Decision Making Process

The decision-making process can be studied under the following heads:

1) Defining the problem

2) Making analysis of the problem and to find facts

3) To suggests alternative courses of action

4) Selecting the best alternative

5) Putting the decision into practice

6) Follow-up the decisions.

1. Defining the Problem

The first and the most important task before the decision- maker is to find and define the problem before he takes any decision. Eminent authors of the subject are of this opinion that a problem well defined is half solved and a good decision cannot be taken up unless the decision taker has a good grasp of the problem. For example, suppose a company is suffering loss. How the loss can be avoided is a symptom? The actual problem is to pin point and identify kr what business practices are causing the company to suffer losses. Are the prices low or expenses too high? Therefore, it is important for the decision-maker to find and define the problem before he takes any decision.

Therefore, the manager must take proper care in defining the problem. If sufficient care is not taken then it may ultimately turn out to be a mere symptom. For instance, a doctor has to take into account all the symptoms before deciding the medicine to be given to the patient. Similarly, a manager should also examine and think carefully in order to diagnose the problem. But in business, situational factors are very important. In one case, the reason of suffering losses may be low prices and in another case, it may be high costs. Therefore, there is no guarantee that symptoms will always lead to the same problem. So, the manager should try to have an overall view of all situations to find the real problem. It is very important that the objectives of the business, both immediate and long-run be taken into consideration when we are defining the problem.

Further, sufficient time should be given over thinking and defining the problem as it is not easy to define the problem and to see the fundamental thing that is causing difficulty and that needs correction. Practically, no problem ever presents

itself in the manner that an immediate decision be taken. Therefore, it is essential to define the problem before any action is taken, otherwise the manager will answer the wrong question rather than the core problem. Right answer to the right question we can have by only having clear definition.

2. Making Analysis of the Problem and to Find Facts

The next phase of decision- making is the analysis of the problem which involves classifying of the problem and collecting information. Classification is essential because without proper classification, the effectiveness of the decision may be jeopardised. The problem should be classified keeping in mind the following factors:

• the nature of the decision - whether strategic or routine,

• the impact of the decision on other functions,

• the periodicity of the decision,

• the futurity of the decision, and

• the strategic factor relevant to the decision.

Role of Information and Collection of Facts in Decision-making

Collection of facts and figures also requires certain decisions on the part of the manager. He must decide obtain this. advance what type of information he requires and how can he is not always possible to get all the information which is needed for defining and classifying the problem. In such circumstances, a manager has to judge and decide as to how much risk the decision involves as well as the degree of precision and rigidity that the proposed course of action can afford. He must lay down the various alternatives first and then proceed to collect facts which will help in making comparison.

Collection of right type of information is very important in decision-making. So long as the required information is not available, any classification would be misleading. This will also have an adverse effect on the quality of the decision. Trying to analyse without facts is like guessing directions at a crossing without reading the highway signboards. Further, this should also be clear in the mind of the manager as to how much money and time he can spend in gathering the information he needs. It should also be clear to the manager that simply collection of information is not enough, he should also know how to use it.

3) To Suggests Alternative Courses Of Action

After defining and analysing the problem, the next step in the decision-making process is the development of alternative courses of action. Without developing alternatives, a manager is likely to be guided by his limited imagination. It is very rare that alternatives of any courses are not available. But sometimes, a manager assumes that there is only one way of doing a thing. In such a case, what the manager has probably not done is to force himself, to consider other altematives. Unless he does so, the best possible decision cannot be taken by him. Effective planning needs a search for the alternatives towards the desired goal. But it should also be noted that development of alternatives is no guarantee of finding the best possible decision, but it certainly helps in weighing one alternative against others and thus minimising uncertainties.

Principles of Limiting in Factor in Decision-Making

What is Limiting Factor? A limiting factor is one which stands in the way of accomplishing the desired goal. It is very important factor rather a key factor in decision-making. If such factors are clearly and properly identified, manager can confine his search for alternatives to those which will overcome the limiting factors. In selecting from among alternatives, the more an individual can recognise and solve those factors which are limiting on critical to the attainment of the desired goal the more clearly and accurately he can select the most favourable alternatives. It is not always necessary that the alternative solutions should lead to taking some action. To decide to take no action is also a decision as much as to take a specific action. For example, if there is an unnecessary post in a department, the alternative not to fill it will be the best one. The ability to develop alternative is often as important as making a right choice among alternatives. If the development of alternatives is thorough, then the manager will have to take the help of certain mathematical techniques and electronic computer to make a choice among the alternatives. the to

4. Selecting the Best Alternative

To evaluate the all possible alternatives one will have to make a final choice of the best alternatives. For that the popular is "through invitation", it means selecting a solution that seems to be good at the time. In this process there is danger that a manager's intuition may be wrong on certain occasions.

In this connection Peter Drucker has suggested four methods to study the consequences of various alternatives. These are as follows:

a. Risk Involved

The manager should assess the risks involved in each course of action against the expected gains. If we study from close, it is definite that risks are involved in all the alternatives. But one has to assess the intensity of different types of risks involved in various alternatives.

b. Economy of Effort

While taking decision the manager should ensure the maximum possible economy of efforts, money and time. He is considered the best manager who has the capacity to mobilise the resources for the achievement of results with the minimum of efforts.

c. Limitation of Resources

In selecting the alternatives primary attention must be given to those factors which are strategic to the decision involved. Discovery of the various limiting factors lies at the basis of selection from the alternatives, so planning and decision-making is essential for the proper utilisation of limited resources.

d. Situation or Condition Prevailing at a Particular Time

The choice of a course of action very much depends upon the situation prevailing at a particular point of time. If the situation prevailing has great urgency, the preferable course of action will alarm the organisation that something important is happening. If a long and consistent effort is needed, a 'slow start will gather momentum and this approach will be preferable.

Further, Koontz, O' Donnell and Weihrich have suggested three criteria which should be followed by a manager while selecting the alternatives. These are: (i) experience, (ii) experimentation, and (iii) research and analysis which have been discussed as under:

1. Experience

Experience no doubt influence to a great extent in taking decision of certain matters. But undue importance need not be attached to past experience. A manager must take sufficient care while depending upon his past experience. He should compare both present and past situations in which he has to take the decision. Eminent authors of management have said that a manager may give more reliance to past experience in case of routine decisions: but in the case of strategic decisions, he should give less weightage to his past experience to reach at a rational and final decision.

2. Experimentation

Under this criteria, the manager tests the situation under actual and prevailing conditions. This criteria has been considered as more helpful in many cases particularly in test marketing of a new product. But this is not correct to put this technique into practice, because, it has been considered as very expensive. It is used as the last resort. It can be used as a small scale to test the effectiveness of the decision. For Example - A company may test a new product in a certain region before expanding its sale throughout the country.

3. Research and Analysis

This criteria involves a search of relationships among the more critical variables, constraints and premises that bear upon the goal sought. It is called the pencil and paper approach to decision-making. To analasye the relationships we may take the help of computers and certain mathematical techniques. It can weigh various alternatives by making models and this makes more rational and objective approach.

5. Putting the Decision into Practice

The decision taken by the management will not serve the purpose if it is not executed into action for the development of the purpose for which decision has been taken. It is the duty of the manager to see and think as to how the decision will be implemented. He should try to ensure that the systematic steps are taken to implement the decision. It is just possible that the manager may face at the implementation stage, the resistance by the sub-ordinates who are affected by the decision. If the manager is not in a position to tackle the resistance then the efforts consumed in decision-making will go waste. Therefore, the manager must try to make the people understand what the decision involves, what is expected from them and what they should expect from the management. The principle of slow and steady progress should be followed in order to bring about a change in the behaviour of the sub-ordinates and the people.

Further, the sub-ordinates should be allowed to participate in the decision- making process. They should be given opportunities to ask questions and give their suggestions. But here the question arises as to what extent the subordinates be allowed to participate in the activities and to put questions ? Normally the subordinates be allowed and should participate in the development of alternatives. They should be encouraged to suggest alternatives. This opportunity will make them feel that they are attached and a part and parcel to the decision. Eminent authors of management are of this opinion that group discussion and group participation does not necessarily improve the quality of the decision, but sometimes impairs it. Group decision is like a train in which every passenger has a brake. Further, all employees and all sub-ordinates are not competent to participate in decision-making. Therefore, participative management has been recommended and are providing more successful than the other styles of management. This will be more useful and helpful in the effective implementation of the decision.

6. Follow-up the Decisions

Kenneth H. Killer, has emphatically written in his book that it is always better to check the results after putting the decision into practice. He has given reasons for following up of decisions and they are as follows:

(a) If the decision is a good one, one will know what to do if faced with the same problem again.

(b) If the decision is a bad one, one will know what not to do the next time

(c) If the decision is bad and one follows-up soon enough, corrective action may still be possible.

In order to achieve proper follow-up, the management should devise an efficient system of feedback information. This information will be very useful in taking the corrective measures and in taking right decisions in the future".

Process of decision making 

The decision making process consists of the following steps

1. Defining the problem

First step of decision making is to determine exactly what the problem is. Writing down the problem in precise terms helps considerably in resolving what one is trying to do. It is aptly remarked that a problem well stated is half solved. Also, knowing exactly what the problem is will help reveal whether it really needs to be resolved. According to Chester I. Barnard, the decision maker should find the critical or strategic factor or factors of the problem, and he would be wise to restrict himself to these. Bernard is of the opinion that in decision making the analysis required is actually a search of the strategic factor. It is also known as a limiting factor one which stands in the way of accomplishing of desired objective. 

2. Analyzing the problem

The analysis of the problem is undertaken to find out what information is required and from where it would be available. A clear definition of the problem is helpful in deciding how relevant and how valid certain data are and what additional information is needed for the decision maker. Efforts should be made to gather as much information as possible because incomplete knowledge about the background of the problem and other related facts may lead to wrong decisions. But all the facts relating to a problem cannot be obtained in every case, nor it is required; what is necessary is to know what information is lacking in order to judge how much of a risk the decision involves, as well as the degree of precision and rigidity that the proposed course of action can afford. 

3. Developing alternatives

Another step in the decision making process is to develop alternative solutions. It is third step of decision making. In fact, the question of decision making does not arise if there is only one way of solving a problem. It is rare that a problem does not have alternative solutions. Even in almost discouraging situations there are several choices. None of the alternatives might be a desirable choice, but the manager still has a choice. The search for alternatives forces the manager to see things from many viewpoints, to study the problems in their true perspectives, and to reach the critical spots of the problems. Unless the manager develops several alternative solutions, he is only too prone to fall into the “either-or” kind of thinking, and his decision is more likely to go wrong. 

4. Evaluating alternatives

After having developed alternatives, the manager is required to compare and weigh the various pros and cons of each alternative by imagining as if he has already put each into effect. He has to foresee the probable, desirable and undesirable consequences of adopting each alternative. Only then he can compare the various alternatives. 

5. Selecting the best alternative

Peter F Drucker has suggested the following four points for picking up the best from among the possible alternatives- 

a. Risk

Every alternative carries some risk and offers certain gains, and the manager must compare and weigh the two. 

b. Economy of effort

That line of action should be selected which will give the greatest results with the least effort, and will obtain the desired result with the least necessary disturbance in the organisation. 

c. Timing

While selecting a course of action, the urgency of situation must be considered. Thus if the situation has great urgency, preferable course of action is one that dramatises the decision and serves notice on the organisation that something important is happening. If, on the other hand, the situation demands long, consistent effort, a slow start that gathers momentum may be preferable. 

d. Limitations of resources

The usefulness of a decision depends to a large extent on the human beings who will carry out the decision. No decision can be better than the people who have to carry it out. Their vision, competence, skill and understanding determine what they can do- It is, therefore, necessary to consider the limitations of the human resource while selecting an alternative. If a given alternative demands more of these qualities than the managers possess, efforts should made to train the managers, or new managers may be found. 

6. Implementing the decision

After an alternative has been selected it is put it into action. It is the essence of a manager’s decision that other people must apply it to make it effective. Thus, a manager’s decision is always, a decision concerning what other people should do—it is made effective through the action of other people. To motivate people to take action, what is required is the communication of decision to subordinates, getting acceptance of the decision, and getting their support, co-operation and commitment in converting the decision, into an effective action. 

7. Following up the decision

This is the final step in decision making process. Under this step follow-up is instituted and, where necessary, the decision is modified in the light of the results obtained. This step is normally covered by the controlling function of management. It is vital to know the results of the decision and the validity of the solution. 

According to Stanley Vance, decision-making consists of the following steps: 

1. Perception: A state of awareness, out of which a consciousness of being arises. 

2. Conception: That power of the mind which develops ideas out of perceptions. Concepts might be termed as schemes or designs for action. 

3. Investigation: The search for and the acquisition of information pertinent to specific concepts so that the relative advantages and limitations of alternative courses of action can be compared. 

4. Deliberation: A mental weighing of relative merits and consequences attached to alternative schemes of action. 

5. Selection: A discrimination among the available alternatives so that the most desirable course of action is designated as the decision. 

6. Promulgation: A declaration or public pronouncement of the decision so that all persons concerned are adequately notified. While the process of thinking involved in any rational analysis generally follows the above pattern, the actual technique of decision making is much the same as that of planning, of which it is a part.