Wednesday, 25 April 2012

The Decision Making

         Closely related to both strategic and managerial planning is the process of decision making. Decisions need to be made wisely under varying circumstances with different amounts of knowledge about alternatives and consequences. Decisions are concerned with the future and may be made under conditions of certainty, conditions of risk, or conditions of uncertainty. Under conditions of certainty, managers have sufficient or complete information and know exactly what the outcome of their decision will be. Managers are usually faced with a less certain environment. They may, however, know the probabilities and possible outcomes of their decisions, even though they cannot guarantee which particular outcome will actually occur. In such cases, there is a risk associated with the decision and there is a possibility of an adverse outcome. Most managerial decisions involve varying degrees of uncertainty. This is a key part of a manager's activities. They must decide what goals or opportunities will be pursued, what resources are available, and who will perform designated tasks. Decision making, in this context, is more than making up your mind. It consists of several steps: 

Step 1:
Identifying and defining the problem
Step 2:
Developing various alternatives
Step 3:
Evaluating alternatives
Step 4:
Selecting an alternative
Step 5:
Implementing the alternative
Step 6:
Evaluating both the actual decision and the decision-making process

Managers have to vary their approach to decision making, depending on the particular situation and person or people involved. The above steps are not a fixed procedure, however; they are more a process, a system, or an approach. They force one to realize that there are usually alternatives and that one should not be pressured into making a quick decision without looking at the implications. This is especially true in the case of nonprogrammed decisions (complex and novel decisions) as contrasted to programmed decisions (those that are repetitive and routine). 

One of the most difficult steps in the decision-making process is to develop the various alternatives. For example, if one is involved in planning a workshop, one of the most crucial decisions is the time, format, and location of the workshop. In this case, one's experience as well as one's understanding of the clientele group greatly influence the selecting of alternatives. Often decision trees can help a manager make a series of decisions involving uncertain events. A decision tree is a device that displays graphically the various actions that a manager can take and shows how those actions will relate to the attainment of future events. Each branch represents an alternative course of action. To make a decision tree it is necessary to: 
(1) identify the points of decision and alternatives available at each point,
(2) identify the points of uncertainty and the type or range of alternative outcomes at each point, 
(3) estimate the probabilities of different events or results of action and the costs and gains associated with these actions, and 
(4) analyse the alternative values to choose the next course of action.

          In extension, the decision-making process is often a group process. Consequently, the manager must apply principles of democratic decision making since those involved in the decision-making process will feel an interest in the results of the process. In such a case, the manager becomes more of a coach, knowing the mission, objectives, and the process, but involving those players who must help in actually achieving the goal. 
          The effective manager thus perceives himself or herself as the controller of the decision-making process rather than as the maker of the organization's or agency's decision. As Drucker (1966) has pointed out, "The most common source of mistakes in management decision-making is the emphasis on finding the right answer rather than the right question. It is not enough to find the right answer; more important and more difficult is to make effective the course of action decided upon. Management is not concerned with knowledge for its own sake; it is concerned with performance."

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