Decision-making is the process through which managers identify organizational problems an attempt to resolve them. Managers may not always make the right decisions, but they use their knowledge of appropriate decision making processes to increase the odds. Managers make many different decisions in the course of their work and it becomes necessary that the decision-making process is effective. An effective decision-making process generally includes four steps:
1. Identify the problem.
2. Generate alternative solutions.
3. Evaluate and choose among alternative solutions.
4. Implement and monitor the chosen solution.
Identify the problem.
Organizational problems must be identified to change the situation from unwanted to desired. This can happen in 3 general stages. Scanning for the problem, Categorizing it and its diagnosis.
The first stage signals the changes in the work situation creating a problem.The Categorization stage, attempts are made to understand the signs that there is some discrepancy between the desired and current state of affairs. It may be difficult to specify the exact nature of the problem but one can find out whether it is a problem or non problem. Diagnosis stage involves gathering further information and specifying the exact nature of the problem.
Generating alternative solutions:
This is the 2nd step in decision making process requiring creative and innovative solutions. The concerned manager must develop alternative solutions. The ideas can be used together or partially eliminated as he proceeds in solving the problem.
Evaluating and choosing an alternative:
Each alternative has to be evaluated according to six criteria. Feasibility, Quality, Acceptability, Costs, Reversibility and Ethics.
Feasibility refers to an extent the alternative is to be considered based on the budget, policy, technology and other constraints of the organization.
The Quality evaluation must consider how effective is the alternative in solving the problem.
The Acceptability creation refers to the degree to which the decision making will affect the decision maker and others.
The Costs consideration should be taken into account in implementing an alternative depending upon the resources of the organization.
Any alternative decision taken must be reversible in case it is found adverse to the organization during implementation or later.
An alternative shall be compatible with the social responsibility of the organization and ethical standards.
Implement and monitor the chosen solution:
This requires careful and intelligent planning within the domain of other five. Managers also need to monitor he decision implementation to be sure that things are progressing as planned. The more important the problem, the greater the effort of follow up mechanism.