Decision making process is a step-by-step process allowing professionals to solve problems by weighing evidence, examining alternatives, and choosing a path from there. This defined process also provides an opportunity, at the end, to review whether the decision was the right one. 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.
Meaning and Definition of Decision Making
According to D.E. Mc. Farland___“A decision is an act of choice, wherein an executive forms a conclusion about what must be done in a given situation. A decision represents a course of behaviour chosen from a number of possible alternatives”.
According to George R.Terry___”Decision-making is the selection based on some criteria from two or more possible alternatives”.
Decision Making Process
Essential steps involved in decision making process are: 1. Define the problem, 2. Analyzing the problem, 3. Developing alternative solutions, 4. Selecting the best type of alternative, 5. Implementation of the decision, 6. Follow up, 7. Monitoring and feedback.
1. Define the problem: The first in the decision-making process are to define the real problem. A problem can be explained as a question for and appropriate solution. The manager should consider critical or strategic factors in defining the problem. These factors are, in fact, obstacles in the way of finding proper solution. These are also known as limiting factors.
2. Analyzing the problem: After defining the problem, the next important step is a systematic analysis of the available data. Sound decisions are based on proper collection, classification and analysis of facts and figures.
3. Developing alternative solutions: After defining and analyzing the problem, the next step is to develop alternative solutions. The main aim of developing alternative solutions is to have the best possible decision out of the available alternative courses of action. In developing alternative solutions the manager comes across creative or original solutions to the problems.
4. Selecting the best alternative: After developing various alternatives, the manager has to select the best alternative. It is not an easy task. Before selecting the best alternative manager should analyze risk involvement,profitability of choosing alternative.
5. Implementation of the decision: Manager has to put the selected decision into action. roper and effective communication of decisions to the subordinates. Decisions should be communicated in clear, concise and understandable manner. And Acceptance of decision by the subordinates is important. Group participation and involvement of the employees will facilitate the smooth execution of decisions.
6. Follow up: A follow up system ensures the achievement of the objectives. It is exercised through control. Simply stated it is concerned with the process of checking the proper implementation of decision. Follow up is indispensable so as to modify and improve upon the decisions at the earliest opportunity.
7. Monitoring and feedback: Feedback provides the means of determining the effectiveness of the implemented decision. If possible, a mechanism should be built which would give periodic reports on the success of the implementation. In addition, the mechanisms should also serve as an instrument of “preventive maintenance”, so that the problems can be prevented before they occur.