Effective Decision Making

• Decision making is the process of selecting a course of action from multiple alternatives to achieve a specific objective or solve a specific problem.
• Factors to consider when making a decision include fairness, impact on self, rule adherence, legality, and public perception.

Importance of Decision Making

• Proper utilization of resources is achieved through effective decision making, minimizing leakage and wastage.
• Organizations can operate at a minimum cost with the help of correct decisions at the correct time.
• Selecting the best alternative among multiple solutions is crucial, achieved through analyzing alternatives using financial, statistical, and accounting tools.
• Decision making evaluates the performance of a manager.
• The quality or success of a manager depends on the number of right decisions they take for organizational success.
• Decision-making motivates employees as it provides an operational framework, guidelines, and timely benefits.
• Decision making is essential for organizational success.
• Achieving organizational goals and objectives within time and budget requires good decision-making.
• Pervasive function of managers aims at achieving organizational goals.
• Decisions affect planning, organizing, motivating, directing, and controlling, spanning production, marketing, finance, personnel, and research and development.

Steps Involved in Decision Making

• Identification to Implementation is key.
• Identify the problem as the first step in the decision-making process.
• Recognizing that a problem exists is essential prior to identifying it.

Importance of Identifying Problems

• Provides a roadmap and approach.
• Realizing the need to make a decision.
• Defining the decision from different perspectives.
• Capturing dimensions of the issue that might otherwise be overlooked.
• Involving multiple people brings diverse information, knowledge, and experience.
• Forming a group to define the problem and frame the decision collectively.
• Having a shared understanding of a decision improves focus and efficiency.
• Accurately define constraints, current operations, and goals.
• Define requirements and constraints to determine the suitability of the solution.
• Identifying a problem involves three stages.
• Scanning.
• Categorization.
• Diagnosis.
• Scanning monitors the work environment for changes that indicate problems.
• Categorizing sorts problems by size and magnitude, solved based on time constraints.
• Diagnosis identifies the proper method to address the problem.

Identifying Resources and Constraints

• Collect pertinent information before making a decision.
• Resources are anything that can solve the problem.
• People.
• Money.
• Materials.
• Time.
• Expertise.
• Equipment.
• Information.
• Constraints limit efforts to solve the problem.
• Hindrances to problem-solving.
• Organizations face multiple competing problems simultaneously.
• A list of resources allows for maximum utilization.
• Listing constraints alerts to potential bottlenecks.
• Absence of needed resources can pose a problem for business.

Generating Alternative Solutions

• This is both internal and external.
• Identify several possible paths of action or alternatives.
• Construct new alternatives using imagination and additional information.
• This involves listing all possible and desirable alternatives.

Importance of Generating Alternatives

• Identifying possible alternatives is important for problem-solving.
• Generate feasible alternatives to the problem.
• Managers should explore all possible alternatives before making major decisions.
• Resisting the temptation to accept the first feasible alternative, enables managers to find the best solution.
• Generating multiple alternatives counters the temptation for a quick solution and improves the chances of an effective decision.

How to Generate Alternatives

• Brainstorming with a group can be an excellent tool for identifying potential alternatives.
• Consider many possibilities and write them down.
• Silly ideas can contain the germ of a superb solution.
• Avoid quick choices without considering all options.
• Spending more time searching for alternatives and weighing their consequences can really pay off.
• Record each idea for later evaluation.
• The process could go on forever.
• Factors to consider when determining the appropriate amount of time to be spent on generating alternatives.
• The first is the importance of the problem, greater the problem, greater will be the value of any improvements.
• The second factor relates to the availability of data and the cost of evaluating the data.
• Managers should not devote too much time to generating alternatives when data is very limited.
• Managers prefer fewer alternatives when the cost of evaluating the data is high.
• Finding alternatives will give you flexibility in choosing the best one.

Evaluating and Selecting Alternatives

• The process of choosing the best alternative based on different criteria.
• It involves evaluating for feasibility, acceptability and desirability.
• Select the option with the highest chances of success.
• Seeking a second opinion can provide a new perspective.
• Ensure risks are understood.
• Consider the impact on the organization, public relations, employees, and organizational climate.
• What is the cost?
• Is it legal?
• What are the ethics of actions?
• Other factors if the course is permitted under collective agreements or to build on another idea.
• Influence diagrams is another tool that decision makers use as a compact graphical representation of a decision situation.
• Influence diagrams are directly applicable in group decisions, as they allow incomplete sharing of information among team members to be modeled and for estimates to be made explicitly.

Implementing and Monitoring Decisions

• Putting the selected alternative into action and checking its progress is implementation.
• Monitoring evaluates the actual outcome versus the desired outcome.
• Gathering information to evaluate how the decision is working.
• Feedback is an essential component.
• Allows the decision-maker to determine the effectiveness of the chosen alternative.
• Evaluate the effectiveness of a decision, by using a set of standards.
• A second requirement is the availability of performance data for comparison with the set of standards.

How to Implement and Monitor Decisions

• Factors that depends on careful planning and sensitivity to those who will implement or affected by it.
• Minor changes require only a little planning.
• Major changes require extensive planning, such as written plans, special funding arrangements, and careful coordination with units.
• Decisions can be implemented smoothly by being sensitive to the reactions of those who decisions will affect.
• Managers identify the steps needed to reach that objective.
• Listing necessary actions and activities, considering required financial and other resources.
• Making a schedule for completing the work.
• Managers assess progress and may identify areas for improvement.
• New circumstances may require additions to, or other changes in, the plan.
• Decisions can be made under conditions of uncertainty.
• In incorrect estimates or unexpected happens, adjustments need to be made to the implementation plans.
• If new facts are significant enough, it can even require reconsideration of the decision.
• Repeating steps to make a new decision can be good.

Decision Making Models

• Help formulate decisions.
• The alternative method for decision making, introduced because of the difficulties in logical thinking process.
• Decision making models reduce uncertainty.
• Require less time in reaching a decision.
• Useful when time is costly or unavailable, settling for a good enough option can be effective.
• Effective strategy.
• Decision-making models are always cost-effective.
• Widely used in the public sector.
• Used in software development where bite-sized changes help to avoid big and costly mistakes.
• They help find a suitable solution for problems.

Types of Decision-Making Models

• Classical Decision Making.
• Incremental Decision Making.
• Garbage Can Decision Making.
• Administrative Decision Making.

Classical Decision-Making Model

• It is a rational model.
• It assumes that managers have access to complete information and can make an optimal decision by weighting every alternative.
• The managers are logical and rational.
• The managers' decision will be in the best interests of the organization.
• The decision-maker has clearly set goals and knows what is expected from them.

Steps Involved in Classical Decision-Making Model

• Problem Identification.
• Development of criteria for alternative solutions to be evaluated.
• Identification of alternative courses of action.
• Evaluation of alternatives.
• Selection of the best alternative and implementation.
• Following these steps managers will be able to handle Classical Decision Making
• Obtain complete and perfect information.
• Eliminate uncertainty.
• Evaluate everything rationally and logically.
• End up with the decision that is best suited to the organization.

Incremental Decision-Making Model

• Instead of huge leap towards solving a problem.
• It breaks down small steps.
• Moving between steps is known as muddling through.
• It is based on the combination of experience, intuition, guessing, and different techniques.
• The model was developed by Charles Lindblom.
• Managers put in the least effort, only enough to reduce the problem to a tolerable level.
• The manager focuses on a short-term solution rather than long-term goal attainment.
• The model does not require managers to process a great deal of information.
• A small number of alternatives and consequences are considered at each stage.
• Costs are minimized.
• Each step proposes only a small change.
• The immediate effect is minimal and not disruptive.

Garbage Can Decision Making Model

• It differs from traditional models.
• Assumes that organizations are imperfect and operate in anarchy.
• In this chaos, many unnecessary solutions are produced (organizational garbage).
• Managers behave randomly while making non-programmed decisions.
• Decision outcomes are chance occurrences depending on participants, problems, opportunities, and favorite solutions.
• The strategy is effective:
• Wwhen managers have no specific goal preferences.
• When the means of achieving goals are unclear.
• When there are frequent changes in participants.
• The approach is often used in the absence of strategic management.

Administrative Decision-Making Model

• Used to develop a better understanding of inherent biases and limitations.
• Decision makers settle for less than ideal solutions, because of time and motivation.
• The Limited Rationality entails that the decision-maker has a limited number of criteria and considers a limited number of alternatives.
• Decision-maker with a limited rationality is Administrative Man.
• The Manager has more concern for themself.
• The Manager will collect whatever information or the data that will be available and then will take a decision.
• In a way that will benefit the organization but will certainly be good for fulfilling his personal interests.
• Managers use incomplete and imperfect information.
• They are constrained by bounded rationality.
• They tend to satisfice.
• Managers use incomplete and imperfect information.
• Constraints with bounded rationality.
• They tend to benefit the organization.