Rational Decision Making Archives

December 21 2024

The 8 Steps of the Management Decision Making Process

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Decision making is a daily activity for any human being. There is no exception about that.

When it comes to business organizations, decision making is a habit and a process as well. Effective and successful decisions make profit to the company and unsuccessful ones make losses. Therefore, corporate decision making process is the most critical process in any organization.

Usually, decision making is hard. Majority of corporate decisions involve some level of dissatisfaction or conflict with another party.

Steps of Decision Making Process

Following are the important steps of the decision making process. Each step may be supported by different tools and techniques

Step 1: Identification of the purpose of the decision

In this step, the problem is thoroughly analysed.

There are a couple of questions one should ask when it comes to identifying the purpose of the decision.

 What exactly is the problem?

 Who are the affected parties of the problem?

 Does the problem have a deadline or a specific time-line?

Step 2: Information gathering

In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders involved in the problem. For the process of information gathering, tools such as ‘Check Sheets’ can be effectively used.

Step 3: Principles for judging the alternatives

In this step, the baseline criteria for judging the alternatives should be set up. When it comes to defining the criteria, organizational goals as well as the corporate culture should be taken into consideration. As an example, profit is one of the main concerns in every decision making process. Companies usually do not make decisions that reduce profits, unless it is an exceptional case. Likewise, baseline principles should be identified related to the problem in hand.

Step 4: Brainstorm and analyse the different choices

For this step, brainstorming to list down all the ideas is the best option. Before the idea generation step, it is vital to understand the causes of the problem and prioritization of causes. Then, you can move on generating all possible solutions (alternatives) for the problem in hand.

Step 5: Evaluation of alternatives

Use your judgement principles and decision-making criteria to evaluate each alternative. In this step, experience and effectiveness of the judgement principles come into play. You need to compare each alternative for their positives and negatives.

Step 6: Select the best alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best alternative is an informed decision since you have already followed a methodology to derive and select the best alternative.

Step 7: Execute the decision

Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of subordinates.

Step 8: Evaluate the results

Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future decision making. This is one of the best practices that will improve your decision-making skills, making the decisions and accepting its consequences is the only way to stay in control of your corporate life and time.

December 21 2024

Why Decision Making is the Most Critical Step in Planning

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Decision making as key step in planning

Planning and decision-making are the most important managerial functions, and there are many relations between
them, Decision-making is a part of planning. Planning is the process of selecting a
future course of action, where Decision-making means selecting a course of action.

Decision-making is defined as the process by which different possible solutions or alternatives are identified and the
most feasible solution or course of action is finalized. It is an integral part of planning.

Decision-making results in
selecting the right action among different available options.
It is also one of the important management functions and effective decision-making leads to fulfilling expected goals
by sorting out different problems related to such decisions. Decision-making is also a time-bound process and
eliminates confusions to reach a conclusion.

Relation Between Planning and Decision-Making

Both planning and decision-making are connected to each other. These are the most important aspects of
management functions. Planning requires a series of decisions to be incorporated in advance. The foundation of
planning is decision-making. The role of a planner demands good decision-making abilities also as the planner has to
take a lot of decisions simultaneously

Simultaneous and a
number of decisions make a plan. In the absence of decision-making, it’s not possible to answer what, how, when,
and who is planning gonna be done. To execute planned activities, decision-making is compulsory.

Different characteristics of decision-making:

1. Process-oriented

Decision-making consists of a process to choose the best solution to a problem among available alternatives. The
process includes identifying and analyzing problems, collecting different facts and figures, finding different solutions,
and, finally, narrowing down and implementing the best one to meet organizational goals.

2. Demands creativity and Intellectual mind

Decision-making process requires creativity and logical thinking. It demands a lot of mental exercise and other
components, i.e. education, experience level, intelligence, etc.

3. Demonstrates commitment

Decision-making process ensures better results based on the decisions made. So, it indicates the commitment of
desired results. It requires joint efforts of the team.

4. Ensures the best solution

Decision-making also provides the best solution to any problem as the best solution is decided after evaluating
different available alternatives.

5. Impacts of decision-making

Decision-making can be either positive or negative. A positive or right decision can bring positive results and negative
or wrong decisions can bring negative results.

6. Decision-making is a final process

After disbursing different activities and tasks, decision-making takes place to get the results of the work done. It is the
end result of discussions, comparisons, etc.

7. An ongoing and changing process

Organizations take decisions on a regular basis; so, decision-making is a continuous process. Every decision
consists of separate situations that make decision-making a changing process.

Rational Decision Making