The decision Making process
Decision making is a daily activity for any human being. There is no exception about that.
When it comes to business organizations, decision making is a habit and a process as well.
Effective and successful decisions make profit to the company and unsuccessful ones make losses.
Therefore, corporate decision making process is the most critical process in any organization.
In the decision making process, we choose one course of action from a few possible alternatives.
In the process of decision making, we may use many tools, techniques and perceptions.
In addition, we may make our own private decisions or may prefer a collective decision.
Usually, decision making is hard. Majority of corporate decisions involve some level of dissatisfaction or conflict with another party.
Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions. Using a step-by-step decision-making process can help you make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives.
Step 1: Identification of the purpose of the decision
In this step, the problem is thoroughly analysed. There are a couple of questions one should ask when it comes to identifying the purpose of the decision.
What exactly is the problem?·
Why the problem should be solved?·
Who are the affected parties of the problem?·
Does the problem have a deadline or a specific time-line?
Step 2: Principles for judging the alternatives
In this step, the baseline criteria for judging the alternatives should be set up. When it comes to defining the criteria, organizational goals as well as the corporate culture should be taken into consideration.
Step 3: Brainstorm and analyse the different choices
For this step, brainstorming to list down all the ideas is the best option. Before the idea generation step, it is vital to understand the causes of the problem and prioritization of causes.
For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps you to identify all possible causes of the problem and Pareto chart helps you to prioritize and identify the causes with highest effect.
Then, you can move on generating all possible solutions (alternatives) for the problem in hand.
Step 4: Execute the decision
Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of subordinates.
Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future decision making. This is one of the best practices that will improve your decision-making skills.
Conclusion
When it comes to making decisions, one should always weigh the positive and negative business consequences and should favour the positive outcomes.
This avoids the possible losses to the organization and keeps the company running with a sustained growth. Sometimes, avoiding decision making seems easier; especially, when you get into a lot of confrontation after making the tough decision.
But, making the decisions and accepting its consequences is the only way to stay in control of your corporate life and time.
The Advantages of Decision Making Strategies in Management:
Decision making s related to planning, organizing, directing and controlling functions of a manager. Decision making is important to achieve the organizational goals/objectives within given time and budget. Decision-making is a pervasive function of managers aimed at achieving organizational goals.
Making solid decisions is a necessary management skill. Because it is a route to possible failure, many managers are uncomfortable with making decisions, choosing to follow orders from superiors instead. While no person makes the right decision 100 percent of the time, having a strategy that guides management’s decision-making fosters confidence in the process and the results of management decisions.
10 Group decision-making techniques your team needs to know
1 Brainstorming
A brainstorming session is a type of group decision making that can be really effective when you need to raise potential ideas and solutions.
This offers a free-flowing structure to the discussion and allows the whole team an opportunity to share their ideas on how to approach a particular situation.
The main goal of brainstorming is to come up with as many suggestions as possible and to then decipher which idea may be the best approach.
These meetings are a little more geared towards generating ideas than coming to a final decision but often, one idea stands out from others and can be selected as the most effective solution.
2 The Delphi Method
The Delphi technique is a good option when you need to reach a group consensus for a major decision.
This group decision-making process takes all of the ideas generated by your team and compiles them for the leader of the group to break down into a smaller list of possible approaches.
Those fewer options are then taken back to the group for further discussion and collective consideration.
Essentially, the choices are condensed until a majority decision can be made.
The idea is that when there are fewer options available a decision is reached with much more ease and with collective agreement from you and your team members.
3 Weighted Scoring
Weighted scoring is ideal to use in a situation where your team has many ideas for possible solutions but have not necessarily considered the implications of each decision thoroughly.
The weighted scoring technique is founded on the idea that certain ideas or approaches may be riskier than others and therefore their implications need to be considered.
Each item is evaluated against criteria such as the business value, costs, risks, and adoption.
Each of these criteria is assigned a score based on the weighting (impact) of them.
You’re looking for an approach that will score high in business value, high in adoption, score low in cost, and low in risk.
After weighing each idea, you can tally up the scores to make an informed team decision.
4 Nominal Group Technique
The nominal group technique builds on the brainstorming discussion by including a voting process at the end.
Not only does each group member cast a vote, but each person is given the opportunity to also give an explanation as to why they voted for whichever decision or option and why they feel as if it’s the best choice.
Depending on the topic of discussion, there are a few different ways that you can use the nominal group technique.
If the topic is more sensitive or controversial, you may want to engage your team with a survey with the option to remain anonymous.
Otherwise, this technique can be used during your meeting in an open discussion.
5 Possibility Ranking
Possibility ranking means determining the best option through using a voting system or creating a list as a team to prioritize ideas and approaches.
When you’re trying to make a collective decision about a question or issue that has many different potential outcomes, this can be a great group decision-making technique to engage.
This technique can be used in an email, in a survey, or in your live meeting.
You can begin with asking everyone to make a personal list of how they might rank different options or approaches and then combine lists to see if there are common opinions amongst the group so that you can come to a consensus.
After you determine the average of the best option, you can take that approach knowing that the majority support it and agree with it.
6 The Stepladder Technique
Similar to the Delphi method, the stepladder technique encourages each team member to give their personal opinion on a matter, before anyone can be influenced by the rest of the group.
This prevents groupthink and encourages authenticity and honesty in your team members’ answers. There are a few steps required for this approach:
Step 1: Before meeting as a group, present the task to your team. Make sure to give enough time to everyone to think about their opinion or decision on how to best accomplish the task at hand.
Step 2: Create a core group of two members and have them discuss the task or issue.
Step 3: Add a third group member to the core group. This third member presents ideas to the first two members before they hear the ideas that have already been spoken about. After all three members have laid out their solutions and ideas, they discuss their options collectively.
Step 4: Repeat the same process by adding a fourth member, fifth, sixth and so on, to the group. Make sure that there’s enough time for discussion after each added member has presented their views.
Step 5: Make a final decision after everyone has been brought in and shared their ideas.
7 Pros and Cons list
In business, a pros and cons list is often referred to as Dialectical Inquiry and can actually be quite effective.
Dialectical inquiry is a group decision-making approach that tries to fight against groupthink.
Philosophical in nature said to have originated with Plato, this group decision-making technique asks group members to consider both the thesis and antithesis to any idea.
When using this technique, split participants into two groups: those advocating for an idea and those advocating against it.
Each group has the chance to explain and highlight why they feel as if their decision will produce the best business outcomes and why the alternative opinion may not make as much sense.
8 Didactic Interaction
Didactic interaction is similar to your pros and cons list or do dialectical inquiry, but unfolds a little differently.
This approach is only applicable in certain situations but works very well when the right opportunity arises.
The type of problem should be such that it results in a “yes” or a “no” solution. These are typically major decisions that will have a large impact on the way the business operates and will affect each employee as well. Such types of decisions require extensive and sometimes exhaustive discussions that can be time-consuming. Using this approach, you can simplify the process of investigation, waste no time and get straight to the point, without asking for any kind of elaboration.
9 Decision-trees
The decision tree technique is great for forecasting outcomes to different decisions.
Decision trees are highly visual and operate as a type of non-linear mind map so that you can predict how certain approaches to a situation may turn out.
Because this model of decision-making isn’t linear, you and your team can come up with creative ideas and make multiple potential decisions to understand which one has the most beneficial outcome.
The decision tree starts out with one question, which is the root of the tree, which then branches out into many different possibilities.
Branches will lead to nodes (outcomes) and subsequently, you can add a leaf, marking a rule or final decision.
10 Consensus Mapping
Consensus mapping begins with your team generating and developing ideas. It then attempts to arrive at a decision by pooling these ideas together, which have been generated by several task subgroups.
The ideas generated by the task sub-groups are further developed collectively and then narrowed down into a smaller number of ideas, with a stronger focus.
Subsequently, all the ideas are again narrowed down into an even smaller number of ideas until the group is able to come to a mutually acceptable solution to the problem or situation.
This technique is best suited for multi-dimensional problems, with interconnected relationships throughout the business, and involves several steps to coming to a final decision.
Best practices for group decision-making
Now that we’ve gone through some of the best group decision making techniques, we’ll leave you with some best practices to make collective decisions more effectively:
Be clear about the decision being made
Respect participants’ time
Be mindful of deadlines or other time restrictions
Be sure all opinions are respected
Don’t allow one or two people to dominate all discussion
Decision Making: Tools and Procedures
The following are the five important elements of decision-making:
Concept of good decision.
Environment of decision.
Psychological elements in decision.
Timing of decision.
Communication of decision.
Concept of Good Decision:
The most important task before the manager of any enterprise is to take a good decision.
The objectives of an enterprise can be achieved only by a good decision.
A good decision is always acceptable to all reasonable persons and is based on sound judgement and factual informations.
No decision should be taken without examining the situation, correlating it with the facts and scientifically analysing the facts.
Such a decision satisfies the concept of good decision.
Environment of Decision:
The success and failure of the whole enterprise depends on the nature; procedure and standard of a decision taken by its manager.
The organisational environment and formal structure decides the relationship between units on the one hand and individuals on the other.
This relationship forms the basis of environment prevailing in an organisation and indirectly affects a decision.
Similarly, political, social and economic situation in and outside the organisation affects a decision which the manager takes for implementation by the enterprise.
Psychological Elements is Decision:
Every manager takes decision on the basis of the given facts, information and scientific analysis.
But out of many alternatives his choice falls on this element.
It is this choice on which his psychological impact is felt. In fact psychologically manager comes closer to the choice and that is why he feels like choosing the one which he feels is in the best interest of the whole enterprise.
The manager’s habits, temperament, social environment, upbringing, domestic life and political leanings all have a trace on his choice of alternative, consequently on his decisions.
Timing of Decisions:
Decision if taken at a time when it is needed helps the management in achieving the objectives more successfully.
Any decision taken in time obviously leaves a lasting impression on the minds of those who are affected by the decision.
The impact of the decision will have lasting effect on the personnel of the enterprise and its effect will be on the working of the enterprise.
Communication of Decision:
The communication of decision is as important as taking of the decision. Both go together. Decisions if not properly and timely communicated carry no weight howsoever important or good they may be.
A good decision is based on scientific analysis of facts and is taken and communicated when it is needed the most.
Principles of Decision Making:
Eminent authors of management are of this opinion that on right and appropriate decisions, the success and failure of the enterprise depend.
Therefore, a manager has to take all precautions before arriving at a decision.
Following are the important principles which may be taken into consideration while taking decision:
Marginal Theory of Decision-Making:
Marginal theory of decision-making has been suggested by various economists. According to economists marginal analysis of a problem is based on Law of Diminishing Returns. From every extra unit of labour and capital the production diminishes and a time comes when the increase in production stops with 'zero'.
The marginal principle can be effectively used while taking decision on matters relating to – (i) production, (ii) sales, (iii) mechanisation, (iv) marketing, (v) advertising, (vi) appointment and other matters where marginal theory can be scientifically and statistically used and a good decision is rendered possible.
Mathematical Theory:
The decision-making techniques used by managers today are very much influenced by the theories of game theory, probability theory and waiting theory.
Psychological Theory:
The manager's aspirations, personality, habits, temperament, political leanings and social and organisational status, domestic life, technological skill and bent of mind all play a part in decision-making.
Decision-making is a mental process and the psychology of those who are deliberating and of the person who take the final decision has a definite say in it.
Principle of Limiting Factors:
The principal principle of a decision-maker is that he takes cognizance to only those alternatives which suit the time, purpose and circumstances and which can be properly and thoroughly analysed considering the human capacity.
The decisions taken are based on limited factors but they are supposed to be good because they are the only possibility.
Principle of Alternatives:
Decision is an act of choice. It is a selection process.
Out of many available alternatives the manager has to choose the one which he considers best in the given circumstances and purpose.
Principle of Participation:
This principle is based on human behaviour, human relationship and psychology.
Every human being wants to be treated as an important person if it is not possible to accord him a V.I.P. treatment.
This helps the organisation in getting maximum from every person at least from those who have been given place of importance and honour.
Participation signifies that the sub-ordinates, even if they are not concerned, should be consulted and due weightage should be given to their viewpoint. Japanese do this.
Japanese institutions – The Japanese debate a proposed decision throughout its length and breadth of the organisation until there is an agreement. Principle of participation – Firstly, aims at the development and research of all possible alternatives. Secondly, asks for debating and deliberating by more and more people so as to know the mind of all.
Further, the principle of participation is becoming popular due to following reasons:
The participants feel that the business is their own of which they are important parts;
Opposition to a decision is considerably reduced, and those who are to carry the decision are gladly accepting even if any change is being introduced;
Guidance and directions function of management are being easily performed;
Decisions are the result of best possible selection of the alternatives, therefore decisions may yield results to the advantage of the organisation on the expected lines;
Increase in the efficiency of workers
Development of co-ordinated efforts
Development of good human relations
Development of team spirit and better understanding because of good human relations.
Managers are more interested in eliciting the participation of workers with their decisions with a view to get more co-operation and exercise effective control over them. Assurance of growth and prosperity to both the organisation as well as the whole working force – managerial, supervisory and operating.
According to Stanley Vance decision-making consists of the following six steps:
Perception.
Conception.
Investigation.
Deliberation.
Selection.
Promulgation
Perception:
Perception is a state of awareness.
In a man consciousness arises out of perception.
Consciousness gives tilt to the decision-making process.
Perception is, therefore, an important and first step without which decisions relating to any of the problems of the organisation cannot be taken.
Other steps follow "perception" is the first step in decision-making.
Conception:
Conception means designs for action or programme for action.
Conception relates to that power of mind which develops ideas out of what has been perceived.
Investigation:
The investigation provides an equipment with the help of which the manager tries to go ahead with a debate either in his mind independently or with his co-workers.
Perception is a sort of location of the problem whereas conception is the preparation of design or programme for solving the problem.
But only perception and conception cannot offer the solution.
For solution investigation is to be carried out.
This needs investigation with which the manager should be armed.
Deliberation:
Weighing the consequences of possible course of action is called deliberation.
The manager may either weigh the relative merits and demerits and the following consequences in his own mind or share his mental exercise with others to equip himself better.
The deliberations remove bias and equip the manager with different ideas and alternatives and help him in arriving at a decision which may safely be ascribed as good decision.
Selection:
Selection is an act of the choice which in management terminology is known as decision.
After deliberations one of the alternatives, the best possible in the circumstances, is selected.
Promulgation:
Perception, conception, investigation, deliberation and lastly selection will carry weight only when selected – the chosen alternative, that is, the decision – is properly and timely communicated to all those who are concerned and for whom the decision is meant.
Only proper promulgation will help its execution.
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