What is Decision Making in Management?

by Shamsul
Decision Making
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What is Decision Making in Management?

Decision making is a significant step and it offers ease of business management. Individuals, as well as large companies, require decision making principles, guidelines, and strategies. As a matter of fact, it is among the main roles and functions of company managers. The managers have to make several decisions with an aim to protect the company’s interests while taking care of the technical, labor, and other segments. Whether a decision is conscious or unconscious, it must be according to the rules and regulations of a company. Today, we are checking the decision making in management. We will study various steps and functions, analyze other options, guidelines, theories, significance, and things not to do.

Definition of Decision Making In Management:

It is a rational process of selecting various methods, especially the alternatives. Every decision brings certain results. However, it also requires certain steps and actions in order to accomplish the final goals. Managers may find some recommendations and opinions on their decisions. This is part of the management system. When someone has different options and alternatives, s/he faces confusion. Some managers pretend to stay neutral, while some select an option to take bold steps.

Decision Making Steps:

When someone talks about deciding something, then it seems a sequential activity. Basically, it is a structural policy or function that provides support to get the desired outcomes. Some of the main decision making steps are given here.

1.   Developing objectives and goals.

2.   Categorizing and prioritizing goals.

3.   Developing a selection standard.

4.   Recognizing potential alternatives.

5.   Analyzing different options against the company’s selection standards.

6.   Choosing an option that is the best fit for selection criteria.

7.   Implement the selected decision.

Decision Making vs. Problem Analysis:

These both have some similarities. However, there are some distinctions too. The main focus of the decision is always on the problems and challenges. Managers must gather and analyze the data in order to make the best decision.

On the other hand, managers use problem analysis in order to find the root cause of an issue. They desire to recognize the main factors causing an issue in the system. This analysis helps them identify and eliminate the problems. It also gives them a suitable set of alternatives to take the right decision.

This is necessary to keep in mind that a problem analysis never gives an outcome or conclusion. It is the main step to find the actual reason behind any result. It is a simple part of decision making in management.

Optimizing vs. Satisficing:

In normal cases, a person holds a variety of databases while making a decision. When a company manager has limited access to the database, then it becomes impossible for him/her to stay close to objectives. This results in making wrong decisions.

Maximize always consumes time before giving an optimum choice. However, the satisficer would recognize the imperfections and problems in order to develop a good decision. Managers should check the spectrum before making any decision. They should check all the database levels for possible risks in order to implement the perfect decision.

Rational vs. Intuitive:

Many experts believe that it may be a perspective of a conscious and semi-conscious mind. A conscious mind always requires rationality, input, and logic in order to take bold steps. On the other hand, the subconscious is automatic and intuitive. It makes quick decisions by analyzing databases rapidly.

Positional vs. Combinatorial:

Positional approach is not good. Usually, a loser uses this strategy. In this case, a person will take certain decisions without forecasting the future outcomes. S/he will rely on natural powers or uncertain things rather than real and concrete things. The combinatorial use solid and concrete reasoning. These people always develop a series of small decisions while trying to overcome the issues. Careful and small leaps are better than long but foolish leaps.

Analysis of Alternatives:

This is the main factor of the decision making process. You have to study all the elements in favor or against the system. Do you have judgment criteria? It consists of a set of preferences, advantages, disadvantages, and costs. For example, a manager is deciding the location of a store, and then his criteria would be closeness to buyers, transportation access, distribution facilities, and skilled labor. A manager will also focus on easy access to the store, rental cost, and other points during this process. Different factors present in your mind have their importance relevant to any activity and the manager would decide accordingly.  

A decision-maker has to see and analyze all the pros and cons of an option, and it becomes a hectic task where s/he has got a variety of alternatives. Factors like emotions, personal feelings, views, and time limitations become important while studying these alternatives. In most cases, decision making demands more time for information collection. In this case, a decision becomes more useful for the business goals.

Decision Making and Its Types:

There are three prominent types of decision making. We will discuss these types one by one.

Avoiding:

It is very clear from the name; a decision-maker should not select a risky option. Here is why managers should avoid it.

Lack of knowledge to select a choice.

Negative outcomes and the risk of selecting a wrong choice is much more devastating than the possible benefits.

The status quo will remain active. There will be no pressure to choose a certain decision.

People who are working in decision making powers don’t have the proper knowledge or a clear idea about what’s happening around them.

The Supreme Court of the United States of America gives most of its decisions depending on this principle. In most cases, this court will refuse to hear a petition if it is considered unimportant or invalid by the lower court.

Problem Solving:

Most of the problem-solving activities become important when the managers reach a satisfactory solution. According to the psychological experts, it is an effort to get the targets and goals by using the current position or state. It includes understanding problems, evaluating and analyzing the database, and different options.

Problem Seeking:

A problem-solving approach always focuses on the scope of the issue. It usually helps to define the problem and its key factors. However, it may offer a poor understanding of the problem. Instead, managers should step back to recheck the database again. Managers should keep all the activities in mind. This is due to the fact that a manager has to go back in the problem zone to find the root cause in order to give a solution.

Importance of Decision Making:

In a corporate cycle, top management needs a constant supply of financial or technical information to find the optimum profits. They will compare these efforts to improve the company’s efforts.

Companies always make decisions according to their goals.

Whether a company is small or big, a contingent condition may appear to change the market and employee situation. In this condition, the managers would require quick decisions.

Management offers functions such as designing, planning, performance, controlling, organizing, and evaluating. Decisions are necessary to make all these factors work.

Decisions support managers motivate the employees. This improves organizational structure, defines the objectives clearly, and gives a course of action.

Theories of Decision Making:

There are Some Important Decision Making Theories.

Intuitive or Traditional Theory:

Managers decide on the basis of random ideas. Thus, they will not have various options and impactful factors in mind. People make such decisions without having any feelings or emotions.

Classical Theory:

In contrast to traditional theory, a classical approach is where a manager carefully tests different factors and then decides. This type of decision-making plays a vital role when managers have certain conditions; however, it is a rare phenomenon.

Behavioral Theory:

As the name indicates, managers take decisions after evaluating or analyzing real-life events.

Guidelines for Good Decision Making:

Setting obvious targets, objectives, and goals.

Make sure that all decisions are according to the company’s policies and goals.

Follow a diagnostic approach while making decisions.

Bring workers and subordinates for meetings and develop a consensus.

Implement the decisions with full spirit. Make this decision successful in order to win the trust of workers.

Evaluate the results of a decision. You have to do it regularly in order to see when to employ other alternatives.

Revise the decision with certain changes if it doesn’t provide expected results.

Conclusion:

After a detailed study, we are able to say that decision making is a vital element of management. It deals with the existing issues and provides new ways to open the solutions. On the other hand, decision making and its types are precious to understand the actual definition. Managers with detailed knowledge of decision making and its types can easily discover effective solutions. They can also avoid the problems present in the system. However, they should keep the guidelines and choices in mind while making the decisions.

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