Effective Decision making is a process of Intelligence, Design and choice activities and “is a central part of the management process”. Decisions are hard to make but once decided there should be no second take.
The following steps are involved in the process of Decision-making:
1. Recognizing the problem
2. Deciding priorities among problems
3. Diagnosing the problem
4. Developing alternative courses of action
5. Evaluating alternatives
6. Selecting the best alternative
7. Effective implementation and follow-up action.
Recognizing the Problem– Herbert A Simon calls this step as an “intelligent activity“. It is important to find out whether there is any deviation from the past experience. For e.g. Sales might decrease, expense might decrease, sometimes there might be deviations from the plan, sales budget, and competitors may outperform by improved systems.
Deciding priorities among the problems: A manager would face many problems at the same time. He should not be bogged down with small and unimportant problems. Some problems can be easily solved by the sub-ordinates. Some may not be important. A manager must see that – he selects carefully the most important problem. Peter Drucker says that “once the right problem is perceived then half of the problem is solved”. A manager must diagnose carefully by asking the following questions.
a. What is the real problem?
b. What are the causes and effects of the problem?
c. Is this problem very important?
d. Can they be solved by sub-ordinates?
e. Which is the right and most important problem to be solved?
Diagnosing the Problem: After choosing the right problem the manager must now start diagnosing the problem. There is no simple answer to the question of how to diagnose the problem, because every individual differs in his or her own way of diagnosing the problem depending on the different background orientations and training. A manager must systematically analyze the problem for identifying the alternative causes of action.
Developing Alternative Courses of Action: This step is creative and innovative where a manager analyzes from all perspectives Sometimes a manager can also use a technique called “brainstorming” where a few individuals discuss at length the various possible available alternatives.
Evaluating the Alternatives: The manager must now give proper weightage to the positive and negative aspects of the alternatives and evaluate by using some criteria like
(d) results expected;
(e) deviations anticipated;
(f) resources available for implementation.
Selecting the Best Alternative: This is the most important step where the manager selects the best alternative that will yield maximum profits or results with minimum cost, input or resources. To put it in simple terms, the solution should be able to solve the problem in the best possible way.
Effective Implementation and Follow-up Action: Any decision without proper implementation becomes futile and hence proper care must be taken by the manager to pool resources and start implementing the decision taken. In large organizations, follow-up procedures are available in the system itself in order to pave way for effectiveness in the implementation of the decisions. Proper follow-up enhances the effectiveness of the decisions taken.
Decision is a course of action consciously chosen from available alternatives for the purpose of achieving a desired result. Thus, a decision is a choice, the result of conscious mental activity and is directed toward a purpose, for e.g. if you have decided to read this article, you always have a choice, of stopping immediately or continuing to read. And this is also a conscious mental activity.
Decision-making is closely related with all management functions like planning, organizing and controlling. Decision – making is closely related to solving problems.