Process of Decision Making in an organization for a Manager.

Topics: Decision making, Decision theory, Decision making software Pages: 7 (1075 words) Published: January 14, 2004
Decision Making

Decision making is defined as a rational choice among alternatives. A decision is the result of making a judgment or reaching a conclusion. In order to perform their jobs well, managers must make good decision.

The Decision Making Process/ The Rational Model of Decision Making

There are different ways, or models, for thinking about decision making. Attempts to show how people should make a decision are called rational model of decision-making, it assume that decision makers apply a carefully set of criteria or rationale for their decision. In the rational model, decision-making usually begins with a judgment that a problem exists or a change is needed. Once a problem is recognized, alternatives are sought that could eliminate the negative condition or achieve the goal.

1.Recognize and Define the problem

Carefully define the problem and make sure you focused on the right problem. Once a problem is recognized and defined, alternatives are sought that could eliminate the negative condition or achieve the goal. Alternatives are activities that you believe will lead to a better state of affair.

2.Generate Alternative Solutions

Explore as many alternatives as possible and be open to creative solutions. Survey all possible objectives sought and the values relevant to the choice to be made.

3.Evaluate each solution based on established criteria.

Carefully evaluate alternatives in terms of costs, risks, and benefits. To choose among the alternatives, you have to use criteria to evaluate them. Among the most common criteria used are feasibility, time, cost, and personel acceptability. Criteria will usually vary from person to person, and it is not always clear what criteria are being used.

4.Decide on the Optimum Solution

Re-evaluate positive and negative consequences of all alternatives even those originally rejected. Here the evaluation can uncover faulty implementation or reveal that errors were made at an earlier stage of decision process

5.Implement the solution

Develop a detailed plan of implementation, including contingency plans to handle risk or new problem should they arise.

Factors Affecting Decision Making

1.Degree of Certainty

Decision-making under conditions of certainty means that the manager has perfect knowledge of handling the problem.

Decision making under conditions of risk provides a more difficult decision making environment

Decision making under conditions of uncertainty is like being a pioneer and is the most difficult for a manager

2.The Decision Strategy: Maximize or Satisficing?

To maximize is to make the best possible decision. The manager needs to have the ideal resources.

To satisfice is more realistic; that is, to make best decision possible with the information available with the information available and in the time available.

3.The Internal Environment

A manager's decision-making environment is greatly structured by:

-Superior

-Subordinates

-Organizational systems, e.g., policies, procedures, programs, rules

4. External Forces

-Customers

-Competitors

-Government agencies, the economy, etc.

5.Personal Attributes of the Manager

Personal decision making approaches (rational(logical) or nonrational(intuitive); logical(objectives, 7 steps) or intuitive(guard feeling))

Ability to set priorities

Timing of decision

Decision Analysis

Decision analysis underlines all the function of management. Even careful planning and execution cannot save an organization from the damage brought by a decision that is basically wrong. To assure growth and progress, nothing less than a system and reasoned approach to Decision Analysis will do.

Pittfalls in the Process

Decision making is no stranger to you; you make decisions everyday. The chances are that you make so many that seem automatic. Beware of these, as good decision do not come easily. They are the result of uncluttered thinking. In fact,...
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