March 2, 2019 89
March 2, 2019 89
Decision-making is the process through which managers identify organizational problems and attempt to resolve them.
The importance of decision-making in any organization underscores the imperative of the entrepreneur’s knowledge of it. The reason has been this, decision-making is one of the most crucial activities of management.
The necessity to decide is the everyday preoccupation of management in all types of organizations whether small, medium, large enterprises or multi-national corporations. No matter how large or small the decision, each contributes to the fundamental success or failure of the organization. Making quality decisions is difficult because the content within which managers make decisions is complex and changing.
Decision-making may be defined as the conscious selection of a course of action from among available alternatives to produce the desired result.
Generally, managerial decision situations fall into two categories:
Programmed decisions are those that occur infrequently and because of differing variables, they require a separate response each time.
In business, there are absolutely no right or wrong decisions but an intelligent choice. What one considers a right decision in a particular time frame may turn out to be an unintelligent decision if the circumstances change.
For the fact that the decisions that managers make have a profound impact on the success of the organization, managerial approaches to decision making have been the subject of considerable curiosity and research.
In this article, we describe two major types of models regarding how managers make decisions:
This is a decision taken after exhaustive study and understanding of all information relevant at the time of taking the decision. Such relevant information includes possible alternatives and all potential outcomes.
Decision-making is very simple if, from the planning stage, the entrepreneur sets the boundaries within which the business is to operate that is, by defining objectives.
The objectives can be set in the following areas:
In order to utilize this objective, the entrepreneur should realize that the objective should be realistic, bearing in mind the limitations placed by the available resources of the firm, especially in terms of men, money, and materials.
Above all, the entrepreneur should take government regulations and policies into consideration when setting objectives.
Even though do not have control over many factors affecting the success of their decisions; they do have substantial control over the process that they use to make decisions.
Below is the five-step effective decision-making process:
The first step in the decision-making process is identifying the problem. Part of identifying the problem, of course, is recognizing that a problem even exists. Organizational problems are discrepancies between a current state and condition and what is desired.
This step has three general stages:
The second step in the decision-making process is developing at least alternatives. This practice usually leads to higher quality solutions, particularly when the situation calls for creative and innovative ones.
The development of alternatives can often be facilitated through brainstorming, a technique for enhancing creativity that encourages group members to generate as many original ideas as possible on a given topic without evaluating them.
There are four principles involved:
This step involves carefully considering both the advantages and disadvantages of each alternative before choosing one of them.
Each alternative should be evaluated systematically according to six general criteria: feasibility, quality, acceptability, costs, reversibility, and ethics.
For the decision-making process to be successful, managers must give considerable thought to the implementation of the chosen solution. It is possible to make a “good” decision in terms of the first three and still have the process fail because of difficulties at this final step. Successful implementation usually depends on two main factors, sure as, careful planning and sensitivity to those involved in the implementation and/or affected by it.
Entrepreneurs need to monitor decision implementation to make sure that things are progressing as planned and also that the problem that triggered the decision-making process has been resolved. The more important the problem is, the greater the effort that needs to be expended on appropriate follow-up mechanisms.
The common with decision-making is that entrepreneurs usually do not allow the five-step (process just outlined above). Despite the fact that this general approach is endorsed by a number of decision experts, entrepreneurs may not be aware of the expert’s recommendations. In addition, the entrepreneur faces several barriers to effective decision-making.
There are five ways of overcoming key decision-making barriers:
There are four basic reactive patterns that characterize the behavior of individuals when faced with a legitimate problem in the form of difficulty or an opportunity.
The first three, complacency, defensive avoidance, and panic represent barriers to effective decision-making. The fourth, deciding to decide, constitutes a more viable approach for decision-makers to follow.
For many decision situations, particularly non-programmed decisions, it is unrealistic for decision makers to collect enough information to identify all potential alternatives and assess all possible pluses and minuses.
Some biases that characterize the way decision makes process information are framing, representatives, availability, anchoring, and adjustment.
When an entrepreneur makes a decision, it is often only one decision in a series of decisions about a particular issue. Further decisions may be necessary, depending on the results of a previous decision. For example, suppose that you decide to hire a new employee because you expect that the person will be an excellent performer.
However, after several months on the job, it is apparent that the person is not performing at an acceptable level. Should you take steps to terminate the worker? Of course, at this point, you have invested considerable time and money in training the new employee, and it is possible that the individual is still learning the job.
So you decide to spend more time helping the worker, and you line up some further training. Even with these additional inputs, 2 months later the worker is still not performing at the necessary level. What do you decide now? Although you have more reason to “cut your losses”, you also have even more invested in making the individual product. When do you discontinue your “investment”?
Decision situations like this one present difficult dilemmas for managers/entrepreneurs. Substantial costs have already been incurred because of an earlier decision. On the other hand, further actions have the potential of either reversing the situation or compounding the initial losses.
Such situations are sometimes referred to as escalation situations because they signal the strong possibility of escalating commitment and accelerating losses. Other barriers like lack of time and lack of information could affect effective decision making in organizations. Entrepreneurs deal with three types of problems: crisis, non-crisis, and opportunity. Opportunity problems are major vehicles for organizational innovation because opportunities involve ideas that could be used, rather than difficulties that must be resolved.
In organizations, more than one person most often makes major decision-making. Group decision-making has several advantages over individual decision making. Despite its advantages group decision-making also has several potential disadvantages when contrasted with individual decision-making.
These advantages and disadvantages are summarized below:
Entrepreneurs should always endeavor to create an ideal environment that is supportive of and promotes creative thinking where individuals should challenge their imagination.
Many organization has in their midst individuals of great inventiveness and the unusual ability to create new ideas. It is the realization that some people are more creative than others that committees are often used in the solution of some vital organizational problems.
Creativity is the cognitive process of developing an idea, concept, commodity, or discovery that is viewed as a novel by its creator or a target audience. In fact, creativity is not the quality of a person; it is a quality of ideas, or behaviors, or products. Creativity is crucial to solving problems in ways that result in important organization innovations.
There are some stages involved in creative thinking as summarized below:
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