According to Monahan (2000), a decision is a choice between two or more alternatives. Decision making is an essential process in the running of an organization. Through it, a manager has the option of selecting different courses in order to improve the operations of an organization. The productivity of an organization depends on the action taken as a result of decision making.
The output can be an achievement or a judgment of the choice taken. Each and every organization operates by people making decisions. A manager plans, organizes, staffs, leads, and controls his/her team by implementing decisions. The effectiveness and quality of these decisions determine how successful a manager will be (Ray, 2009).
In the course of his/her operations, an administrator is constantly making decisions. Being an administrator is a challenging task. This is due to the fact that they often find themselves in situations where they have to make tight decisions.
In a single day, an administrator makes a lot of decisions either consciously or unconsciously. Decisions usually involve the application of considerable human judgment and experience before a solution is obtained (Monahan, 2000).
Types of Managerial Decisions
According to Monahan (2000), there are five types of managerial decisions. These are:
- Organizational and Personal Decisions
- Individual and Group Decisions
- Routine and Strategic Decisions
- Programme and Non-Programme Decisions
- Policy and Creative Decisions
Organization decisions are those decisions that are made to progress the interest of the organization. They are made to advance the interest of the organization.
When an administrator performs formally in his or her role as per the expectations of the organization, he makes decisions for the organization and the power can be delegated to the other members and calls for decisions at subordinate levels supporting it which end up becoming a chain of behavior throughout the organization.
The decisions made by the managers affect everything that happens in the organization and the decisions that the managers take, they do it as individuals but not as part of the specified organization. This in turn affects the overall organization culture and behavior of the organization.
The management normally makes the personal decisions of an organization. A manager thus makes these decisions exclusively as an individual and not as an organization. The decisions the administrators make may affect the organization sometimes directly or indirectly.
Individual decisions are made by this or that person within some organization. Most of the times, these entail normal problems that an organization is likely to encounter in the course of normal operations. The most usual places for the Individual decisions are small autocratic organizations. Group made by a group of people who have a purpose. Making decision as a group encourages all the members to participate.
Routine decisions are made continually following some well-known rules, measures and policies. People do not have to collect new data and hence can be taken without debates or negotiations. On the other hand, strategic decisions are those key decisions that may affect the running of an organization.
Due to this fact, they are normally made by key managerial figures within an organization. They help in coming up with the desired plan and hence they need thorough data collection and analysis of the likely choices in the organization. The introduction of a new program or a system may be reckoned to be a strategy.
Programmed decisions deal with fairly routine and recurring problems. These decisions have short-term force. A person who is about to take a decision should analyze the situation from the analytical point of view and then take or suggest the appropriate way out or a solution to this or that problem.
Non-programmed decisions take place when the situation is hard to be figured out and when it is difficult to find a appropriate solution. Policy decisions are essential and are taken by the top management. People who deal with the implying of policies are used to take the operating decisions.
Steps in Decision Making
In any organization, administrators like managers have to make decisions that help to solve problems in an organization. The process of decision-making is a continuous process in the running and management of an organization. As stated earlier, the decision-making process is a critical aspect of an organization.
It has to be made using the right information, with the right strategy and at the right time. This will ensure that an organization operates in an effective and efficient manner.
According to Ray (2009), William & Stephen G. M., (2010) and Monahan (2000) the decision-making process involves the following steps:
- Definition of the problem
- Identification of the limiting factors
- Development of potential alternatives
- Analysis of the alternatives
- Selection of the best alternative
- Implementation of the decision
- Establishment of a control and evaluation system
The manager identifies the real problem which has to be accurately defined in order to have effective decision making. The manager can identify the problem separately from its indicators. He then works to expose the factors that cause the indicators to the problem. These indicators can include; low profits, high cost of production, High employee turnover, high rate of absenteeism, low morale and decline in sales.
Managers need to have good resources such as time, supplies, equipments, personnel and information. Though the resources might not be available or up to date the managers should strive to look for the things that can lead to low productivity.
They must make the best decision possible with the resources that are available. Managers should think and find out several alternative solutions to a certain problem before they make a decision. It is good to brainstorm ideas from the other members because one person’s ideas, no matter how outrageous, can generate ideas from the others in the group.
Managers need to analyze the various alternatives that they have on disposal. This is essential as they are able to determine the advantages and importance every information or strategy that is presented. Managers should also consider the advantages and disadvantages of the alternatives before coming up with the final decision.
This can be done by determining the pros and cons of each alternative, performing a cost-benefit analysis for each alternative, weighing each factor important in the decision. The alternatives should be evaluated in terms of feasibility, effectiveness and the consequences to the organization. The manager has to predict consequences of the alternative to the organization.
After the analyzing all the alternatives the manager has to decide on the best one which has more advantages than the disadvantages. The manager must now come up with the most feasible and effective alternative.
The manager has to make a wise choice. Managers should make the employees or the subordinates know their roles by making policies, rules and procedures that help them to attain the problem-solving process (Charles and Benjamin, 1965).
The manager has to come up with information in order to evaluate the effectiveness of a decision. If the plan has not been accomplished he then has to figure out what went wrong. This helps the managers to notice any action taken when coming up with the decision. Managers should make an insightful study of the choice.
Decision-Making Stages (Phases)
There are four stages that should be involved in all group decision making. These stages are important for the decision-making process to begin (Annon, 2008). They include:
- Orientation stage
- Conflict stage
- Emergence stage
- Reinforcement stage
The orientations stage is the first stage in the process of decision making. People socialize and discuss issues. The conflict stage generally occurs after members get used to one another.
Here, they tend to disagree with the thoughts and ideas of each other and as a result a lot of arguments arise. At the emergence stage people try to defend themselves and stand for their rights and for the decisions they have made. They come into one conclusion and make a choice as a group.
Decision-Making Models
There are four decision-making models which include ad-hoc decision-making, multi-attribute utility theory (MAUT), AHP, and Bayesian team support. At times, an organization is faced with tricky situations where it has no time to employ structured approaches for solutions. It is during these times that an organization makes ad-hoc decisions. The decision making depends on the problem at hand (Monahan, 2000).
There are problems that can be solved using different criteria. Such problems are referred to as multi-attribute problems (Monahan, 2000). Several methods can be used to solve such problems. These include mathematical approaches and informal methods (Monahan, 2000).
Analytical Hierarchy Process (AHP) is an extension of MAUT and it uses pair comparisons. Bayesian team support is a model that is used to support decision-making with unseen information (Monahan, 2000). This is one of the most common methods used to solve uncertain problems.
Making High Quality Decisions
A high quality decision comes with a merit or a guarantee that the process that was used to come up with a choice was the best one. Decisions should be broken down into components and then working at one alternative at a time. Without a process, the process is likely to drag decisions into ones comfort zone. Each problem has to be tackled separated and in a unique manner (Monahan, 2000).
With a process or framework, you have the mechanism you need to warrant the quality of your own decisions. Perhaps more importantly, you also have a common language and set of mental models that makes conversations about decisions more efficient and effective (Noe, 2008).
The common understanding of decision processes, criteria, and roles avoids many of the common organizational decision traps, allowing people in your organizations to spend their conversational energies on creating better alternatives and validating assumptions and ultimately warranting their own decisions (Jock, 2011).
Managers make decisions every day that affect their team and their organization. Before any manager makes a decision, they first need to define their goals. You need to examine if the decision is the right decision and how you can get commitment from your staff to implement the decision you have made (Noe, 2008).
The importance to make decisions is to enable the organization have a sound process or steps from the beginning up to the overall results of the choice. Good leadership skills should be applied so as to attain the steps of decision making process (Ray, 2009).
Jock (2011) argues that successful business managers understand that the effectiveness of managerial decision making often determines the success or failure of an enterprise. If wise decisions are made in an organization then it will have success but if the decision making is dragged it can affect the organization negatively. Effective decision making is an innate skill which is acquired with experience over years (Triantaphyllou, 2000).
A great decision making makes use of sound logic. The employees are usually comfortable when they have a good understanding of what and why a certain decision has been chosen. The manager should use the available resources to make the best choice.
Manages are personally and sometimes legally responsible for the efforts of their decisions and so it is important to stay within the boundaries of their authorities. Managers need to make good decisions which allow the business to grow and employees to develop and have success (Hal, 2007).
During the decision making process, it is important that you do not inflate information to support your decision (James, 1990). The manager should invite challenges from other people concerning a decision made and he or she should take it positive. One can ask a colleague to evaluate the managerial skills so that they do not end up with the wrong decision.
This colleague can give other alternatives or a different way of solving problems before coming up with the final decision. Rushed decisions that are made without taking a second thought and not well evaluated leads to a great failure (Noe, 2008).
In decision making process, the manager has the responsibility to make the right decision for the organization. If the manager becomes indecisive then it will be portrayed to the employees that he cannot make a tough choice or take a stand on issues that have effect to the organization.
The managers need to be concerned that taking a strong stand on problems regarding the organization will cause others to dislike them. A manager should have in mind that when employees dislike your opinion they are not rejecting you (Hal, 2007).
It is also valuable to draw on other people’s expertise within your own organization and outside of the organization. It is wise to seek advice, and it will strengthen and build on your relationship as manager in an organization. Depending on what the decision involves, you may need to learn more about your customers and your organization (Noe, 2008).
For managers to make sound decisions, they should collect information from the people involved and the ones affected by the decision. One should involve the employees so that they feel involved in decisions that will affect them.
Even though a manager may believe they can make a decision by themselves, when possible they should try to involve those who believe they need to be involved. Take a good long look at everyone’s point of view; this will give you different perspectives to evaluate (Noe, 2008).
Conclusion
Decision making is a continuous process that has to happen every day within an organization. Managers should be able to know the steps that have to follow in coming up with the right decision. The paper has discussed various types of managerial decisions and the managers should deal with each problem separately using the right model.
Decision making has phases which the manager has to keep in mind before taking or coming up with the final decision. When all the steps are followed the managers will have to come up with an effective decision which will involve all the share holders of an organization.
References
Annon, K. (2008). Decision Making Process. Web.
Charles, H.K. and Benjamin B. T. (1965). The Rational Manager: A Systematic Approach to Problem Solving and Decision-Making. Boston: McGraw-Hill.
Hal, L. (2007). Managerial Decision Making and the Decision Process. Web.
James, R. (1990). Human Error. New York: Ashgate.
Jock, F. (2011) Managerial Decision Making. Web.
Monahan, G. (2000). Management Decision Making. Cambridge: Cambridge University Press.
Noe, D. ( 2008). Managerial Decision Making and Decision Process. Web.
Ray, C. (2009). Making Effective Decisions. Web.
Triantaphyllou, E. (2000). Multi-Criteria Decision Making: A Comparative Study. Dordrecht: Kluwer Academic Publishers.
William, F.S. and Stephen G.M. (2010). Managerial Economics. New York: Wiley.