Making Better Decisions


Good decisions are those that get the required results. Ironically, the process used to make decisions is often flawed. Most people tend to make decisions by thinking they understand what it is they want and then searching for the first solution that fits the need. This approach is time efficient but it can be costly. Following is a suggested five-step approach to making important decisions.

First, understand the problem and establish a purpose for the decision. Do you need a vehicle to deliver parts as inexpensively as possible or do you need a vehicle that will help you deliver parts, improve your business image in the community, and increase sales. Understanding what you are trying to decide guides you to making a better decision.

Second, establish criteria to evaluate possible alternatives. There are two types of criteria—those that must be present for making a choice (must haves) and those that are desirable to have (desirables). It is important to know the difference. The must haves are essential; a delivery van must be reliable while a desirable may be having a CD player in the van. A must have may be rent at $1.25 per square foot and a desirable may be a location next to the river. You get the idea.

Third, search for alternatives. Look around; don’t go to the first supplier that comes to mind or the first location or the first vehicle. Spend the time, the more expensive the choice the more time you should spend. Snap decisions are the bane of smart choices.

Fourth, compare alternatives to the criteria. In its simplest form you could set up a yes/no matrix— the alternative either meets or does not meet the criteria. The alternative that has the most matches wins. If some criteria are more important than others you may want to weight them. Weighting is simply attaching a numerical value to the criteria. Some criteria are weighted with a numerical 1 and others are weighted with 1.5.

In other words, you may need to value criteria in relationship to other criteria. Weighting makes it possible that an alternative with less matches wins. An alternative may win by matching fewer but more important criteria. There are a variety of ways you can weight criteria that go beyond the scope of this article, but keep in mind that some criteria may be more important than others and that needs to be considered when making a decision.

Fifth, do a risk analysis of the most favored alternative. What this means is that you understand that every choice has a downside. What are the chances that the alternative you choose will work out and if it doesn’t what are the possible consequences. If you choose van A, the less expensive van, what are the risks that it will have more repairs. Is the fact that you will have more repairs an acceptable risk? At the heart of risk analysis is the “What if” question (what if “thus” happens). You need to discern what the probability that the “thus” will happen and then determine the consequence of the “thus” occurring. After doing a risk analysis you may want to throw out the alternative and see another alternative is less risky.

By using these five steps you should make better hiring and purchasing decisions that get you your desired results.
To learn more about how to start up a business, obtain funding, or operate your business, enroll in COCC’s Entrepreneurship Program, Small Business Management Program, or take seminars from the Center for Business and Industry (Business Development Center). (541) 383-7290 or 383-7713.


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