WHAT IS DECISION MAKING? Decision making describes the process by which a course of action is selected as a way to deal with specific problems. Decision making is a major and important task for managers as the quality of managers decisions is the yardstick of the effectiveness and value to the organisation. Decision making is a systematic process and involves a series of steps.
THE PROCESS/STEPS OF DECISION MAKING
IDENTIFYING THE PROBLEM It involves 3 stages Scanning,Categorization and Diagnosis. Scanning stage involves monitoring the environment for changes that may indicate the emergence of a problem. The categorization stage attempts to understand the performance gap,at this point the manager categorize the situation as problematic or not. The diagnosis stage involves gathering relevant facts and other additional information about the problem.The level of discrepancy and the causes of it is identified.
Identifying the resources and constraints Anything that can be used to to solve the dentified problem is a resource,these includes people,money,material,time,equipment,expertise and information. Constraints are the factors that limit the managers efforts to solve the problem ie,hindrances to problem solving. The listing of resources of the business helps managers to utilise it to the best extent possible and knowledge about constraints alerts managers to the presence of various bottlenecks that could create problems.
GENERATING ALTERNATIVE SOLUTIONS Feasible alternative solutions should be explored by the managers before taking any major decisions. Generating a number of alternatives by way of brainstorming,group decision making etc increases the chances of arriving at an effective decision. While determining the amount of time to be spent on gathering alternatives,theimportance of the problem and the fact that how accurately the manager is able to differentiate between alternatives(depends on availability of data & cost of evaluating data) should be considered.
EVALUATING ALTERNATIVES Alternatives need to be evaluated considering its pros and cons and to see how effective it would be. Based on 5 criteria alternatives are evaluated;feasibility,quality,acceptability,cost and ethics.
SELECTING AN ALTERNATIVE After evaluation the best alternative need to be selected for which managers can make use of 3 basic approaches ie,Experience,Experimentation and Research & Analysis. Whatever approach the decision maker may adopt in selecting an alternative he must bear in mind that the selected alternative should be acceptable to those who implement it & those who will get affected by the chosen decision. Failure to meet this condition means failure of the decision making process.
IMPLEMENTING THE DECISION The selected alternative should be implemented properly to achieve the objective for which it was selected because it is possible that a good decision become ineffective due to poor implementation. Two factors are to be considered in this process;careful planning and sensitivity to those who implement the decision & those who get affected by it.
MONITORING THE DECISION To ensure that the decision is progressing according to the plan &problem that initiated the decision making process has been resolve. Assertaining feedbacks on the implemented decision to determine the effectiveness of the chosen alternative. A set of standards against which actual performance can be compared,availability of performance data for comparison & a data analysis strategy need to be made for the effective monitoring of the decision.
TYPES PROGRAMMED DECISIONS Those that deal with simple,common,frequentlyoccuring problems that have well established & understood solutions. These decisions are made in routine,repetitive,well structured situations using predetermined decision rules that may be based on habit,established policies & procedures.
NON-PROGRAMMED DECISION Those that deal with unusual or exceptional problems & which require very careful analysis and study. Predetermine rules are impractical for such decisions and it involves lots of uncertainity. Each situation is unique and distinct from others and require enormous amount of time,energy & resource to explore the situation from all perspective.
Irreversible: These decisions are permanent. Once taken, they can't be undone. The effects of these decisions can be felt for a long time to come. Such decisions are taken when there is no other option. Reversible: Reversible decisions are not final and binding. In fact, they can be changed entirely at any point of time. Delayed: Such decisions are put on hold until the decision maker thinks that the right time has come.Such decisions give one enough time to collect all information required and to organize all the factors in the correct way.
Quick Decisions: These decisions enable one to make maximum of the opportunity available at hand. In order to be able to take the right decision within a short span of time, one should also take the long-term results into consideration. Experimental:This approach is used when one is sure of the final destination but is not convinced of the course to be taken. Trial and Error: This approach involves trying out a certain course of action. If the result is positive it is followed further, if not, then a fresh course is adopted
Conditional: Conditional decisions allow an individual to keep all his options open. He sticks to one decision so long as the circumstances remain the same. Once the competitor makes a new move, conditional decisions allow a person to take up a different course of action. Authoritative: In authoritative type of decision making the leader is the sole decision maker which subordinates follow. The leader has all the information and expertise required to make a quick decision.
Facilitative: In facilitative type of decision making, both the leader and his subordinates work together to arrive at a decision. Consultative: consultative decisions are made in consultation with the subordinates. Delegative: the leader passes on the responsibility of making decisions to one or more of his subordinates..