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# Decision making

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• 1. DECISION MAKING (A research report) Submitted by: SWARUPARANI SAHU (Sec: B, F11116)1. INTRODUCTION
• 2. A major part of decision making involves the analysis of a finite set of alternatives describedin terms of some evaluative criteria. These criteria may be benefit or cost in nature. Then theproblem might be to rank these alternatives in terms of how attractive they are to the decisionmaker(s) when all the criteria are considered simultaneously. Another goal might be to justfind the best alternative or to determine the relative total priority of each alternative (forinstance, if alternatives represent projects competing for funds) when all the criteria areconsidered simultaneously. Solving such problems is the focus of multi-criteria decisionanalysis (MCDA) also known as multi-criteria decision making(MCDM). This area ofdecision making, although it is very old and has attracted the interest of many researchers andpractitioners, is still highly debated as there are many MCDA / MCDM methods which mayyield very different results when they are applied on exactly the same data. This leads to theformulation of a decision making paradox.2. STAGES OF DECISION MAKINGDeveloped by B. Aubrey Fisher, there are four stages that should be involved in all groupdecision making. These stages, or sometimes called phases, are important for the decision-making process to begin:Orientation stage- This phase is where members meet for the first time and start to get toknow each other.Conflict stage- Once group members become familiar with each other, disputes, little fightsand arguments occur. Group members eventually work it out.Emergence stage- The group begins to clear up vague opinions by talking about them.Reinforcement stage- Members finally make a decision, while justifying themselves that itwas the right decision.3. DECISION MAKING STEPSEach step in the decision making process includes social, cognitive and cultural obstacles tosuccessfully negotiating dilemmas. Becoming more aware of these obstacles allows one tobetter anticipate and overcome them. Pijanowski (2009, p.7) developed eight stages ofdecision making based on the work of James Rest:
• 3. Establishing community: creating and nurturing the relationships, norms, and proceduresthat will influence how problems are understood and communicated. This stage takes placeprior to and during a moral dilemmaPerception: recognizing that a problem existsInterpretation: identifying competing explanations for the problem, and evaluating thedrivers behind those interpretationsJudgment: sifting through various possible actions or responses and determining which ismore justifiableMotivation: examining the competing commitments which may distract from a more moralcourse of action and then prioritizing and committing to moral values over other personal,institutional or social valuesAction: following through with action that supports the more justified decision. Integrity issupported by the ability to overcome distractions and obstacles, developing implementingskills, and ego strengthReflection in action: When in an organization and faced with a difficult decision, there areseveral steps one can take to ensure the best possible solutions will be decided. These stepsare put into seven effective ways to go about this decision making process (McMahon 2007).The first step -Outline your goal and outcome. This will enable decision makers to seeexactly what they are trying to accomplish and keep them on a specific path.The second step - Gather data. This will help decision makers have actual evidence to helpthem come up with a solution.The third step -Brainstorm to develop alternatives. Coming up with more than one solutionable to see which one can actually work.The fourth step - List pros and cons of each alternative. With the list of pros and cons, youcan eliminate the solutions that have more cons than pros, making your decision easier.The fifth step - Make the decision. Once you analyse each solution, you should pick the onethat has many pros (or the pros that are most significant), and is a solution that everyone canagree with.
• 4. The sixth step - Immediately take action. Once the decision is picked, you should implementit right away.The seventh step - Learn from, and reflect on the decision making. This step allows us to seewhat you did right and wrong when coming up, and putting the decision to use.4. VARIOUS DECISION MAKING MODELS KepnerTregoe Model Decision step models Six Thinking Hats Carnegie Decision Model Iterative Decision Model Vroom-Yetton-Jogo Decision Model Contingency Decision Model5. SEVEN STEP DECISION-MAKING MODELThis model was developed by Rick Roberts of the University of North Florida careerservices. It was designed for those who wanted a decision-making model to help withchoosing a career path or deciding what to do about a job offer. An important factor in themodel is information gathering. It is suggested that the more information thats available, theeasier it is to make decisions. So many of the steps are designed to do just this.The 7 steps : Identify the decision to be made - exactly what are you trying to decide? Know yourself - what are your strengths, weaknesses, skills, values and interests Identify options - list the various choices so far Gather information and data - about each alternative Evaluate options that will solve the problem, pros, cons and risks of each alternative
• 5. Select the best option- may be necessary to loop back and gather more info Develop a plan of action - and implement it!Pros and ConsThe 7 Step Decision Making Model was designed for career decision making and so can be abit cumbersome if applied to decisions that are not as significant. Not so useful for decidingbetween chocolate or vanilla ice cream, for example! Information overload may actuallyinhibit the decision making, as well as trying to figure out which information is relevant andwhich is not. And this model is not how we as humans naturally make decisions. The firststep in the 7 Step Decision Making Model is very important, whatever decision we have tomake. Sometimes just clarifying what the decision is, or what the question you wantanswered is, makes it much easier to decide.6. IMPROVE OUTCOMES USING DECISION MAKING TIPSHere are some decision making tips and ideas that can help to reach goals and fulfilpersonal or business vision. Decisions do not sit in isolation. A connected decisionframework can help reveal the decisions that should guide your current choice, as well as thedecisions that might be impacted. Avoid being surprised by misaligned choices andunintended consequences by considering the Connected Decisions before you decide. Thesetips avoid common decision errors, and as a guide to building your decision making skills.These tips for decision making are categorized as:Prioritization :Good decision making takes time and effort. Make time for important decisions by: Not spending effort on decisions that arent needed Establishing the value of a decision and prioritizing those with the highest value (and importance) Quickly deciding low value (less meaningful) choices that dont justify additional time or effort Delegating lower value decisions that can be made by others Moving faster on reversible choices and more carefully on decisions that will have immediate consequences that arent easily changed
• 6. Decision timing:The best decision timing is achieved when the value of a decision is maximized by balancingthe time needed to gain knowledge that informs the choice against the benefit loss that mayresult due to delay of decision implementation. The following decision making tips can helpin improving that balance. Characterize the success factors or goals for the decision as the minimum information that must be gathered. Benefits wont be gained from the decision if factors that create value havent been defined. Significant emotions can be involved that will motivate choosing too early or too late. If managing emotional responses becomes difficult, use an emotionally detached third party to help determine when best to decide. Give preference toward choosing sooner if information gathering and analysis efforts appear to be delaying clear benefits. Future outcomes always carry uncertainty, and making a decision may sometimes be the least expensive way to gain the knowledge of what will happen. Anticipate and be proactive for high value decisions. Strategic decision making can enable needed information and analysis efforts by considering choices well ahead of potential consequences. Dont let little choices accumulate. Apply time management techniques to your decision making to prevent a challenging backlog.Process :Have a decision making process. A well-developed process enables continued improvementwith each additional decision. A process can help reduce many of the biases and thinkingerrors that commonly occur when choosing.Consider these guidelines for your decisionmaking process: Record your decision efforts. It is hard to learn and improve from something that is not written down. Having things written also makes it possible to keep relevant information visible.
• 7. Define success factors or criteria in advance of considering options. This ensures your needs and desires are understood prior to being influenced by benefits from specific solution alternatives. Try to get a balanced set of success factors. Outcomes often fail because a critical need or desire was not considered. Determine alternatives before gathering data. The process should consider the consequences and possible outcomes of alternatives, including how the decision will be implemented. Give preference to objective data, but subjective data is better than no data. Evaluate all alternatives for the same criteria versus all criteria for the same alternative. This helps avoid bias for a specific option. Start evaluation with the most important success factors first in case the effort gets cut short. Communicate throughout the process. Many good decisions fail when those needing to support them are not included during the decision making process. Recognize the difference between the process and repeatedly making the same decision. A new situation and circumstances make it a new decisionEmotionsDo not ignore emotions, but do not let them keep you from thinking through an importantdecision objectively. Decision regret is wasted emotion. You cant change the past. Look forward. Use new information to make a new decision. We are continuously pressured to focus on insignificant, inappropriately urgent, or low value decisions. Keep breaking it down. Smaller decisions are easier to make. Our connected decision making model can helpMotivation and inspiration Not deciding is a decision not to act. Take responsibility and decide, even if it is to choose to not act now. Coaches motivate. They are available to help with decision making as well.
• 8. Changing a decision: Good decision making does not guarantee outcomes. The unexpected will happen. Always be open to new information, and be prepared to make a new decision if it becomes clear that decision goals and criteria will not be met. Being committed to a decision means changing slowly. Dont let emotions cause rapid changes in direction. Require the same (or higher) level of diligence for new information as when the decision was first made. Building skills: Learn about decision traps, biases and mistakes. Knowing about these common errors makes it possible to avoid them. Find out about alternative decision making techniques and try applying them to low risk decisions. Get some practice before you need to make an important decision. Identify or develop some brainstorming techniques that can be used togenerate decision alternatives. Play games that simulate life choices. This creates a low risk environment to build the patterns that can enhance intuition. Positive outcomes increase when the chances are in your favour. Learn about uncertainty and risk to improve your likelihood of success. Intuitive decision making can enhance effectiveness for choices where we have a lot of experience. Learn where intuition fits best, and decisions where it is best to apply a more rational analysis. Decision making skills improve with practice. Dont be afraid to choose.Values: It is difficult to have decisions deliver on what you value if you have not decidedwhat they are. Values last. So should your most important decisions. Consider short and long term consequences when you choose. Be careful of assumptive language and influencing. If others are making your decisions, you are living their values, not yours. Take responsibility for your choices.
• 9. Seeking information and avoiding overloadDistinguish fact from interpretation. A large amount of the information we use in decisionmaking is laden with interpretation that can bring up emotions that can lead to poor choices.Find decision making tools that can help address the cognitive overload that comes frominformation that is doubling every three years. The best tools will accelerate informationcollection by reusing knowledge gained from related and similar decision making efforts. Examine assumptions. Decision criteria and information important to a choice can often be hidden in the assumptions. Cross-check information with independent third parties where practical.Consider an outside opinion. An alternative viewpoint can expose biases that may be affecting the decision making effort. It doesnt require an expert. Consulting a friend or colleague that has made the same decision will likely provide valuable insight. Additional information gathering comes at a cost. Try to determine in advance what information will best inform your choice to limit the data gathering effort. Do the research. Effective decisions require reliable information7.CONSENSUS DECISION MAKINGIt is a group decision making process that seeks the consent, not necessarily the agreement, ofparticipants and the resolution of objections. Consensus is defined by Merriam-Webster as,first, general agreement, and second, group solidarity of belief or sentiment. It has its originin a Latin word meaning literally feel together. It is used to describe both the decision and theprocess of reaching a decision. Consensus decision-making is thus concerned with theprocess of reaching a consensus decision, and the social and political effects of using thisprocess.Consensus should not be confused with unanimity or solidarity.Objectives:As a decision-making process, consensus decision-making aims to be: Agreement Seeking: A consensus decision making process attempts to help everyone get what they need.
• 10.  Collaborative: Participants contribute to a shared proposal and shape it into a decision that meets the concerns of all group members as much as possible. Cooperative: Participants in an effective consensus process should strive to reach the best possible decision for the group and all of its members, rather than competing for personal preferences. Egalitarian: All members of a consensus decision-making body should be afforded, as much as possible, equal input into the process. All members have the opportunity to present, and amend proposals. Inclusive: As many stakeholders as possible should be involved in the consensus decision-making process. Participatory: The consensus process should actively solicit the input and participation of all decision-makers.8. INDIVIDUAL DECISION MAKINGGood decision making is a skill to be learned and mastered, especially for leaders who aremanaging a team. More importantly, individuals must also practice being good decisionmakers since it is not advisable to be too dependent on others for personal decisions.Thedownside of being too dependent on others is that you might have a hard time standing onyour own two feet when a situation would require you to make a choice without anyone’shelp. A better way to deal with it is to consult friends or trusted people who can advise youon the kind of decision you are about to make. They can give you tips, suggestions andwarnings before you implement it. This way, you are still on your own in arriving at a finaldecision.9. CATEGORIES OF DECISION MAKINGThere are three broad categories of decision making processes, rational and intuitive.Rational: These are by far and away the most common and when many people think ofdecision making, they typically consider some kind of rational model. The general idea hereis to weigh up the pros and cons, and work out the most sensible, logical option. There areusually a series of steps involved and these are done one after the other. These models ofteninvolve plugging information into a graph or chart. This information usually includes facts aswell as assumptions. And the scoring method is designed to produce the optimal decision.
• 11. Bounded rationality: Bounded rationality is the idea that in decision making, rationality ofindividuals is limited by the information they have, the cognitive limitations of their minds,and the finite amount of time they have to make a decision. It was proposed by HerbertSimon as an alternative basis for the mathematical modelling of decision making, as usedin economics and related disciplines; it complements rationality as optimization, which viewsdecision making as a fully rational process of finding an optimal choice given the informationavailable. Another way to look at bounded rationality is that, because decision-makers lackthe ability and resources to arrive at the optimal solution, they instead apply their rationalityonly after having greatly simplified the choices available. Thus the decision-maker isa satisfice, one seeking a satisfactory solution rather than the optimal one. Simon used theanalogy of a pair of scissors, where one blade is the "cognitive limitations" of actual humansand the other the "structures of the environment"; minds with limited cognitive resources canthus be successful by exploiting pre-existing structure and regularity in the environment.Intuitive: The main category is the intuitive model. These models do not depend on reasonand logic. The choice is reached usually by an intuitive knowing of what the best answer is.People talk about feeling it in their gut, listening to their heart and receiving visions orhearing voices.Other methods of decision making such as astrology, crystals, tarot cards, aroll of the dice, could also be considered to be intuitive models. They are not based on reasonand rationality; rather they are tapping into some inner wisdom.10. DECISION MAKING TOOLS AND TECHNIQUESOftentimes, people really have a difficult time deciding and choosing between or amongoptions. Indecisiveness is not something innate. An indecisive person can master the art ofgood decision making. One way to make this happen is to apply a practical technique whenmaking decisions.The various tools and techniques of decision making are very helpful in teaching people howto become quick and smart decision makers. There are so many of these decision makingtools and one can choose any of these techniques which seems applicable and useful for thesituation.Here are some of the common tools and techniques used by people in decision making:
• 12. Cost/Benefit-AnalysisA tool that allows the decision maker to simply compare the costs with the benefits ofsomethingSWOTThe acronym stands for Strengths, Weaknesses, Opportunities and Threats. It is a very usefuland effective tool for various situations in businesses and organizations wherein the strengthsand weaknesses are identified as well as the opportunities and threats in order to arrive atsound decisions.Pareto-AnalysisThis tool is useful in focusing on major causes for changes that will bring about huge benefitsto the decision maker.Stepladder-TechniqueThe technique works by managing the entry or admission of members in a decision makinggroup. It encourages every member to contribute ideas and alternatives to the group.StarbustingStarbursting is a process of gaining knowledge on new ideas through brainstorming but thefocus is more on the questions and not on the answers.PMIPMI tool is used for arriving at quick decisions that do not quite have problems. The acronymstands for Plus, Minuses, and Interesting points.11. STRATEGIES IN DECISION MAKINGWhen the need for a decision is caused by a problem or an issue, potential solutions may bepresented but only one option will be chosen. In the process of narrowing down the options toget to the most feasible choice, there are strategies in doing so.OptimizingIn this strategy, the most practical solution or alternative to the problem is chosen fromamong the list of possible alternatives. There are factors to be considered in optimizing:  significance of the problem  time availability
• 13.  cost involved  accessibility of tools and resources  personal values and beliefsSatisficingThe term came from the combination of “satisfactory” and “sufficient.” This strategy is doneby choosing the first satisfactory option over the best alternative.MaximaxMaximax means “maximize the maximums” which is a decision making strategy that openlytakes risks because the approach is choosing the alternatives based on their highest potentialsand most favourable outcomes.MaximinThe term is a combined form of “maximize the minimums.” In contrast to the maximaxstrategy, the decision maker settles for the alternative with the highest minimum payoff forfailures or negative outcomes.12. HOW TO MANAGE AND OVERCOME MENTAL SHORTCUTS TO DECISIONMAKINGWhat makes decision making difficult? Is it the inability of the person to take the decision oris it something more than that? To answer these questions will be the chief aim of this paper.Decision making requires not just an idea about what to decide but also the ability to tacklethe inherent obstacles present in everyone’s mind. Decision making is not something whichcan be taken lightly. At each stage of life, there will be some decision or the other that onemust take. Take for example a child. Even the child takes plenty of decisions. May be thenature of decision making and its impact is not that big, but eventually every person goesthrough this process of making a decision at every stage of life.Overcoming the mental obstacles in decision making is not that easy because the mind goesthrough a lot of thought processes while taking a decision. It is not just about taking somedecision at that moment and forgetting it. Decisions once taken are mostly of permanentnature and so it is important that the decision once taken is of the highest standard. Becauseof this, there is fair amount of pressure inside every person to take a good decision. This