Decision making is a very crucial component of effective management. The decision that a manager takes for his firm decides the success or the failure of the firm. However, the decisions made depend on the knowledge of the manager, his intuition, experience, intelligence, emotional level,and understanding.
Factors affecting the process of decision making
Apart from the manager’s knowledge and skills, there are three basic factors which affect decision making:
- Certainty: This condition is effectual only when the manager has complete information about the situation and he is able to foresee the outcome of the decision. He also knows about various alternatives available so that he can assess the best option, which ultimately leads to lower chances of risk.
- Uncertainty: This condition is effective only when the manager has little information about the situation and the outcome of the decision is neither known nor can be predicted. The manager’s intuition, judgment,and experience only work in such situations.
- Risk: Every organisation is prone to certain risks, some of which can be predicted while some events may occur unexpectedly. So, the managers need to make the decisions under certain risks as he is unsure about the consequences of the decision. Manager’s experience, foresightedness, knowledge,andjudgmentwork best in this case.
These three factors affecting decision making reflects the knowledge and skills of the manager with respect to the decision’s output.
The process of decision making
The process of decision making is not abrupt. In fact, it is a long process that involves several steps in order to reach the final outcome which is the best out of the available options. Here are the steps involved in the process of decision making:
- Define the Problem: For making any decision, the main and basic step is to be familiar with the problem and reach to its root cause.
- Identifying Limited Factors: Once the problem is identified and its root cause is recognised, the manager should analyse the ideal factors which would be needed in solving the problem. These include resources such as workforce, information, equipment, time, supplies, etc.
- Develop Potential Alternatives: Knowing the best resource for resolving the problem can help in limiting the search for other alternatives and thus, the best decision can be made quickly. In order to find the best alternatives, the manager can exploit various techniques including:
- Brainstorming: Here, a group of people sit together, think of innovative ideas and give alternative solutions to various issues.
- Delphi Technique: Here, a formal meeting is not organised. Rather, the leader of the group takes the help of questionnaires to accomplish decision making.
- Nominal Group Technique: Here, a highly well thought out meeting is conducted with a proper
- Analyse the Alternative: Once all the alternatives have been discovered, the next step involves analysis of all the alternatives. All the alternatives are assessed in terms of their merits & demerits. Cost, quantitative as well as qualitative measurements are made to find whether the alternatives would work in different situations or not.
- Selecting Alternatives: Out of the potential alternatives known, the best alternative is chosen after analysing various factors. Such an alternative is chosen that would be advantageous for the firm in terms of profitability and various other factors.
Every manager would have to take certain decisions for his firm on a regular basis. These decisions play a key role in the success journey of the organisation as well as the manager’s professional career progression. Thus, a manager must be familiar with all the steps involved in the process of decision making so that he can select the best possible alternative. We at MIT School of Distance Education (MIT-SDE) understand the importance of decision making in management. That is why we train our candidates in such a way that they master the art of decision making. Our best in class trainers share their experiences and knowledge in webinars to train the candidates in taking the best decisions. So, if you too want to launch your career in the field of management in the best way, then enroll for admissions in MIT-SDE right away.