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Three important steps in the decision-making process

For many of us, making decisions can be quite an intensive and challenging process. Furthermore, sometimes making the wrong decisions can lead to negative personal and financial outcomes. Wouldn’t you like to know how to make decisions in a more efficient and less stressful way? Read on to find out three important steps in the decision-making process.

Step 1: Understanding the stakes

Patrick McGinnis, an acclaimed author and venture capitalist, links decision-making with its related stakes. According to him, every decision can be seen in terms of its stakes: no stakes, low stakes or high stakes.

No stakes decisions are generally related to everyday things such as which movie to watch or what to have for dinner. Regardless of what you decide, it’s unlikely to have any lasting impact on your situation. These decisions are easily forgettable choices, so you don’t want to be spending a lot of time on them.

Low stakes decisions have a moderate impact on your situation or lifestyle. For example, if you decide to buy laptops for everyone at your company, it will affect your day-to-day operations as well as your finances. In such cases, you should put some time and thought into the process of making a decision.

High stakes decisions have quite a significant impact on your life. For example, taking a job or buying a house has a long-term effect. You don’t want to rush these decisions. So be sure to assess your needs and situation, do your research and talk to a friend or relative to get a second opinion before making a decision.

Step 2: Choosing from a variety of options

In today’s world, there are a lot of options to choose from, be it a job or bar of soap. Going through and evaluating so many alternatives can lead to greater indecision, making it hard to find the best option.

You may not always find the best option but, by understanding what you want, you can find one that’s best suited to your needs.

Let’s say you’re trying to find a hotel for an upcoming trip. The travel website you’re on shows you a number of options, each with its own set of desirable qualities. One of them is close to the city center, another serves free breakfast and a third that’s extremely cheap. In such cases, selecting one option from a sea of other options can seem like a difficult task.

Don’t worry! Just try to determine which of the options’ qualities is most suitable to your needs and go with the option that has them.

Step 3: Reviewing the outcomes

Every decision you make has an outcome of some sort. It could range from feeling happy after watching a TV show to financial stress from deciding to buy a really expensive car.

In decision-making, arriving at a decision is not the end of the process.

After you make a decision and are able to see its impact, think about how you feel, how it affected your situation, how you benefited from it and whether, in retrospect, there was another decision that may have served your needs better. That way, the next time you are in a similar situation, you’ll be able to make a more informed and appropriate decision.

If you enjoyed reading this article, then you might like to try some of our related courses. Keep going, keep learning!


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