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What Is Decision-Making?

What do you call a life of unmade decisions? Stressful.

And everyone knows what happens when you start stressing out. Your shoulders tighten, back aches, and stomach churns. Then you share your stress with everyone around you. You get snappy and dramatic, lose perspective, and sometimes even miss amazing opportunities—all because you let the stress of uncertainty weigh you down and hold you back.

But here’s the good news: Decision-making frees you to use your energy for things you love—like thinking up new ways to work smarter and win bigger.

This is a big freaking deal when you’re leading a business. You’ve got a lion’s share of fires to put out, problems to solve and questions to answer all day every day. You need the mental and emotional space to stay above the problems, boldly lead the charge, and buckle down and make decisions. Even if you make a wrong decision, you’ll move closer to the right one just by taking a step. Action builds momentum, so consider this your kick in the pants. Make the decision!

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Easier said than done, right? That doesn’t have to be the case. We’ll help you understand decision-making so you can get faster and better at moving things forward.

What Is Decision-Making?

Ready for it? Decision-making is the act of making decisions—choosing between at least two options. Yep, it’s that straightforward. And it’s a practice that’s critical to effective leadership. If you’re a leader, just sitting back and waiting for things to happen isn’t an option.

How Do I Deal With Indecision?

The opposite of decision-making is indecision (when you just can’t make up your mind). And the top two causes of indecision are fear and criticism. We get it—sometimes the battlefield of doing business is intense. You might fear losing a customer or team member, losing money, or even dealing with a lawsuit. But as old-time motivational speaker and politician Les Brown wisely said, “Too many of us are not living our dreams, because we are living our fears.”

One way to battle fear in decision-making is to say the reasons you’re afraid to decide out loud. Then, make the decision. By doing that, you take away fear’s power and avoid the cost of not acting.

The same goes for facing criticism—it doesn’t have to control you. As the saying goes, “There is only one way to avoid criticism: Do nothing, say nothing, and be nothing.” But who wants to live like that? Let the haters hate while you weigh the wisdom of people you trust and then make the call.

Of course, complicated situations take more time to work through and make decisions on than simple ones. If you need to pause to gather facts or get advice, then pause. But in the long run, it’s better to be wrong than to not act at all.

What Are Two Types of Decision-Making?

Decision-making can be broken down into two categories.

  • Automatic (or fast) decision-making: This type feels intuitive—like when you just know you should choose a certain vendor or say no to a request because of previous cases. It’s almost second nature.
  • Long-term decision-making: This kicks in when you face new or bigger problems where you need more time to weigh the pros and cons. This type leans on critical thinking to help you explore facts and make discoveries on your way to finding the best choice.

What Is Ethical Decision-Making?

Ethical decision-making is a staple of great leadership. Ethics are the moral principles behind how you act—your guiding beliefs that steer your decisions and behavior. If you take a fresh look at your business’s core values (like trustworthiness, respect, and unity), hopefully you’ll see the connection between what drives your company culture and what influences the way you make decisions.

Always ask if a certain decision will cause you to lie or hide the truth. Sweeping anything under the rug shows a lack of integrity. But when your decisions line up with your core values, you’re using ethical decision-making (and developing a kick-butt culture)!

Pro tip: When you walk a mile in someone else’s shoes, you tend to make decisions more quickly, compassionately and fairly. It’s the golden rule—treat people the way you want to be treated. If you were a vendor, customer, team member or competitor, how would you want to be treated? That rule is your filter for acting with decency, timeliness and honor in every decision you make.

What Is the Decision-Making Process?

With the decision-making definition fresh in your mind, you may feel ready to conquer the wide world of choices and challenges. That’s awesome! But hold on a sec. Let’s get really clear on the decision-making process and explore what do when the situation is extra complicated.

Here are the seven key steps of the decision-making process:

  1. Refresh yourself on how to improve your decision-making skills. 
  2. Define your challenge or problem.
  3. Gather information to get clarity.
  4. Come up with lots of options. (And if none of the choices in front of you are good, keep digging for more. Great options give you power and help you keep your cool.)
  5. Weigh the pros and cons of each option.
  6. Choose the best solution, and then put it into action.
  7. Evaluate the results of your decision. Don’t be afraid to fine-tune that decision or make a new one if you get new information that changes things. That’s called learning and growing.

Now you’ve got the basics for processing and making decisions with confidence. But what about those Goliath-size situations that keep you up at night? Debbie Downer alert! As your business and leadership opportunities grow, you’ll face complicated situations more and more. So, let’s look at some tips that get you armed and ready to slay your decision-making giants.

  • Know the difference between processes and principles. Processes change, principles don’t. Processes are the methods for getting things done and should change as your company grows. For example, if you need to update and optimize your website or use a new social media strategy, embrace the change. If you worship processes (meaning you do things just because you’ve always done them), you’re a bureaucrat . . . and you’re sealing your doom. Principles, on the other hand, are like guiding stars, steady and constant. They keep you—and your decisions—on course when opportunities come up that go against your values and mission. 
  • Break decisions into small bites. When you can make a series of smaller decisions, they often point you in the right direction overall. For example, launch your product in just one region to test it and learn how to make it better before you roll it out to a bigger customer base.
  • Ask yourself whether you can handle the financial hit if your decision is completely wrong. If it fails, it shouldn’t be fatal or lead to the closing of your whole organization. Never go all in. Only James Bond can bet all his poker chips on one hand and come out a winner.
  • Ask experts. If you have tax questions, for instance, ask your chief financial officer, tax attorney and CEO. When their advice agrees and you understand it, you can make better decisions. You might also need an expert in areas like marketing, production, engineering or HR laws. There’s safety in wise, experienced counsel. (Notice we said experienced. Check references and make sure your expert lives their advice and didn’t just read it somewhere.)
  • Talk with your spouse (or a trusted accountability partner if you’re single). Yes, you lead your team and run your business—but getting perspective on important decisions from someone who cares deeply about you and your business will bring valuable insight. Even Luke Skywalker had R2D2.
  • Write a report. When you put your thoughts down on paper, you use your brain differently and reach a higher level of understanding. So if you’re really stuck on making a decision, write out every element of it and possible solutions so you see them more clearly.

How Do I Handle Group Decision-Making?

There’s one more thing to consider in the world of options, opportunities and full-on problem-solving: how to make decisions as a group.

Maybe you’ve heard the warning about having too many cooks in the kitchen. It’s a warning for good reason! Getting too many people in the decision-making mix stirs up chaos. But it’s also true that there’s safety in numbers—decision-making included.

So, how do you handle shared decision-making? Here are some guardrails:

  • For starters, yes, we’re stating the obvious: You can’t “share” by yourself. That means, you also can’t decide alone with shared decision-making. Besides, when you need more options, nothing beats the ideas you’ll get from a great group putting your heads together.
  • Choose the right team and keep it small. You want a handful of proven experts, trusted guides and super-smart specialists ready to be part of some healthy debate with the goal of coming to an agreement on the best way forward.
  • If you’re worried about group pressure swaying the conversation, collect input from everyone individually before they come together.
  • Make sure you have a balanced mix of personalities, not just people who think and act like you. (Check out the four DISC personality types to understand the strengths each personality type brings to the table.)
  • Keep the conversation safe and respectful. Get everyone to speak up, don’t shy away from healthy conflict, and tackle viewpoints—not the people holding those views.

What’s Next? Be a Leader of Action.

Dealing with conflict, great unknowns and hard decisions comes with the territory for anyone in leadership. But when you’re a leader of action, the rewards you reap beat the costs of wishy-washy decision-making any day. If you want to build great leadership skills and an even greater business, check out EntreLeadership Elite. Elite offers decision-making resources and other leadership tools to help you create unstoppable momentum. And Elite is free for your first 30 days! Here's how to start your free trial.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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