?

the art of
decision
making
A note from the Author
I
heard
and
overheard
some
youngsters,
who
were
passing
out
of

college,
discuss
their
job
op:ons.
I
felt
that
the
way
they
were

arriving
at
their
decisions
was
not
a
very
scien:fic
way
of
doing

things,
to
say
the
least!

So
I
have
put
together
this
learning
module
on
the
‘Art
of
Decision

Making’,
that
provides
an
overview
of
the
Decision
Making
Process.

Books
I
have
referred
to
for
this
module
include,
‘Smart
Choices’
by

Hammond,
Keeney
and
Raiffa
(a
book
I
highly
recommend)
and

‘Harvard
Business
Review
ar:cle
compila:on
on
Decision
Making’.

I
think
it
will
take
around
30‐40
minutes
to
peruse
through
this

learning
module.
I
hope
you
will
find
the
module
useful
and
I

welcome
your
comments
and
sugges:ons
at
[email protected]

 J
o
b


You are soon going to complete your college studies in

Economics and you have four job offers based on your
campus recruitment interviews.
Job

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Couple of your friends with similar offers are
thinking of accepting the IT company’s offer.

After all I.T. is the future!

Job

r f r o m a C r edit
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 Job

Your family suggests you should accept the offer

made by the bank because it is a stable job with
good prospects. o f f er f r o m a
Job y ,
4 t in g A g e n c
C redit Ra
And, banking will always be there! earch Analyst
Res
The thought, “This is ‘me’ reporting live from Davos”
excites you most and you are veering towards
accepting the offer made by the TV channel.
although you hardly know anything about broadcasting industry!
How do you
decide?
Go with your
intuition...
Trust your parents’
judgement?
Do as your friends
are doing...

...at least you

will be together
and that ensures
good times!
Or just toss a coin!
People have
put in a lot
of thought
on how good
decisions are
made...
They have
laid down a
series of
steps you
can follow to
improve your
decisions.
This series of steps is called the

Decision Making
Process
it has 5 steps...
1. Define the Problem

2. Define the Objectives

1. Define the Problem

2. Define the Objectives

3. Think of Alternatives

4. Work out Consequences

5. Make Trade-offs
3. Think of Alternatives

4. Work out Consequences

5. Make Trade-offs
3. Think of Alternatives

4. Work out Consequences

5. Make Trade-offs
These steps can be used for any decision, though for trivial
decisions you don’t need to follow all the steps.
Let’s go through the Decision Making Process to take a
decision on what job you should accept...
STEP-1: Define the Problem

Usually the issue is not wrong definition of the problem but

an incomplete definition.

Use following techniques to better define the problem...

a) See the bigger picture

What larger issues are at stake here?

The four jobs open up very different career paths... what

do you aspire for?
b) Challenge the constraints

Why limit your decisions to the four

available options...

...why not apply for other jobs that

really, really meet your aspirations

...or perhaps go abroad

to study further
c) Analyze Linked Decisions

What other decisions get

affected by this decision?

Does one of jobs require

relocation or frequent
travel?
d) Ask a lot of ‘whys’

Be creative while defining the problem

e) Ask others

What has been their

experience in similar jobs?

What do they think of

career prospects?

Consult your teachers

Thus, a better definition of your job selection
problem could be...

What are my
life aspirations and what
career choice will best
help me realize my
aspirations?
Does one of the current
job offers align better
with my aspirations?
Summary of STEP-1

1. Define the Problem

a)  See the bigger Picture
b)  Challenge the constraints
c)  Analyze linked decisions
d)  Ask ‘why’ five times
e)  Ask others
STEP-2: Define your Objectives
What do you want the
decision to accomplish?

Search your soul... do you

really, really want to...
teach, or become a CEO of
a MNC, or freelance...

Your first job may not lead to fulfilment of your aspiration but clarity on
what you seek in life will help you choose a job that best aligns with your
long-term plans.
Objectives help you determine
what information you need to
make a good decision

They help you evaluate your

options

Here are some ideas that will

help you search your heart and
determine your objectives...
a) Create a wish list

Don’t have any apprehensions!

E.g. you are passionate about

environment conservation
and want to work for a green
company with low carbon footprint...

Add it to your wish list.

b) Write down all your concerns

Concerns make great

objectives!

E.g. you want to go abroad for

further studies but don’t have
funds... while weighing options
you can check if any jobs offer
sabbatical opportunities
c) ‘Means’ & ‘Ends’ Objectives

Distinguish between ‘means’

objectives and ‘end’ objectives.

Ask ‘why’ five times to reach

‘end’ objectives.

‘Means’ objectives deepen your

understanding of decision
problem and help generate
alternatives.

‘End’ objectives help you

evaluate alternatives.
d) Visualize the end result

For each objective

visualize the end
outcome.

Ask yourself if you are

comfortable with the
outcome.
Summary of STEP-2

2. Define the Objectives

a)  Create a wish list
b)  Note all your concerns
c)  Distinguish between
‘means’ and ‘end objectives
d)  Visualize the end result
STEP-3: Think of Alternatives

While defining the

decision problem and
objectives you asked
‘why’.

Now you have to ask

‘how’ - how can I meet
my objectives?
Ideas to generate alternatives
a) Do away with the constraints

E.g. do away with the

constraint of lack of
funds to go abroad
for further studies
and see if you can get
an education loan.
b) To infinity and beyond...

I want to retire Set high aspirations because this

on the moon! forces you to think in entirely
new ways.
c) May the force be with you!

Once you have looked at

the decision problem from
various perspectives give
your thinking a break.

Let your sub-conscious go

to work... you might get new
insights
 d) Consult others

Thou shall e) Don’t pre-judge your

defer
judgement
options

f) Let your creative juices

flow
g) ‘Optimize’ don’t ‘Satisfice’

When you start looking for

options you tend to stop at
the first good-enough
option you find. This is
called ‘satisficing’.

You should instead keep

looking for more options
and then choose the most
optimal option.
g) Know when to stop
Your best option can be no better than
one of your alternatives so think hard.

However, the perfect solution

seldom exists and at some point
you will have to stop looking for
more alternatives.

This will usually be when you have pushed

yourself enough, or you have a sense
that one of your options will meet most
of your objectives.
Summary of STEP-3
3. Think of Alternatives
a)  Do away with constraints
b)  Set high aspirations
c)  Put your sub-conscious to work
d)  Consult others
e)  Don’t pre-judge options
f)  Let your creative juices flow
g)  Optimize don’t Satisfice
h)  Know when to stop
4. Work out Consequences
a) Assess the alternatives
work out the consequences
for each alternative, against
each objective.

b) Create a ‘Futures
Scenario’

c) Rate each consequence

d) Construct a ‘Consequences Table’
ALTERNATIVES

 I.T.
 Credit
Ra<ng

 T.V.
Journalist
 Bank

/
OBJECTIVES
 Company
 Agency

Salary

1.
List
all
your

Perks
 ‘alterna:ves’
‐
one

Loca:on
 in
each
column

Saving
Poten:al

2.
List
all
your

Working
Hours
 ‘objec:ves’
‐
one
in

Weekend
Off
 each
row


Annual
Holidays

Career
Progression
 Some of the life aspirations have
Job
Sa:sfac:on
 become objectives here like further
Domes:c
Travel
 studies and future entrepreneurship.
Int’l
Travel
 Based on your think through you could
Future
Study
Possibility
 also have more objectives (rows) and
Future
Self‐ also more alternatives (columns).
Employment
Possibility

 ALTERNATIVES

 I.T.
 Credit
Ra<ng

 T.V.
Journalist
 Bank

/
OBJECTIVES
 Company
 Agency

Salary
 30,000
 22,000
 25,000
 20,000

Perks
 5,000
 5,000
 Nil
 8,000

Loca:on
 Far
City
 Near‐by
City
 Far
City
 Own‐City

Saving
Poten:al
 7,400
 5,400
 1,000
 10,000

Working
Hours
 Very
Long
 Regular
 Shia‐duty
 Long

Weekend
Off
 Yes
 No
 No
 Yes

Annual
Holidays
 10
 8
 15
 10

Career
Progression
 High
 Low
 High
 Medium

Job
Sa:sfac:on
 Medium
 Low
 High
 Medium

Domes:c
Travel
 High
 Low
 High
 Low

Int’l
Travel
 Medium
 Low
 Medium
 Low

Future
Study
Possibility
 Medium
 High
 Low
 High

Future
Self‐
High
 Low
 High
 Medium

Employment
Possibility


Each objective should be described on the same scale

 ALTERNATIVES

 I.T.
Company
 Credit
Ra<ng

 T.V.
Journalist
 Bank

/
OBJECTIVES
 Agency

Salary
 30,000
 22,000
 25,000
 20,000

Perks
 5,000
 5,000
 Nil
 8,000

Loca:on*
 Far
City
 Near‐by
City
 Far
City
 Own‐City

Saving
Poten:al**
 7,400
 5,400
 1,000
 10,000

Working
Hours
 Very
Long
 Regular
 Shia‐duty
 Long

*For
“Loca:on”,
‘Far
City’
implies
a
rental
of
9,600;
‘Near‐by
City’
implies
a

Weekend
Off
 Yes
 No
 No
 Yes

commute
expense
of
3,600;
and
‘Own
City’
implies
no
addi:onal
expense.

Annual
Holidays
 10
 8
 15
 10

Career
Progression
 High
 Low
 High
 Medium

**
“Saving
Poten:al”
has
been
calculated
by
assuming
expenses
of
18,000

and
deduc:ng
this
expense
plus
loca:on
expense
from
salary
plus
perks

Job
Sa:sfac:on
 Medium
 Low
 High
 Medium

amount;
e.g
for
I.T.
Company
op:on
Saving
Poten:al
=
(30,000
+
5,000)
–

Domes:c
Travel

(18,000
+
9,600)
=
7,400
High
 Low
 High
 Low

Int’l
Travel
 Medium
 Low
 Medium
 Low

Study
Possibility
 Medium
 High
 Low
 High

Self‐Employment

High
 Low
 High
 Medium

Possibility

e) Simplify Analysis
To simplify analysis, in the
Consequences Table,
rate each objective from best to
worst.

Use an appropriate scale.

For our job decision consequences
table lets rate the best option as 1
and worst option as 4

Options that are rated same have

the same score (i.e. a tie)

Our Consequences Table now looks

like this...
 ALTERNATIVES

 I.T.
 Credit
Ra<ng

 T.V.
Journalist
 Bank

/
OBJECTIVES
 Company
 Agency

Salary
 1
 3
 2
 4

Perks
 2
 2
 3
 1

Loca:on*
 3
 2
 3
 1

Saving
Poten:al
 3
 2
 3
 1

Working
Hours
 4
 1
 3
 2

Weekend
Off
 1
 2
 2
 1

Annual
Holidays
 2
 3
 1
 2

Career
Progression
 1
 3
 1
 2

Job
Sa:sfac:on
 2
 3
 1
 2

Domes:c
Travel**
 1
 2
 1
 2

Int’l
Travel**
 1
 2
 1
 2

Future
Study
Possibility
 2
 1
 3
 1

Future
Self‐Employment

1
 3
 1
 2

Possibility

*Assuming
that
you
prefer
‘Own‐City’
or
‘Near‐by
City’
to
Far
City
(you
don’t
want
to
relocate)

**You
don’t
want
hec:c
domes:c
travel
but
would
love
interna:onal
travel

Assuming that you are really interested in net Saving
Potential, we can do away with the Salary and Perks
objective:

ALTERNATIVES

 I.T.
Company
 Credit
Ra<ng

 T.V.
Journalist
 Bank


/
OBJECTIVES
 Agency

Salary
 1
 3
 2
 4

Perks
 2
 2
 3
 1

Saving
Poten:al
 3
 2
 3
 1

Summary of STEP-4
4. Work out Consequences
a)  Assess the alternatives
b)  Create a ‘Futures Scenario’
c)  Rate each consequence
d)  Construct a ‘Consequences
Table’
e)  Simplify analysis by rating
options from good to worst
5. Make Trade-offs
a) Analyze the alternatives
1.  Compare two alternatives at a time

2. See if one of them is better than the other for

all objectives, and no worse

3. Such an objective is called a ‘Dominant

Objective’

4. At times one objective could, for all practical

purposes, dominate another objective
 In our table ‘Bank’ alternative
ALTERNATIVES

 Credit
Ra<ng

 Bank
 is better than ‘Credit Rating
/
OBJECTIVES
 Agency
 Agency’ for location, saving
potential, weekend off, annual
Loca:on
 2
 1
 holidays, career progression,
Saving
Poten:al
 2
 1
 job satisfaction and own
business potential objectives
Working
Hours
 1
 2

Weekend
Off
 2
 1
 It has same rating for
domestic travel, international
Annual
Holidays
 3
 2

travel and study possibility.
Career
Progression
 3
 2

Only on working hours
Job
Sa:sfac:on
 3
 2

objective credit rating agency
Domes:c
Travel
 2
 2
 is better.
Int’l
Travel
 2
 2

For all practical purposes
Future
Study
Possibility
 1
 1
 Bank is a better option than
Future
Self‐Employment
 Credit Rating Agency.
3
 2
 So we eliminate Credit Rating
Possibility

Agency as a choice.
 ALTERNATIVES

 I.T.
 Credit
Ra<ng

 T.V.
Journalist
 Bank

/
OBJECTIVES
 Company
 Agency

Loca:on
 3
 2
 3
 1

Saving
Poten:al
 3
 2
 3
 1

Working
Hours
 4
 1
 3
 2

Weekend
Off
 1
 2
 2
 1

Annual
Holidays
 2
 3
 1
 2

Career
Progression
 1
 3
 1
 2

Job
Sa:sfac:on
 2
 3
 1
 2

Domes:c
Travel**
 1
 2
 1
 2

Int’l
Travel**
 1
 2
 1
 2

Future
Study
Possibility
 2
 1
 3
 1

Future
Self‐Employment

1
 3
 1
 2

Possibility

b) Make “Even Swaps”
See if you can eliminate some objectives by making them equal
for all options (so that they do not have any influence on the
decision), by compensating another objective.

1.  E.g for Annual Holidays objective the rating is same for
Bank and IT Company but better for TV journalist.

2. However, TV Journalist job does not offer weekends off,

as do IT Company and Bank.

3. Thus, TV Journalist job will have 53 less Saturdays off and

hence the 5 extra holidays it offers is meaningless.

4. So we can eliminate ‘Annual Holidays’ objective as it is not a

decision influencer.
 ALTERNATIVES

 I.T.
 T.V.
Journalist
 Bank

/
OBJECTIVES
 Company

Loca:on
 3
 3
 1

Saving
Poten:al
 3
 3
 1

Working
Hours
 4
 3
 2

Weekend
Off
 1
 2
 1

Annual
Holidays
 2
 1
 2

Career
Progression
 1
 1
 2

Job
Sa:sfac:on
 2
 1
 2

Domes:c
Travel**
 1
 1
 2

Int’l
Travel**
 1
 1
 2

Future
Study
Possibility
 2
 3
 1

Future
Self‐Employment

1
 1
 2

Possibility

Our Consequences Table now looks like this:

ALTERNATIVES

 I.T.
 T.V.
Journalist
 Bank


/
OBJECTIVES
 Company

Loca:on
 Far
City
 Far
City
 Own‐City

Saving
Poten:al
 7,400
 1,000
 10,000

Working
Hours
 Very
Long
 Shia‐duty
 Long

Weekend
Off
 Yes
 No
 Yes

Career
Progression
 High
 High
 Medium

Job
Sa:sfac:on
 Medium
 High
 Medium

Domes:c
Travel
 High
 High
 Low

Int’l
Travel
 Medium
 Medium
 Low

Future
Study
Possibility
 Medium
 Low
 High

Future
Self‐Employment

High
 High
 Medium

Possibility

We make more even swaps...
To make Bank’s Career Progression rating High, so that
it becomes same as IT Company and TV Journalist, we
make working hours 'very long', assuming that hard
work will lead to brighter chances for promotion.

ALTERNATIVES

 I.T.
Company
 T.V.
Journalist
 Bank


/
OBJECTIVES

Long


Working
Hours
 Very
Long
 Shia‐duty

Very
Long

Medium

Career
Progression
 High
 High

High


Career
Progression
 High
 High
 High


Better career progression in the Bank brightens the chances
of self-employment in future - say consulting work
possibilities open up.

Since Self-Employment possibility is now high for all

alternatives, we can eliminate this objective because it is no
longer a decision influencer:

ALTERNATIVES

 I.T.
Company
 T.V.
Journalist
 Bank


/
OBJECTIVES

Working
Hours
 Very
Long
 Shia‐duty
 Very
Long

Future
Self‐Employment
 Medium

High
 High

Possibility
 High

Future
Self‐Employment

High
 High
 High

Possibility

Working Hours, being very long for IT Company and Bank
and being Shift Duty for TV Journalist, for all practical
purposes we can deem the three options equal.

Hence, we can eliminate Working Hours objective.

ALTERNATIVES

 I.T.
Company
 T.V.
Journalist
 Bank


/
OBJECTIVES

Working
Hours
 Very
Long
 Shia‐duty
 Very
Long

These are the even swaps we have just made:

ALTERNATIVES

 I.T.
Company
 T.V.
Journalist
 Bank


/
OBJECTIVES

Loca:on
 Far
City
 Far
City
 Own‐City

Saving
Poten:al
 7,400
 1,000
 10,000

Working
Hours
 Very
Long
 Shia‐duty
 Very
Long

Weekend
Off
 Yes
 No
 Yes

Career
Progression
 High
 High
 High

Job
Sa:sfac:on
 Medium
 High
 Medium

Domes:c
Travel
 High
 High
 Low

Int’l
Travel
 Medium
 Medium
 Low

Study
Possibility
 Medium
 Low
 High

Self‐Employment

High
 High
 High

Possibility

Our Consequences Table now looks like this:

ALTERNATIVES

 I.T.
Company
 T.V.
Journalist
 Bank


/
OBJECTIVES

Loca:on
 Far
City
 Far
City
 Own‐City

Saving
Poten:al
 7,400
 1,000
 10,000

Weekend
Off
 Yes
 No
 Yes

Job
Sa:sfac:on
 Medium
 High
 Medium

Domes:c
Travel
 High
 High
 Low

Int’l
Travel
 Medium
 Medium
 Low

Future
Study
Possibility
 Medium
 Low
 High

1.  Talking with people in the TV Journalism profession you
find that glamour doesn’t come easy or early!

2. So you decide to revise its Job Satisfaction to Medium.

3. It is now equal for all options and hence can be eliminated

ALTERNATIVES

 I.T.
Company
 T.V.
Journalist
 Bank


/
OBJECTIVES

Loca:on
 Far
City
 Far
City
 Own‐City

Saving
Poten:al
 7,400
 1,000
 10,000

Weekend
Off
 Yes
 No
 Yes

Job
Sa:sfac:on
 Medium
 High
Medium
 Medium

Domes:c
Travel
 High
 High
 Low

Int’l
Travel
 Medium
 Medium
 Low

Future
Study
Possibility
 Medium
 Low
 High

The IT Company alternate now dominates TV
Journalist option

Thus, the TV Journalist option can be eliminated.

ALTERNATIVES

 I.T.
 T.V.


/
OBJECTIVES
 Company
 Journalist

Loca:on
 Far
City
 Far
City

Saving
Poten:al
 7,400
 1,000

Weekend
Off
 Yes
 No

Domes:c
Travel
 High
 High

Int’l
Travel
 Medium
 Medium

Future
Study
Possibility
 Medium
 Low

Our ‘Consequences Table’ now looks like this:

ALTERNATIVES

 I.T.
 Bank


/
OBJECTIVES
 Company

Loca:on
 Far
City
 Own‐City

Saving
Poten:al
 7,400
 10,000

Weekend
Off
 Yes
 Yes

Domes:c
Travel
 High
 Low

Int’l
Travel
 Medium
 Low

Future
Study
Possibility
 Medium
 High

Between the IT Company and Bank options, Bank
dominates on all objectives except International Travel.
Thus, for all practical purposes, BANK is a better option.

ALTERNATIVES


/
OBJECTIVES

I.T.

Company
 d

Bank


Loca:on
 Far
City
 Own‐City


Saving
Poten:al
 7,400
 10,000

Weekend
Off
 Yes
 Yes

Domes:c
Travel
 High
 Low

Int’l
Travel
 Medium
 Low

Future
Study
Possibility
 Medium
 High


You can accept the Bank offer

OR…
c) Revisit your objectives
You could revisit your
objectives to ensure you have
analysed the consequences
completely.

For example, you could try to

figure out the future Savings
Potential of both jobs (say in 3
years time).

If Bank job still proves a

better option then it is indeed
your best bet!
Summary of STEP-5

5. Make Trade-offs
a)  Analyze the alternatives
b)  Make ‘Even Swaps’
c)  Revisit your objectives
DECISION MAKING PROCESS
- SUMMARY
1.  Define the problem, completely
2.  Define the objectives, by looking at varied desired
outcomes
3.  Work out Alternatives, by looking the decision problem
from various perspectives
4.  Figure out the Consequences, and ask yourself if you are
comfortable with these outcomes
5.  Make intelligent trade-offs to arrive at a good decision
What next?
•  Your cognitive biases, risk appetite and uncertainties
further influence the decision making process.

•  Intuition also has a role to play, usually only when you

have lot of knowledge and experience in the domain.

•  We will consider all these factors that effect decision

making in another module.
You can join the learning
conversations that deepen
your understanding of life
skills essential for success
in the 21st century
@
www.facebook.com/lifeskills
About the Author
Co-founder www.EnablingDimensions.com
(a company providing bespoke elearning and knowledge management solutions)

Co-founder www.TimelessLifeskills.co.uk
(a company providing learning solutions on life skills essential for success
in the 21st century)

Blog: http://atulpant.blogspot.com

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