Decision making
Definition
It is defined as selection based on some criteria of one
alternative from 2 or more possible alternatives.
Example: To fill up vacancy in an organization
3 alternatives
Promote from
within
Recruit from
outside
Appoint a
relative of previous employee
Managers takes the
decision(select an alternative) based on experience, experimentation,
Effective decision
An effective decision is one which
is action oriented, goal directed and provides efficiency in implementation.
Guidelines for effective decision
1.
Define the
goals
2.
Ensure that decision
contributes to goal
3.
Involve
subordinates in the decision making process
4.
Ensure
successful implementation of the decision
5.
Evaluate the
results
6.
Be flexible
and revise the decisions which do not produce the desired results
Rationality in Decision making
Rationality means the ability to follow a systematical, logical and thorough
approach in decision making.
Decision taken after thorough analysis and reasoning is called rational
or objective decision.
Principles of rationality
1.
The decision
maker has complete access to information and knowledge on all elements of his
decision environment.
2.
He has a clear
sequential scheme.
3.
He knows his
problem thoroughly
4.
He has a wide
range of alternatives from which he can pick and choose on basis of their
outcomes.
5.
Manager has
the full freedom and ability to make the choice
Significance of
decision making
Decision making needed for all
management functions.
Characteristics of
decision making
It should achieve the goals
Analytical study of the
alternatives - Process of choosing a course of action from among alternatives
It is a human process involving
application of intellectual abilities.
It should be flexible – change the
decision to win the cooperation of entire group.
Take sufficient time for effective
decision.
Study of impact of decision- it
precedes the decision making
Proper communication system
Means to an end
Types of decisions
Programmed and Non-programmed (routine/repetitive
and non routine/non repetitive)
Major and Minor (to buy 10 lakh Rs.
machine/stationary item)
Policy and Operating (promotion
policy/preparing salary bill)
Organizational and Personal (official
capacity/individual capacity)
Individual and Group (sanction of
leave to worker/modify design of product)
Departmental, interdepartmental and
Enterprise
Routine and Strategic (sending
samples of a product to Govt test house/lowering the price of product)
Simon’s Decision making process
Identifying the
problem( Intelligence phase)
A problem identified and defined is a problem half solved.
What is Symptom?
Symptom indicate that something is wrong with an organization, but
they don't identify root causes.
What is Diagnosis?
Diagnosis is the process of identifying a
disease from its symptoms.
Here we identify the root cause or real problem
from the symptoms.
|
TABLE 1
|
Symptoms and Their
Real Causes
|
|
Symptoms
|
Underlying Problem
|
|
Low profits and/or declining sales
|
Poor market research
|
|
High costs
|
Poor design process; poorly trained
employees
|
|
Low morale
|
Lack of communication between management and
subordinates
|
|
High employee turnover
|
Rate of pay too low; job design not suitable
|
|
High rate of absenteeism
|
Employees believe that they are not valued
|
While diagnosing the
real problem the manager should consider causes and find out whether they are
controllable or uncontrollable.
Analyzing the Problem: Design phase
After defining the problem, the next step in the
decision-making process is to analyze
the problem in depth. This is necessary to classify the problem in order to
know
Who must take the decision and
Who must be informed about the decision taken,
What information is needed and
From where the
information is available.
Developing alternate
solutions or courses of action - Design phase
Reason for Developing alternate solutions is to make the best
decision.
Example : if the management wants to fill up vacancy ,
alternatives are
Promote from within
Recruit from outside
Appoint a relative of previous employee
Selecting the best solution-
Choice Phase
Selection is based on parameters like experience,
experimentation and detailed investigation.
Consider the merits and demerits of each alternative solution
and costs involved in each.
Converting the decision in
to effective action – Implementation phase
Implement the decision.
We need co operation of subordinates
They should be convinced that decision is correct.
Follow up the decision
A decision is said to be good if it also holds good in the
same situation at another time and place.
Manager should introduce a system of follow up.
Characteristics of decision-making:
1.
It is a process of
choosing a course of action from among the alternative courses of action.
2.
It is a human process
involving to a great extent the application of intellectual abilities.
3.
It is the end process
preceded by deliberation and reasoning.
4.
It is always related
to the environment. A manager may take one decision in a particular set of
circumstances and another in a different set of circumstances.
5.
It involves a time
dimension and a time lag.
6.
It always has a
purpose. Keeping this in view, there may just be a decision not to decide.
7.
It involves all
actions like defining the problem and probing and analyzing the various
alternatives, which take place before a final choice is made.
No comments:
Post a Comment