Ethics and Decision Making in Business Establishment Essay

When doing this, the first step is to look at the risks you face and determine if they have a high or low probability of occurring. You can use a Risk Assessment Matrix (RAM) to do this. To create a Risk Assessment Matrix, draw a graph, matrix or simple table with a vertical axis marked as “Consequences” and a horizontal axis marked as “Probability”. Use a simple scale of 0 (very small) to 5 (very large). “Consequences” are credible potential worst-case scenarios that may develop. “Probabilities” are your best assessments of the likelihoods that individual consequences will occur.

Now brainstorm the possible consequences to which you’re exposed, and then assess the risk of each consequence occurring. Where possible, base these assessment of risk on real-world evidence and experience. Then plot these on the RAM. You’ll find that that as you do this, your contingency planning priorities quickly become clear. Keep in mind that using a Risk Assessment Matrix is not an exact science: What it is is a useful visual tool for looking at the relative importance of each risk. This will allow for better planning and optimal outcomes when reactive decision-making must be relied on.

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But what to do when forced to make a reactive decision without having a plan in place? When this is the case, there is not time to complete a thorough RAM. Such a decision must be quickly made using appropriate reasoning, based on the best possible outcome. Making Unexpected Decisions Under Pressure For instance, a team leader unexpectedly walks off the job in the midst of the company’s largest project, jeopardizing the project’s outcome and negatively impacting other areas in which he or she is involved. Obviously, work must go on.

This is when it is important to make a quick reactive decision based on perceived risks and possible consequences. In such a case, it may be appropriate to gather the team and re-assign certain tasks so that everyone involved is taking up some of the responsibility left by the departing team leader. Or, perhaps appointing a new team leader is the best reactive decision to make. Whatever the decision, make sure to make it based on what’s best for all involved, while remaining mindful of the larger picture, i. e. possible risks and consequences.

Here it’s often not possible to achieve a perfect outcome – what you’re trying to do is control damage as best you can. Tip: Because reactive decision-making is based so much on people’s individual experiences, decisions made may vary from person to person. Also, because reactive decisions are often needed when emergencies occur, these can be some of the most difficult but important decisions one can make. Decision making is an essential leadership skill. If you can learn how to make timely, well-considered decisions, then you can lead your team to well-deserved success.

If, however, you make poor decisions, your time as a leader will be brutally short. Decision-making is a key skill in the workplace, and is particularly important if you want to be an effective leader. Whether you’re deciding which person to hire, which supplier to use, or which strategy to pursue, the ability to make a good decision with available information is vital. It would be easy if there were one formula you could use in any situation, but there isn’t. Each decision presents its own challenges, and we all have different ways of approaching problems.

So, how do you avoid making bad decisions – or leaving decisions to chance? You need a systematic approach to decision-making so that, no matter what type of decision you have to make, you can take decisions with confidence. No one can afford to make poor decisions. That’s why we’ve developed a short quiz to help you assess your current decision-making skills. We’ll examine how well you structure your decision-making process, and then we’ll point you to specific tools and resources you can use to develop and improve this important competency.