even most essential steps involved in decision making process are: 1. Define the problem, 2. Analysing 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!
Decision-making is concerned with the selection of one alternative course of action from two or more alternative courses of action.
Precisely it can be stated as a choice-making activity.
These steps can be explained as under:
1. Define the problem:
The first and the foremost step 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.
For example, if a machine stops working due to non-availability of screw, screw is the limiting factor in this case. Similarly fuse is a limiting or critical factor in house lighting. While selecting alternative or probable solution to the problem, the more the decision-making takes into account those factors that are limiting or critical to the alternative solutions, the easier it becomes to take the best decision.
Other examples of critical or limiting factor may be materials, money, managerial skill, technical know-how, employee morale and customer demand, political situation and government regulations, etc.
2. Analysing 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.
here are three principles relating to the analysis and classification as explained below:
(i) The futurity of the decision. This means to what length of time, the decision will be applicable to a course of action.
(ii) The impact of decision on other functions and areas of the business
3. Developing alternative solutions:
After defining and analysing 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.
In modern times, the techniques of operations research and computer applications are immensely helpful in the development of alternative courses of action.
4. Selecting the best type of alternative:
After developing various alternatives, the manager has to select the best alternative. It is not an easy task.
The following are the four important points to be kept in mind in selecting the best from various alternatives:
(a) Risk element involved in each course of action against the expected gain.
(b) Economy of effort involved in each alternative, i.e. securing desired results with the least efforts.
(c) Proper timing of the decision and action.
(d) Final selection of decision is also affected by the limited resources available at our disposal. Human resources are always limited. We must have right type of people to carry out our decisions. Their calibre , understanding, intelligence and skill will finally determine what they can and cannot do.
5. Implementation of the decision:
Under this step, a manager has to put the selected decision into action.
For proper and effective execution of the decision, three things are very important i.e.,
(a) Proper and effective communication of decisions to the subordinates. Decisions should be communicated in clear, concise and understandable manner.
(b) Acceptance of decision by the subordinates is important. Group participation and involvement of the employees will facilitate the smooth execution of decisions.
(c) Correct timing in the execution of decision minimizes the resistance to change. Almost every decision introduces a change and people are hesitant to accept a change. Implementation of the decision at the proper time plays an important role in the execution of the decision.
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.
According to Peter Drucker, the monitoring system should be such that the manager can go and look for himself for first hand information which is always better than the written reports or other second-hand sources. In many situations, however, computers are very successfully used in monitoring since the information retrieval process is very quick and accurate and in some instances the self-correcting is instantaneous.