, you put the drawbacks. 

This step is crucial and requires a lot of brainstorming, so ensure you are taking enough time, especially if it is a crucial decision. 

  • Assess the probability of the pros and cons: For this, you can mark them from 1 to 10, where 1 is the least probable, and 10 is the highest. 

When done giving scores, sum up the total score. The one with a greater probability score is more likely to happen. 

Delete the arguments with the same score or low scores. 

2. Heuristic Method To Save Time On First Trials

Not every decision you make as a manager has to be perfect on the first go. In those situations, you can use the heuristic method to save time instead. Investors often use this process to speed up the analysis of investment decisions. 

This process also helps simplify problems and avoid cognitive overload. The solutions received from this method may not be the most optimal, but they are still efficient as they take the least amount of time. 

3. Cost Benefit Analysis For Making Financial Decisions

As a manager, if you have to make a financial decision that is absolutely bias-free, a cost-benefit analysis can help you achieve that. This evidence-based evaluation technique will help you make more data-driven and logical decisions. 

Other benefits of this technique include the following:

  • Making the decision simple
  • Finding out hidden costs or benefits

However, there are some limitations as well. With this technique, you can not predict all the possible factors that may impact the outcome. Besides, if you implement an incorrect or incomplete data set, the results may be faulty. 

Here’s how Harvard Business School suggests doing a cost-benefit analysis

Learn Job-ready Program in Business Analytics from upGrad to become a certified Business Analyst professional. Fast-track your professional career after graduation with this Business analytics course with placement assistance.

4. Linear Programming To Make The Most Out Of Limited Resources 

This decision making technique uses mathematical linear equations and is great for making decisions when resources to solve a situation are limited. Limited resources can include things like money, material, or machinery. 

5. NPV and PV For Making Investment Related Decisions 

The net present value and present value method help make financial decisions of a business related to investment and capital budget, and hence, the future cash flow. The method is based on the ability of critically thinking and taking informed decisions. 

Bonus: Multivoting for making fair group decisions

As a manager, there can be times when you have to make decisions as a team. According to this method, you first need to weed out low-priority options (which can be done using other decision-making methods) and then leave the team to pick the best option. 

For that, you can hand over the list of options to each team member and ask them to choose the top three. Finally, by tallying up the votes, you will be able to find the opinion of the majority. 

Explore our Business Analytics Programs from World's Top Universities

How Important Are Decision-Making Skills 

As a manager having good decision making skills helps make the job easier to quite an extent. Here are some reasons why good decision-making skills can be fruitful.

  1. Saves Time: Making decisions without any framework can cause a lot of confusion, hence, consuming a lot of time. Knowing when to use the right decision making methods not only saves time but also increases the chances of making the best choice. 
  2. Prevents Conflicts: If a manager cannot make decisions independently, they will frequently rely on their team to make them, and more heads involved often leads to more conflict. An efficient decision-making strategy can avoid situations like these in the long run. 
  3. Cultivates Respect: As a manager, if you are prompt at making decisions, the team will grow respect towards you. While lacking the same can have the opposite outcome. 
  4. Boosts Productivity: Knowing how to make swift and accurate decisions simplifies your job while increasing your team’s overall productivity. The longer you take to make a decision, the more delays will be in starting the process. 
  5. Motivates Team: If you are good at decision-making, your team will start looking up to you. You may even become their motivational figure to improve their professional skills. 

Check out our free courses related to upskill yourself.

How To Improve Your Decision-Making Skills

Here are some tips to improve your decision-making skills as a manager. 

1. Start with understanding the scenario: 

You can not make an informed decision if you are unaware of the context and the entirety of a situation. Thus, your first step towards making a good decision should be understanding the context. 

Once you have figured that out, setting goals and defining what successful outcomes you want to work towards will get easier. 

2. Empower your team: 

There are agile methods of decision-making that only work well if your team members are empowered and supported. They should also be well-informed about the situation and have the autonomy to voice their opinions. 

For example, update the entire team during a product launch and schedule a meeting to get their feedback. Group discussions or individual feedback forms are a great way to involve and empower your team while valuing their opinions to become an equally capable leader.

3. Make plans to minimise mistakes:

Every decision you make as a manager will have long-term consequences in a business setup; therefore, it must not be taken hastily. When you have to make a difficult choice, make a plan that blocks time for separate decision-making stages, such as data collection, interpretation, etc. 

4. Get a second opinion:

If you are new to this role, getting a second opinion from a senior is always good. However, taking a second opinion also works great if you want to have a different perspective of the scene. 

Read our Other Articles Related to Business Analytics

Takeaway 

Leveraging decision making techniques definitely makes the job much easier, but it is important to have the basic skills to use them. To effectively use these techniques, you must have abilities like critical thinking, stress management, and analytical approach. 

The first will eventually come with experience, but if you want to improve your analytical skills, upGrad’s Job-ready Program in Business Analytics can be a great option!

The course will teach you how to leverage data to make informed business decisions while equipping you with trendy in-demand skills and experience necessary to perform your duties with utmost perfection.

Profile

Sriram

Blog Author
Meet Sriram, an SEO executive and blog content marketing whiz. He has a knack for crafting compelling content that not only engages readers but also boosts website traffic and conversions. When he's not busy optimizing websites or brainstorming blog ideas, you can find him lost in fictional books that transport him to magical worlds full of dragons, wizards, and aliens.
Get Free Consultation

Selectcaret down icon
Select Area of interestcaret down icon
Select Work Experiencecaret down icon
By clicking 'Submit' you Agree to  
UpGrad's Terms & Conditions

Our Popular Business Analytics Course

Frequently Asked Questions (FAQs)

1Which decision making methods use brainstorming and mind mapping?

The most popular technique for mind mapping and brainstorming is the affinity diagram. It helps visualise multiple data points in a simple form.

2What is the use of the analytical hierarchy process?

It is a method of decision-making where maths and psychology are used side by side. This approach is mostly taken to solve complex problems. This structured technique is well suited to utilise while making complex decisions.

3What are some group decision making techniques?

Some of the most used group decision making techniques include brainstorming sessions, the Delphi technique and the Didactic technique. These techniques prioritise every team member's opinion, implying the value of teamwork within the group; as a result, it enhances productivity.

Explore Free Courses

Suggested Blogs

9 Key Skills Every Business Analyst Needs In Order to Excel
92009
Doctors, engineers, data scientists and other such professions demand a lot of focus, will-power, learning ability, anticipation and other similar men
Read More

by upGrad

08 Apr 2024

Business Analyst Salary in India 2024 [For Freshers & Experienced]
912203
Over the years, Business Analysis has emerged as a core business practice in the enterprise and IT sectors. It pertains to understanding the changing
Read More

by upGrad

04 Mar 2024

Top 11 Industry Applications of Business Analytics in 2023
12819
Business analytics uses sorting, collating, processing, and studying data through iterative methodologies and statistical models to generate meaningfu
Read More

by upGrad

22 Sep 2023

Business Analytics Free Online Course with Certification [2024]
88949
Summary: In this article, you will learn more about Business Analytics Free Online Course with Certification. Why Learn Business Analytics? Getting
Read More

by Rohit Sharma

21 Sep 2023

Top 10 Business Intelligence Tools To Improve Business Decision Making [2023]
6027
Business intelligence (BI) tools are applications that collect and interpret massive volumes of unstructured information from internal and external sy
Read More

by Rohit Sharma

28 Jun 2023

What is Excel VBA? Explained with Real Time Examples
6549
What Is VBA? Do you know what VBA stands for? VBA full form is Visual Basic for Applications. This simple, but powerful programming language was deve
Read More

by Keerthi Shivakumar

26 Jun 2023

Types of Sampling Methods & Techniques in Business Analytics [With Examples]
7078
Introduction  Dealing with enormous amounts of data is one of the main challenges in data analytics. It would be unnecessary and even impossible to a
Read More

by Keerthi Shivakumar

21 Jun 2023

Top 15 Ways to Improve Excel Skills [Actionable Tips]
5789
Excel is a powerful spreadsheet software widely used in businesses, organizations, and personal finance management. Whether you’re a beginner or
Read More

by Keerthi Shivakumar

19 Jun 2023

What are Requirement Elicitation Techniques? The Complete Guide
11583
Requirement elicitation is a crucial phase in any software development project, as the success of a project largely depends on how well the requiremen
Read More

by Keerthi Shivakumar

19 Jun 2023

Schedule 1:1 free counsellingTalk to Career Expert
icon
footer sticky close icon