Decision Making in Management

What is Decision Making ?  

Decision making is an important part of modern administration. Essentially, the primary function of management is logical and sound decision-making. That manager subconsciously or consciously takes hundreds and hundreds of decisions making it the key component in a manager's position. Decisions play important roles in deciding both administrative and organizational operations. A decision can be defined as a course of action intentionally chosen from a set of alternatives to achieve goals or objectives of organization or management. The decision-making process is a continuous and necessary part of the management of any organization or company. Decisions are made to support all business activities and the operation of the company.

Decisions are made at all leadership levels to ensure the achievement of organizational and company goals. Therefore, the decisions represent one of the key operational principles embraced and enforced by each organization in order to ensure maximum development and drivability in terms of the services and products provided.

As such, in the background of the following definitions, decision-making process can be further exemplified.

Definition of Decision Making

The term decision-making implies, according to the Oxford Advanced Learner's Dictionary-the process of deciding something important, particularly in a group of people or in an organization.

Trewatha & Newport describes the decision-making process as follows: "The decision-making process includes choosing a course of action from among two or more possible alternatives to find a solution to a particular problem."

As demonstrated by the foregone concepts, decision-making is a strategic activity made by a qualified committee to guide any organization's better functioning. It is thus a constant and complex operation that pervades all other organization-related activities. Because it is an ongoing practice, decision-making process plays a vital role in an organization's functioning. Since intelligent minds are involved in the decision-making process, in addition to mental maturity, it needs solid scientific expertise combined with skills and experience.

In fact, decision-making processes can be viewed as a method of checking and balancing that keeps the company through in both vertical and linear directions. This means the process of decision-making is searching for a target. The targets are pre-set business goals, tasks and vision of the organization. Business will face many challenges in financial, strategic, advertising and functional areas to achieve these goals. These problems are solved through a systematic system of decision-making. There is no decision as an end in itself, because new problems will develop to solve. Once one problem is solved another and so on occurs, such that, as mentioned earlier, the decision-making process is a continuous and dynamic process.

Decision Making Process Step # 1. Recognizing the Problem:

In the decision-making process, the first step is to consider circumstances where a decision is necessary because there is an opportunity, a challenge or a crisis.

Defining the problem is not an easy task in most situations. Chances and problems aren't that clear. What might often seem to be the real problem could be just the signs of the problems at best.

Nibbling on the problem's fingertips and addressing only the problem's symptoms, focusing on the wrong issue are futile attempts and premature decision-making. Superficial disruptions can be deceptive and the underlying problems can not be known. Management sees a personality clash that the real problem may be weak structure of the company.

Management sees a production cost issue and launch a cost reduction campaign, the real problem may be poor engineering design or poor sales planning. So apart from observing the symptoms, before identifying the problem, a director may well try to find out the limiting factors.

The critical factor assessment tries to determine the difference between what is going on in a particular situation and what is going to happen. The critical factor decides the difference between the desired results and the actual results.

The spark plug is the tactical variable if a scooter is not running because the spark plug needs replacement. The complexity of the strategic variable will change as the issue is correctly described, according to Barnard. After defining the problem, replacing the spark plug, a new situation will arise where the new limiting factor will get the plug, or have money to buy the plug if it is available nearby and so on.

Proper attention on all relevant factors will help to better define the problem, and it must be understood that when properly defined, the problem is half-solved.

Decision Making Process Step # 2. Analysing the Problem:

The decision-maker collects information at this point and seeks guidance. He collects as many facts as he can and attempts to separate them from prejudices, perceptions and preconceived notions. Every object is assessed carefully, it is weighted fairly, its validity is determined. It will delete irrelevant data and facts. The entire exercise helps to ensure sufficient background information and critical data related to the identified issue.

Of course, earlier, full information about the problem can be obtained. Some abstract variables often pressure the director on imperfect and coarse data to base his decisions. It is worth remembering that' the best doctor is not the person who can detect his own erroneous diagnosis early and correct it immediately.'

Understanding the size of the distance that forced him to guess will at least help in correctly crystallizing the problem.

Decision Making Process Step # 3. Generating Alternatives:

Usually, there are many ways to solve a business problem. No decision is made if there is only one alternative. But the director should not leap to a single suggestion in any logical decision-making process without weighing all the alternatives.

The decision maker is looking for existing alternatives at this point, changing them more efficiently, easier to implement and more readily available. If these alternatives are found to be inappropriate, modifying them can make them useful.

Totally unique alternatives are costly and time-consuming to develop and often difficult to execute working within these contrasts (existing Vs. unique alternatives). In this exercise, a director may include others to formulate possible courses of action. As Koontz points out, the ability to develop alternatives is often just as critical as making the right choice between alternatives.

To ensure that the best options are considered before a course of action is chosen, creativity research and creative imagination are needed. It would be enough to take no action at times. Taking no action is as much a decision as taking specific action. Searching for alternatives allows administrators to have creative abilities. It helps to focus enough time before it is finally resolved.

However, the existence of two or three good alternatives enables managers to thoroughly test each and every alternative's soundness before it is eventually put into practice. When one decision fails, the next one can be pressed into service without difficulties during the testing process.

Decision Making Process Step # 4. Evaluating Alternatives:

It's not an endless method to look for an alternative. It is not possible to express the whole spectrum of alternatives in black and white, there is a cutoff point. The decision-maker must balance alternative solution against each other once this point is reached. It is important to describe the problem effects of each solution.

The implications are sadly not always obvious. The decision-maker may well focus these alternatives as really important facts by using the' key variable analysis' to minimize time and effort. It is important to collect all relevant facts.

They must be listed and considered for and against, and the important facts must be separated from irrelevant facts. The basic purpose of seeking a magic solution should not be the analysis.

The aim should be to restrict the alternatives to an economically feasible amount that can be handled (two or three). Comparisons must be made on the basis of values, the beneficial and unacceptable aspects in each specified alternative, and the conflicting values must be resolved in a satisfactory way. This calls for subjective judgment. Practice can be the best teacher at times.

Decision Making Process Step # 5. Choosing the Best Alternative:

The decision maker evaluates the alternative in this process by evaluating it according to certain criteria (profit, price, service, performance, etc.). There are four criteria to choose the best among the possible solutions, according to Druker.

1. The risk:
The director has to weigh the risk against the anticipated benefits of each course of action. He has to determine how much uncertainty he can face and consider the solution that fits this point of view.

2. Economy of effort:
Obviously the best alternative to be chosen is the alternative that will offer the greatest production for the least material and human resources input. Instead of picking up an elephant gun to choose sparrows, administrators can choose the one that ensures that scarce resources are used effectively.

3. Timing:
When there is great pressure in the situation; the best approach is one that warns the business of potential dangers. On the other hand, if inconsistent effort is required, it may be better to have a slow start that will gain momentum.

Limitation of Resource:

External, financial and human resources restrict the option of these, the most critical resources whose weaknesses must be addressed are the people who will enforce the decision. Their vision, skill, understanding, and competence often determine the effectiveness of the organizational efforts.

The decision must give effect to their production or recruitment from outside sources in the next project if sufficient human resources are not currently available.

The cycle of choice is a demanding task. Often it's a painful process. It requires an uncanny ability to draw the curtain between factors that are controllable and uncontrollable, tangible and intangible, facts and predictions. The final decision is a result of analysis, assessment and deliberation. The reputation of the manager is at stake in some decisions, and he may risk antagonism and misunderstanding.

Managers usually rely on past experience to escape these unpleasant situations. Based on experience, routine problems are solved and unique problems such as the launch of a new product are solved through an experimentation process.

The time and expense involved in the testing process, however, make it a prohibitive task. Managers rely on the research and analysis methodology in the case of important decisions.

The problem and its relationship with various variables are presented in mathematical terms and put to further study and evaluation with the aid of computer and data processing machines, a theoretical framework-work is developed under consideration for the problem.

Decision Making Process Step # 6. Implementing and Verifying the Decision:

Implementation of the decision is as important as the formulation of the decision. A judgment of a director is always a decision about what other people should do. To order to avoid compliance issues, he must convey the decision, that is, show what attitude change is anticipated, what action is expected, and so on.

Therefore, how people react to it depends on successful implementation. Acceptance involves the participation of operators. Developing potential solutions to the problem is the most suitable phase for their participation.

They may add their ideas and suggestions at that point. The execution of the decision therefore includes: watching the decision as it becomes functional, changing it if necessary, training and perfecting the people who execute it once it is in practice. The decision verification process is very useful in the sense that it helps to identify the anomalies and helps to take corrective action in time.

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