Decision Making

I am not talking of routine decisions even the juniors may take about the day to day work in this article. I am writing about important decisions to be made by a manager or a manager and his senior subordinates or members of  top management along with the required departmental heads. These can be increasing market share of the company, increasing production, adding new products, expansion of capacity and buying of new capital goods. These are not made in one setting but several settings over a period of time.

Making decisions is not an easy task. So, does the mere involvement of more than one individual in the process make this process any easier as compared to an individual taking the decision.

Given the uncertain world we are in, solutions to decision making problems cannot be based on a purely black box approach. Though routine and mundane decisions can be easily delegated and even quantified more often than not, truly intellectual judgment comes only from knowing that you are independent to decide and can use your tools and resources as felicitously as an author would choose his words.

What kind of companies encourage such flexibility is another question that has befuddled researchers in the past. As one questions the superstructures upon which decision making models are built, founder and managing principal, Decision Options, it can be explained the underlying principles of an organization conducive to such flexibility. Companies, today, have to move away from traditional structures that follow prescriptive decision processes based on rules and regulations and design flat organizations with complete delegation of decision authority. Since one cannot reasonably predict the future, any decision process based on fixed expectations of future or extrapolations of the past are bound to fail. With flat organizations with complete delegation, companies can increase flexibility and thus are able to manage uncertainty rather than design actions for set expectations driven by a few at the top.

Clearly, one cannot take it for granted the freedom and must seek to build teams with substantial power to perform with maximum degree of independence, possible. Practically, an organization cannot function on centralized decision any longer because the scope and potential in the global economy is immense.

Though decision making autonomy is tough to realize, it is not impossible. In every business, the managers have to take similar decisions. But in order to increase the scale of operations, a good manager decentralizes decision making as much as possible, of course with due checks and balances. Keeping all the decisions to your limits your scope and delays result due to distance from the information center. A manager should effectively build teams monitor their decisions and maximize satisfaction. Every chain has a loose link, so will a team. That is where management action steps in.

For global organizations of today, a national subsidiary can function properly and take decisions as per the localized and other information available only when such rights have been made available to it. One of the relatively recent shifts in the International Business Environment is the transfer from HQ perspective to transnational network perspective whereby the role and function of MNC subsidiaries have been widely recognized. This results in autonomy of the subsidiaries in a way that makes them independent to take their own decisions to achieve global goals.

Chaos is a pattern of three states: equilibrium, disequilibrium and bounded instability. The task of decision makers is to keep the organization in the third state because that is where organizations can innovate. Decision making becomes a continual process of adaptation to forces largely beyond a decision maker’s control. It is like surfing a huge wave off Diamond Head, a wave that never hits shore.

Rational decision making proceeds on the belief that managers can transform a complicated web of facts, assumptions, objectives and educated guesses into a clear decision that people at the organization can act on. There is a strong faith in all this that the world can be influenced through manager’s mental capabilities. Decision making, then is an effort to exercise control over the organization’s destiny. This has been a distinctive management belief for more than a century.

In decision making as mentioned in the first paragraph the cost aspect, productivity, profitability and manpower are taken into consideration. If not feasible even the entire plan may be dropped irrespective of the time and settings. The company should increase on its profitability, productivity, market share and manpower ratio (should be decreased). A decision regarding automation can also be taken by the above members. The end result should be increase in profits and market share.

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