Tags
DECISION MAKING, DECISION-MAKING PROCESS, Delphi Technique, GROUP DECISION-MAKING TECHNIQUES, Non-programmed Decisions, Programmed Decisions, Strategic Decisions, Tactical Decisions
DECISION MAKING
Decision making is the process of choosing a course of action among several alternatives in order to achieve a specified goal. Thus, decision making is the process of selection and the aim is to select the best alternative.
According to Lopez
A decision represents a judgement; a final resolution of a conflict of needs, means or goals; and a commitment to action made in face of uncertainty, complexity and even irrationally.
Decision making is a process to arrive at a decision; the process by which an individual or organisation selects one position or action from several alternatives.
Shull el al. have defined decision making as follows:
“Decision making is a concious human process involving both individual and social phenomenon based upon factual and value premises which concludes with a choice of one behavioral activity from among one or more alternatives with the intetion of moving toward some desired state of affairs.”
Features:
- Decision making implies that there are various alternatives and the most desirable alternative is chosen to solve the problem or to arrive at expected results. A problem situation which does not have alternatives is not really a problem requiring solution though die problem may by quite injurious,
- Existence of alternatives suggests that the decision maker has freedom to choose an alternative of his liking through which his purpose is served-
- Decision making may not be completely rational but may be judgemental and emotional in which personal preferences and values of the decision maker play significant role.
- Decision making, like any other management process, is goal-directed. It implies that the decision maker attempts to acheive some results through decision making.
TYPES OF DECISIONS
Decision making is involved in every walk of life; it is relevant in organisational as well as non-organisational context. In organisational context, decisions may vary from the major ones like determination of organisational objectives or deciding about major projects to specific decisions about day-to-day operations. Therefore, if there are different types of decisions which are made by managers in organisations and for each type of decision, decision making variables and conditions differ. There are different ways in which organisational decisions may be classified. One way of classifying these decisions is to group them into routine and repetitive or non-routine. In another way, these decisions are classified as programmed or non-programmed. These are further classified as strategic and tactical decisions.
Programmed and Non-programmed Decisions
Herbert Simon has grouped organisational decisions into two categories based on the decision factors which are taken into consideration. These are programmed and non-programmed decisions.
Programmed Decisions. Programmed decisions are routine and repetitive and are made within the framework of organisational policies and rules. These policies and rules are established well in advance to solve recurring problems in the organisation. Programmed decisions are comparatively easy to make as these relate to the problems which are solved by considering internal organisational factors.
Non-Programmed Decisions. Non-programmed decisions are relevant for solving unique/unusual problems in which various alternatives cannot be decided in advance such decisions, the situation is not well structured and the outcomes of various alternatives cannot be arranged in advance. A common feature of non-programmed decisions is that they are novel and non-recurring and, therefore, readymade solutions are not available. Since these decisions are of high importance because of their long-term consequences, these are made by managers at higher level in the organisation.
Strategic and Tactical Decisions
Organizational decisions are classified as strategic and tactical or operational.
Strategic Decision Strategic decision concept is based on strategy which is a major action plan in an organisation. Therefore, strategic decision can be defined as follows :
Strategic decision is a major choice of actions concerning allocation of resources and contribution to the achievement of organisational objectives.
In a strategic decision, following characteristics are present:
- The decision is a major one which affects the whole or major part of the organisation.
- It contributes directly to the achievement of organisational objectives. Though all decisions try to contribute in this direction, strategic decisions contribute directly and other decisions are derived from these.
- A strategic decision may involve major departure from earlier ones concerning some organisational practices; for example, change in product mix, expansion of business, change in personnel policies, etc.
- The strategic decision has normally three elements: a) a course of action or plan which specifies the work to be done to achieve the result, known as action element; b) a desired result or objective to be achieved through the implementation of the decision, result element; and c) a commitment which directs some part of the organisation to undertake the course of action, makes the personnel involved responsible for attaining the objective and allocates resources to them, commitment element.
- The strategic decision is normally a non-programmed decision which is made under the condition of partial ignorance. The alternatives involved and the outcomes of these alternatives cannot be known in advance. This is so because strategic decision is to be taken in the context of environmental factors which are quite dynamic and uncertain.
Tactical Decision : Tactical or operational decision is derived out of strategic decision. It relates to day-to-day working of the organisation and is made in the context of well-yet policies and procedures.
Features of tactical decision :
- Tactical decision relates to day-to-day operation of the organisation and has to be taken very frequently. The decision is mostly repetitive; for example, purchase of raw materials, assigning duties to employees, etc.
- Tactical decision is mostly a programmed one. The decision is programmed through the prescription of policies, rules, procedures, etc. Therefore, the decision can be made within the context of these variables. Such prescriptions provide what to do in a particular case. When the case for decision making comes, the decision maker simply applies those prescriptions and decides the things.
- The outcome of tactical decision is of short-term nature and affects a narrow part of the organisation. For example, purchase of raw materials in routine manner will affect production department for a short period because raw materials are purchased very frequently in the context of well-set policies.
- The authority for making tactical decisions can be delegated to lower level managers. This is done because of two reasons: First, the impact of tactical decision is narrow and of short-term nature. Therefore, the lower level managers have adequate perspective to make such decisions. Second, by delegating authority for such decisions to lower-level managers, higher level managers are free to devote more time on strategic decisions which are more important.
DECISION-MAKING PROCESS
When a manager makes a decision, it is in effect the organisation’s response to a problem. As such, decisions should be thought of as means rather than ends. Every decision is the outcome of a dynamic process which is influenced by multiple forces. However, this process should not be interpreted, to mean mat decision making is a fixed procedure. A process is basically a dynamic concept rather than static. Events and relationships are dynamic, continuous and flexible and must be considered as a whole in which many forces interact; a force affecting others and being affected by others. Therefore, the decision-making process as presented in Figure should be seen as sequential process rather than a series of steps to enable the decision maker to examine each element in the progression that leads to a decision. Moreover, the process reveals that it is more applicable to non-programmed decisions than to programmed ones.
Specific Objective
The need for decision making arises in order to achieve certain specific objectives. Ever)’ action of human being is goal directed. This is hue for decision making also which is an action. In fact setting of specific objective itself is an outcome of an earlier decision.
Problem Identification
Since a particular decision is made in the context of certain given objectives, identification of problem is the real beginning of decision-making process. A problem is a felt need, a question thrown forward for solution. It is the gap between present and desired state of affairs on the subject-matter of decision. A problem can be identified much clearly, if managers go through diagnosis and analysis of the problem.
a. Diagnosis. Diagnosing the real problem implies knowing the gap between what is and what ought to be, identifying the reasons for the gap, and understanding the problem in relation to higher objectives of the organisation.
b. Analysis. The analysis of the problem requires to find out who would make decision, what information would be needed, and from where the information is available-This analysis may provide managers with revealing circumstances that help them to gain an insight into the problem. The whole approach of analysis of problem should, however, be based around critical factors like the availability of information for making decision, criticality of decision, and the time available for making decision.
Search for Alternatives
A thorough diagnosis defines both a specific problem and the situation in which the problem exists. With this definition in mind, a decision maker seeks possible solutions. A problem can be solved in several ways, however, all the ways cannot be equally satisfying. Further, if there is only one way of solving a problem, no question of decision arises. Therefore, the decision maker must try to find out the various alternatives available in order to get the most satisfactory result of a decision.
Evaluation of Alternatives
After the various alternatives are identified, the next step is to evaluate them and select the one that will meet the choice criteria. However, all alternatives available for decision making will not be taken for detailed evaluation because of the obvious limitations of managers in evaluating all alternatives. The energy of managers is limited psychologically most of them prefer to work on plans that have good prospect of being carried out.
Choice of Alternative
The evaluation of various alternatives presents a clear picture as to how each one of them contributes to the objectives under question. A comparison is made among the likely outcome of various alternatives and the best one is chosen. Choice aspect of decision making is related to deciding the most acceptable alternative which fits with the organisational objectives. It may beseen that the chosen alternative should be acceptable in the light of the organisational objectives. In choosing an alternative, the decision maker can go through three approaches : experience, experimentation, and research and analysis.
- Experience. Managers can choose an alternative based on their past experience if they have solved similar problems earlier. Reliance on past experience plays a larger part than it deserves in decision making.
- Experimentation. Experimentation which is generally used in scientific enquiry involves that a particular alternative is put in practice, result is observed, and the alternative giving the best result is selected.
- Research and Analysis. Research and analysis is the most certain method of selecting an alternative, specially when major decisions are involved. This approach entails solving a problem first by comprehending it.
Action
Once the alternative is selected, it is put into action. Truly speaking, the actual process of decision making ends with the choice of an alternative through which the objectives can be achieved. However, decision making, being a continuous and ongoing process, must ensure that the objectives have been achieved by the chosen alternative. Unless this is done, managers will never know what way their choice has contributed. Therefore, the implementation of decision may be seen as an integral aspect of decision.
Implementation of a decision requires the communication to subordinates, getting acceptance of subordinates over the matters involved in the decision, and getting their support for putting the decision into action. The decision should be effected at appropriate time and in proper way to make the action more effective. The effectiveness of action is important because it is only effective action through which organisational objectives can be achieved, and right decisions help in effective action.
Results
When the decision is put into action, it brings certain results. These results must correspond with objectives, the starting point of decision process, if good decision has been made and implemented properly. Thus, results provide indication whether decision making and its implementation is proper. Therefore, managers should take up a follow-up action in the light of feedback received from the results.
GROUP DECISION-MAKING TECHNIQUES
The most common form of group decision making takes place in interacting groups. In these groups, members meet face-to-face and rely on both verbal and nonverbal interaction to communicate with each other.
Brainstorming, the nominal group technique, and electronic meetings have been proposed as ways to reduce many of the problems inherent in the traditional interacting group.
Brainstorming is meant to overcome pressures for conformity in the interacting group that retard the development of creative alternatives. It does this by utilizing an idea-generation process that specifically encourages any and all alternatives, while withholding any criticism of those alternatives.
In a typical brainstorming session, a half dozen to a dozen people sit around a table. The group leader states the problem in a clear manner so that it is understood by all participants. Members then “freewheel” as many alternatives as they can in a given length of time. No criticism is allowed, and all the alternatives are recorded for later discussion and analysis. That one idea stimulates others and that judgments of even the most bizarre suggestions are with held until later encourage group members to “think the unusual. Brainstorming, however, is merely a process for generating ideas. The following two techniques go further by offering methods of actually arriving at a preferred solution.
The nominal group technique restricts discussion or interpersonal Immunization during the decision-making process, hence, the term nominal.
Group technique members are all physically present, as in a traditional committee meeting, but A members operate independently. Specifically, a problem is presented and then the following steps take place….
- Members meet as a group but, before any discussion takes place, each member independently writes down his or her ideas on the problem.
- After this silent period, each member presents one idea to the group. Each member takes his or her turn, presenting a single idea until all ideas have been presented and recorded. No discussion takes place until all ideas have been recorded.
- The group now discusses the ideas for clarity and evaluates them.
- Each group member silently and independently rank-orders the ideas. The ideas with the highest aggregate ranking determine the final decision.
The chief advantage of the nominal group technique is that it permits the group to meet formally but does not restrict independent thinking, as docs the interacting group.
Delphi Technique. The name Delphi indicates a shrine at which the ancient Creeks used to pray for information about the future. In Delphi technique of decision-making, members do not have face-to-face interaction for group decision. The decision is arrived at through written communication in the form of filling up questionnaires often through mail. Delphi technique is quite useful where the problem does not lend itself to precise analytical techniques but can benefit from subjective judgements on a collective basis and members who may be experts in the area of the problem may not be able to have face-to-face interaction
Consensus Mapping. Consensus mapping technique of group decision-making tries to pool the ideas generated by several task subgroups to arrive at a decision. The technique begins after a task group has developed, clarified, and evaluated a list of ideas. Consensus mapping technique works best for consolidating results from several task forces or project groups and best suited for problems that are multidimensional, have interconnected elements, and many sequential steps.