DECISION MAKING

Decision Making  is the process of making a choice from a list of alternatives whilst Problem Solving is a process of determining appropriate actions required to ease or assuage a standing problem. In decision making, managers are charged with the task of using their judgment to identify events, items and courses of action appropriate enough to solve a problem.

For instance, if a crisis occurs in a company during operations, management will need to form a think-tank committee that will be tasked to solve the problem at hand. After thinking through the problem, various options will be suggested. The committee will therefore explore rationally and uphold the best option. So, we say a decision is made. The intent of problem solving on the other hand is to secure and correct something that is off the beam or erroneous. This cannot be achieved without first making a decision and relying on the best option to the solve problem.

Problem solving and decision-making are important skills for business and life. Problem-solving often involves decision-making, and decision-making is especially important for management and leadership. There are processes and techniques to improve decision-making and the quality of decisions. Decision-making is more natural to certain personalities, so these people should focus more on improving the quality of their decisions. People that are less natural decision-makers are often able to make quality assessments, but then need to be more decisive in acting upon the assessments made. Problem-solving and decision-making are closely linked, and each requires creativity in identifying and developing options

6.3 TYPES OF MANAGERIAL DECISIONS

Programmed and Non-programmed decisions typify the two major types of decisions made by management.  

6.3.1 Programmed Decisions/Structured Decisions

Programmed decisions usually require little thought and can be delegated to lower level managers. Programmed decisions often exhibit the following characteristics:

v  Repetitive, routine, often automated, usually involve things rather than people.

v  Existing precedents i.e. managers can rely on things that were successful in the past without having to establish new methods.

v  Well structured and organised.

v  They have a high degree of certainty of the outcome of events

v  The required information on working rules, formats, procedures and methods are in most cases, if not all, available.

v  They are dependent on top management and therefore require no originality.

6.3.2 Non-programmed Decisions/Unstructured Decisions

They are the opposite of programmed decisions usually made at senior level. The most prominent features are:

v  Non-routine, novel,

v  Decision rules are not known

v  They require original thinking and usually taken by top executives

v  They cannot be delegated to lower levels

v  They have a high degree of uncertainty

v  They may involve things but always involve people

Programmed decisions involve situations where the procedures to be followed in making decisions are specified in advance. The inventory recorder decisions and machine loading decisions are typical examples. Non-programmed decisions involve situations where it is not possible to specify in advance most of the decision procedures to follow examples are: launching of new products acquisitions, mergers and personnel appointments.

Note:

Another type of decision making category is possible even though the two major ones (programmed and non-programmed) are usually highlighted. It is known as Semi-structured Decisions.

6.3.2 Semi-structured Decisions

Some decisions can be prespecified, but not enough to lead to a definite recommended decision. E.g. Daily work assignment, Capital budgeting, major changes in employee benefit etc would probably range from unstructured to semi-structured.

 6.4. DECISION MAKING CONDITIONS

Sometimes, decisions are made under certain conditions. These conditions are indispensable and managers can be swerved if they allow such parameters to elude their decision making. There are instances when managers are aware of such factors and can manipulate situations to their advantage. Sometimes managers are unaware about certain situations. These decision making conditions can be seen below:

I. Risk

The probability of failure is known as risk. In many cases, managers cannot be certain of future outcomes even though they can calculate their chances of success or failure. Thus a chosen alternative may be subject to chance. As noted by Dr. M Smith, ‘Risk is not necessarily a bad thing – it is often associated with higher returns.

However, it needs to be managed carefully.’ It must be noted that the level of risk should not be kept at levels that might jeopardize the fundamental stability of the organization.

II. Uncertainty

                                                                                                                                    

Uncertainty is the inability of decision makers to compute the likelihood of a failure. A decision maker may not be able to calculate the risk attached to alternatives chosen to solve a problem. The sources of uncertainty are: the absence of information and complexity of the environment. For instance, a production plant manager may be uncertain about the demographic features of consumers of a factory’s products. Marketing managers of a company may not also be certain of the factors influencing the purchasing decisions of consumers.

   

III. Ambiguity

When alternatives cannot be clarified they are said to be ambiguous. Ambiguity exists when a decision maker is not clear about goals. They also exist where it is difficult to define the given alternatives. Managers in this case are unclear about the right problem or alternative to tackle.

6.5 THE RATIONAL DECISION MAKING PARADIGM

This model of decision making developed from the classical economic theory presupposes perfect knowledge of all factors surrounding the decision and adopts a rational, mechanistic approach to decision making.    

Steps in the Rational Decision Making Process

Decision making is a process based on reasoned judgment on the part of managers. To be able to perform the functions of management in organisations, rational and logical decisions should be made. The stages of the decision making model can be seen as follows:

I.    Identifying Problem (Detect Problem)   

Search the environment for conditions calling for decisions to be made. The most important step in good decision making is to recognise a decision to be made.

In essence, decision making is a problem solving process that involves eliminating the bottle necks to organisational goal attainment. The first step in getting rid of these bottle necks is to identify or detect a problem.

II. Analyse the Problem (Diagnose Problem)

The problem identified should be examined critically to be able determine the needed inputs or courses of action to solve it. Once the problem has been identified, it must be diagnosed.

III. Gathering Information

Managers must be able to list and search out many alternative solutions that exist to solve the problem. Questionnaires, interviews and observations are some of the techniques that can be employed to collect information on the issue(s) at stake.

IV. Selection and Implementation

This involves the choice of the most suitable alternative from the information gathered and putting it into action. Correct decisions will become useless if not implemented.

V. Evaluate Decision

Making a review on assessment of choices – the implementation process should be monitored to check whether a decision was necessary so that an adjustment can be made if it becomes necessary. In extreme cases, it may be prudent to abandon decisions after careful evaluation.

Identifying Problem

Analyse or Diagnose Problem

Gathering Information

Selection and Implementation

Evaluate Decision

 

6.6 CREATIVE DECISION MAKING TECHNIQUES/TOOLS

Creative decision making is a form of decision making that takes place in groups. These group members meet and rely on both verbal and non verbal interaction to communicate with each other. At group level creativity is encouraged  

Creative decision making encourages consensus building in groups. Decisions at group level are a catalyst for creative ideas and innovation as every member of the group elicit the best alternative solution to the problem.

Some creative decision making techniques are discussed as below:

1. Interacting Group Technique

In this technique, members meet face-to-face and rely on group opinion. Interacting groups censor themselves and put pressure on individual members to conform to group opinion.

2. Brainstorming

It is meant to overcome the pressures for conformity in interacting group that retard the development of creative alternatives. It is an idea generation process that specifically encourages any and all alternatives, while withholding any criticism of those alternatives.

In a typical brainstorming session, the group leader states the problem to the lot of people sitting around a table in a manner that will be understood by all present.

In a given period of time, group members throw in freely as many alternatives as they can. During the session criticisms are not allowed. All alternatives are recorded for later discussion and scrutiny.  In effect, brainstorming is a process for generation of ideas for later diagnosis and examination – a way of developing new ideas, in a discussion where several people make lots of suggestions and the best ones are selected.

3. Nominal Group Technique

It is a group decision making technique in which individual members meet face-to-face but work in independent fashion. Judgment on the issue is gathered systematically without recourse to interpersonal interaction until the session is over. Group members are present but members work independently. The following steps are employed in the use of this method.

I.                 Members meet as a group but before they discuss anything, each member writes down his or her ideas concerning the problem.

II.               The individual ideas gathered are presented to the team/group leader. Members then take turns to speak on what they have gathered. There is no discussion until all ideas are gathered.

III.             The group reviews, analyses and evaluates the ideas presented in a skillful and diligent manner without apathy and bias.

IV.            At this final point, the group disintegrates once more to rank the ideas presented. The alternative with the highest aggregate is adopted and taken as the final decision.

4. Gordon Technique

The Gordon technique involves the use of broad and abstract generalisation to introduce the topic under discussion. From this broad dimension, issues are then narrowed down to an exclusive and specific end. This technique is employed among groups with a high degree of knowledge and expertise about the issued to be decided. It therefore requires high level cognitive skills coupled with specialisation.

5. Brain Writing Technique

Brain writing is similar to the nominal group technique except that individual members write out their ideas and sample them without any consultation with group members. It is evident that brain writing techniques generate high quality initiatives, minimise interpersonal conflicts and reduce the tension on group conformity.

6. Synectics

This method was developed by George M. Prince (April 5, 1918 - June 9, 2009) and Gordon. The name Synectics comes from Greek and means "the joining together of different and apparently irrelevant elements." Synectics is a way to approach creativity and problem-solving in a rational way. "Traditionally, creative process has been considered after the fact...The Synectics study has attempted to research creative process in vivo, while it is going on. This method gives credence to problem-analysis and the alienation of the original problem by drawing comparison between two situations. A solution is likely to emerge from a comparative study of the events. Synectics is more of a problem-solving technique which requires a lot of time and effort. It is also complex and procedural.

According to Gordon, Synectics research has three main assumptions:

• The creative process can be described and taught;
• Invention processes in arts and sciences are analogous and are driven by the same "psychic" processes;
• Individual and group creativity are analogous.

With these assumptions in mind, Synectics believes that people can be better at being creative if they understand how creativity works.

One important element in creativity is embracing the seemingly irrelevant. Emotion is emphasised over intellect and the irrational over the rational. Through understanding the emotional and irrational elements of a problem or idea, a group can be more successful at solving a problem.

Gordon emphasised the significance of a system termed "metaphorical processes. This he believes will make the familiar strange and the strange familiar". He articulated his theory on the following: "Trust things that are alien, and alienate things that are trusted." This promoted on the one hand, the idea of fundamental problem-analysis and, on the other hand, the isolation of the original problem through the creation of analogies. It is thus possible for new and surprising solutions to emerge.

To gather ideas for a start, synectics develops a system dubbed “springboarding”. This is incorporated with the brainstorming technique.  It helps decision makers to start with beginning ideas (springboarding); incorporate brainstorming and subsequently widen the process with metaphor. For idea development in decision making an evaluation process is added.

Synectics is more demanding of decision making than brainstorming, as the steps involved mean that the process is more complex and requires a lot of effort. It is also much more rewarding because the end product is action not just ideas.

7. Electronic Meeting

                                                                                                                    

This is the most recent method to decision making which merges the nominal group technique with sophisticated computer technology.

It is a meeting in which group members interact on computers. Up to 50 people sit around a horseshoe-shaped table, empty, except a series of computer terminals. Issues are presented to participants and responses are typed which appear on their computer screen.

Individual comments are displayed on a projection screen. The major advantages with this technique are the anonymity, honesty and speed. People can be very honest without attracting penalty.

It is fast because chitchat is eliminated, discussions do not digress, and many participants can talk at once without interruptions.

The choice of one technique over another will depend on the criteria to be emphasized. For instance, the interacting group is good for establishing rapport and building group cohesiveness; brainstorming keeps social pressures at a minimum; the nominal group techniques is inexpensive for generating a large number of ideas and electronic meeting process and transmits ideas very fast.

6.7 BENEFITS OF DECISION MAKING

1. There is a diversity of opinion for identifying alternatives, gathering information and establishing objectives
2. Greater employee satisfaction with decisions they help to make.
3. Decision making serves as an aid for planning.
4. Decision making create a forum for young executives to observe and learn from senior executives – it is during these decision making sessions that young executives watch their senior colleagues in action and as such, emulate them. 
5. There is a high degree of certainty on issues which were properly decided.

6.8 BARRIERS TO EFFECTIVE DECISION MAKING

1. Managers tend to be over self satisfied with decisions they make – complacency
2. Defensive avoidance -   because managers become satisfied with decisions taken, they are usually eluded from protecting the decisions from failure.
3. Unilateral decisions are made where powerful personalities dominate decision making process. Such decisions however might not be in the interest of the organisation.
4. Lack of objectivity – human thought is greased with the slime of self opinion. It is very difficult for human beings to be totally objective. Dr. M. Smith will refer to this as, ‘Bounded Rationality’ i.e. a rationality that is restricted by human frailty.
5. Time constraints
6. Communication failure – it is apparent that the essentials of decision making process must be communicated to those involved. Failure to transmit such basics will result in futile decisions.
7. Procrastination – this is the tendency to delay events contributing to decision making without a valid reason. This can affect the effectiveness of decisions.
8. Financial constraints
9. The complexity of environment for decision making
10. Incomplete information for decision making.

HARUNA SULEMANA