decisions is on the short-run or immediate present, while it is on the longrum in the case of strategic decisions.
3. Organizational and Personal Decisions
Decisions taken by managers in the ordinary course of business in their capacity as managers relating to the organizational issues are organizational decisions. For example: decisions regarding introducing a new incentive system, transferring an employee, reallocation or redeployment of employees etc. are taken by managers to achieve certain objectives. As against such decisions, managers do take some decisions which are purely personal in nature. However, their impact may not exactly confine to their selves and they may affect the organization also. For example: the manager’s decision to quit the organization, though personal in nature, may impact for the organization.
4. Individual and Group Decisions
It is quite common that some decisions are taken by a manager individually while some decisions are taken collectively by a group of managers. Individual decisions are taken where the problem is of routine nature, whereas important and strategic decisions which have a bearing on many aspects of the organisation are generally taken by a group. Group decision making is preferred these days because it contributes for better coordination among the people concerned with the implementation of the decision.
Decisions may also be further classified under major and minor decisions and simple and complex decisions. However, a detailed description of these types is not necessary because they are almost all similar to the already discussed programmed and non-programmed decisions in respect of importance and impact.
Steps in the Decision-making Process
Rational decision-making process contains the following steps:
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a. Define the Problem
Problem definition is the most crucial step in the entire decisionmaking process. As the saying goes, “a problem well defined is a problem half-solved,” utmost care has to be exercised in this stage for wrong definition of the problem leads to wrong solutions. This is also called diagnostic stage. Jumping to conclusions on the basis of certain symptoms has to be avoided. The problem has to be examined from different angles so as to identify the exact causes. Unless exact causes are identified, right decisions cannot be taken.
b. Analyze the problem
The problem has to be thoroughly analysed. The past events that contributed to the problem, the present situation and the impact of the problem on the future have to be examined. Problems do no crop up overnight. The genesis of the problem and the various contributing factors need to be analysed. In analysing the problem, personal prejudices have to be avoided. As far as possible, an objective assessment of the situation is useful to arrive at right decisions.
Proper analysis of the problem helps the manager to assess the scope and importance of the problem. If the problem is of minor nature, he can authorize his subordinates to solve it. If it is a major problem requiring the involvement of many people, he can initiate the necessary steps. Interestingly, at times some of the problems may not warrant any decision. Leaving the problem as it is could be the better option.
c. Develop Alternatives
There are hardly few problems for which there are not many alternatives. Effective decision-making depends on the development of as many alternative solutions as possible. The underlying assumption is that a decision selected from among many alternatives tends to be a better one. The ability to identify and develop alternative courses of action depends on the manager’s creativity and imagination. As the thinking of two people may not be similar, the skills and abilities in developing alternatives significantly vary from one manager to the other.
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d. Evaluate Alternatives
The next step in the decision-making process involves evaluation of the alternative courses or solutions identified to solve the problem. Alternatives have to be evaluated in the light of the objectives to be achieved and the resources required. Evaluation involves a through scrutiny of the relative merits and demerits of each of the alternatives in relation to the objectives sought to be achieved by solving the problem.
e. Select and Implement the Decision
Scientific evaluation of the alternatives reveals the acceptability of various alternatives. After weighing the pros and cons in detail, the best alternative has to be selected and implemented. It may not always be possible to select the best alternative for a given problem for want of complete information, time and resources. In such a case, the manager has to satisfy with limited information and optimize the yields under a given set of circumstances.
Once an alternative is selected that becomes the decision and it has to be implemented in a systematic way. The required resources for the implementation and the necessary cooperation from the people concerned with or affected by the decision have to be ensured. Otherwise, however good the decision may be, it may encounter stiff resistance in the implementation stage.
f. Follow-up and Feed back
Once the decision is implemented, it has to be closely monitored. Adequate follow-up measures have to be taken. In the course of implementation, so many unexpected events may render the decision ineffective. The decision may not yield the desired results. Constant followup helps to take corrective measures as and when necessary. Further, such a follow-up enables to identify the shortcomings or negative consequences of the decision. It provides valuable feed-back on which the decision may be reviewed or reconsidered.
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Rationality in Decision-Making
Rationality in decision making implies maximization of the values in a given situation by choosing the most suitable course of action. Rationality refers to objectivity in the development of alternatives and the final selection of an alternative to achieve the desired goal. Though it is very much desirable, for a variety of reasons complete rationality is not always possible. That is the reason why people prefer to take satisfactory decisions instead of ideal or optimum decisions. In reality they confine themselves to a few important alternatives which have limited risks combined with favourable consequences. Following are the major reasons that stand in the way of rational decision-making process:
ӹӹBecause of time and cost constraints, all complex variables that have a bearing on decision cannot be examined fully. Hence, the decision-maker is forced to strike a balance between the ideal and real situations.
ӹӹSince decisions are related to future, managers cannot foresee all the future consequences accurately.
ӹӹHuman factors like value systems, perceptions, prejudices, social factors, etc., may enter the decision making process. Managers, being human beings, are greatly influenced by their personal beliefs, attitudes and bias.
Barriers in Decision-Making
In addition to the above factors, the various barriers in organization structure also influence the decision-making process. These barriers impede the process of identification of problem, its analysis and the development of the solution. Elbing has identified some of the important barriers that can block managerial effectiveness in choosing the most suitable decision. Some of them are listed below:
ӹӹThe tendency to respond to the problem instantaneously without proper information and thinking.
ӹӹThe tendency of human-beings to evaluate a given problem with pre-conceived notions acts as a stumbling block in understanding the real situation.
ӹӹThe tendency to resist new and innovative solutions. This is
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known as the love for ‘status-quo’.
Awareness of the above factors will surely help the managers in arriving at pragmatic decisions. The following suggestions can be offered to overcome the above barriers.
ӹӹAvoid premature evaluation.
ӹӹInitiate impartial probing by avoiding personal bias on the outcome.
ӹӹDevelop a sound system that can supply adequate information for making decisions.
ӹӹEncourage group leaders to respond to a given situation and compare the pros and cons of the solutions offered by the two groups for making an effective decision.
ӹӹEncourage innovative thinking among the subordinates so as to identify the crux of the problem without waste of time and money.
ӹӹWhen decisions of critical and pivotal in nature are to be taken, encourage group thinking. For this, the problem is to be presented to the group members first and they are asked to develop as many solutions as possible in a free environment.
Techniques of Decision-Making
Now-a-days, different techniques are used by managers in making decisions. These techniques, if used properly, would contribute for the effectiveness of the decisions. Some of the important techniques are discussed below.
1.Brainstorming: Brainstorming is the oldest and widely followed technique for encouraging creative thinking. It was originally developed by A.F. Osborn. It involves the use of a group. The success of the technique lies in creating a free and open environment where members of the group participate without any inhibitions. It starts on the premise that when people interact in a free environment, the possibility for creative ideas to emerge to higher continuous interaction through free discussions may result in spontaneous and creative thinking. The larger are the number of solutions, the fairer are the chances in locating an acceptable solution. Established research proves that one hour brainstorming session is likely to generate 50150 ideas. Of course most of them may be impracticable; at least, some of them merit serious consideration. This group process is
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