Effective Decision-Making - Essay Example

Effective Decision Making of the of the Effective Decision Making Introduction It is important for the individuals andorganisations to make effective and efficient decisions in order to achieve the set objectives and targets. For this reason, individuals need to follow the process of analytic decision making and should keep in mind all associated facts and figures before taking the final decision. The success or failure of an individual or organisation is directly dependent on the decisions taken. Hence, it is essential to use the analytic decision making process and base the decision on all available data and logic. This in turn allows the individuals to make sure that the decisions taken are effective and efficient (Heizer and Render, 20011). It has been said that ‘A good decision is one that uses analytic decision making, which is based on logic and considers all available data and possible alternatives’. Assuming this statement to be true, the paper will clearly define the major and critical steps in the decision process to enable a good decision to be made. Later on, the paper will evaluate the quantitative approach to decision making in detail. Discussion In general, people differ in their decision making styles. Everyone has a different way of taking a decision. Some people think much before taking a decision by evaluating all the alternatives they have, while others do not think much and do not consider the importance of the alternatives. Some people have the fatalistic approach towards making decisions. They believe ‘whatever will be, will be’; therefore, they do not take much time before making a decision as they think that whatever is going to happen will happen, and they cannot do anything about it, so they must get on and pick something. This kind of decision making is not considered as a rational decision making (Sjöberg, 2003). However, in the organisations, the management of the company need to have a rational decision making process. They cannot simply rely on the fatalistic approach of whatever will be, will be. They have to make rational and logical decisions as the profitability and success of the company rely on their decisions. Thus, they need to adopt the analytic decision making approach for making better and effective decisions. The individual who has the analytic approach to decision making is the one who has great tolerance towards ambiguity. He or she makes careful decisions and likes to be well-informed about all the alternatives and options he has. Moreover, he or she is able of adapting or coping with challenging and unique situations in an effective way. Hence, the managers of the organisations who adopt the analytic style of decision making while making important decisions in the organisation have a rational way of thinking and huge tolerance for uncertainty. They think a lot before taking a decision for which they need much information about different alternatives and options. These types of managers are considered as the most careful decision makers since they evaluate detailed and factual information before making a decision (Triantaphyllou, 2000). The managers of analytic decision making approach usually prefer clarity and analysis in their task. They generally develop objective criteria against which they may analyse their decisions. They usually put the objectives of the business first, and their decisions support the aims and goals of the team or organisation. This type of decision makers has a preference of convincing by data and want to see the evidence. In this type of decision making process, if a leader does not have enough information while making an effective decision, he needs to gather the information from others, for which he needs to ask his subordinates or team members. He might not need to tell the others regarding what the problem is, but usually he simply asks for the information. After that, he analyses the gathered information and makes a decision in accordance to that. Steps of the Analytic Decision Making Process Following are listed the steps of the analytic decision making process: Understanding the situation or decision to be made Identification of the criteria needed for the process and the outcome Consideration of all the possible solutions Calculation of all the consequences of every solution against the possibility of satisfying the criteria Choosing the best option with the most suitable consequences An analytic decision making model has a pre supposition that there is definitely a best outcome for every situation. Due to this assumption, this decision making model is known as the optimising decision making model. This usually caused the decision makers to take a lot of time while making the decision. They desire perfection in their decision which is normally the main factor behind delaying of the decision (Klein, 2003). The model of analytic decision making also think it possible to evaluate every available option and it also wants to know the consequences of every alternative in the future. However, despite evaluating all the alternatives in the best possible way; sometimes, the plans tend to fail due to the ineffectiveness of the people involved, the lack of monitoring or controlling, and the lack of communication among the people involved. Therefore, after making the decision, it is the responsibility of the managers to successfully implement the methods needed to fulfil the task. In addition, they also must communicate the strategies of implementing the decision to all the team members so that they may understand what is expected of them. The good communication will help to motivate the employees and will develop a sense of belonging in them with the company and the project (Keeney and Keeney, 2009). Furthermore, the model of analytic decision making is limited to the cognitive abilities of the individuals making the decision. The effectiveness of the decision depends on the strength of their memory and their imaginative skills. Thus, it needs a competent person to evaluate the decision in an organisation. Moreover, this model requires a great amount of time and information. In addition, the logical or rational decision tries to negate the role of emotions while making the decisions. Quantitative Approach to Decision Making The managers who lack experiential knowledge of the organisation and its members can use a quantitative approach for making a decision. The initial step of this approach is translating the problem into a mathematical language. As a result, this approach is best for the objectively measurable problems. For instance, the decision about how to provide the resources within the departments may start by identifying which departments are most profitable ones and are more likely of generating more profits/unit of fresh resources. Due to this logic, the managers of the organisations use accounting data for constructing the mathematical model or formula, for apportionment of the resources among the departments (Lin and Wu, 2008). The Steps in Quantitative Analysis of Decision Making Model Building Building a mathematical model which shows the ways in which the system works, (for example, identification of the decision variables, constraints on them, and the objective function which evaluates the performance of the system). Solve Model This step requires the managers to use an efficient algorithm for getting the optimum solution. Implement solution or Update Model Repeat This step needs to check the solution to see its practical feasibility. If the solution is not feasible, then the managers need to make the required changes in the model and then repeat the step. In addition, most of the times, the decision maker uses his practical knowledge for transforming the optimum solution to the implementable solution (Rob, 2011). Pros and Cons of the Quantitative Approach to Decision Making The model of the quantitative approach may fail due to the under- or overestimation of the company’s managers, or if they completely fail to account for an important variable. For instance, depending completely on the known profitability of certain departments to distribute the resources does not account for scalability. Sometimes, the departments that produce more profits may operate at high efficiency; the resources would not produce more profits proportionally as the workers simply cannot work any faster. The lack of reasoning and logic may cripple any of the approaches to decision making; however, the quantitative approach tend to be at more risk due to the fact that it relies heavily on the formal reasoning. Consequently, there must be close monitoring of the consequences and outcomes for verifying the reason behind taking a decision. On the contrary, the managers who use the qualitative approach to decision making are likely to have the fair expectations about how their decisions would perform because of the past experiences they have in the same kind of situations (Hammond, Keeney and Raiffa, 1999). For using the qualitative approach to decision making, the managers of the company need to know the difficult relationship of the variables of the company. For example, they have to know the connections between the supervisors of every department and the availability of the resources for which the departments are competing. In other words, the manager should have an intuitive feeling about how the decisions would work out, and this kind of knowledge can only come from direct and hands on experience with the organisation and its members. The managers of the organisations must use both approaches i.e., qualitative and quantitative, to decision making if possible. Combination of experience with the mathematical logic provides the better chance to be successful. Each of the elements of both approaches complements the other, and creates effective and efficient solutions to solve the complex problems (Gupta, 2006). Conclusion In a nutshell, it can be suggested from the above discussion that the use of the analytic approach to decision making will certainly be beneficial for the managers of the organisations while making important decisions. Though, it requires a lot of time and reasoning of the alternatives; it gives the best results, as well. Moreover, the quantitative decision making is based on the mathematical reasoning which requires much thinking and reasoning based on the calculations of the cost and profits. In the manufacturing organisations, this kind of decision making approach is beneficial as they need to continuously evaluate the allocation of resources and capital to get the optimum output and results. However, being a good manager and a good decision maker requires considering the combination of the quantitative approach as well as the qualitative approach. The qualitative approach is based on the experiential knowledge of the organisation and its employees. It is more of the intuitive reasoning. However, it provides the great results, as well. Therefore, a combination of both would be good enough to make better and feasible decisions which are less likely to fail in the real environment. Reference List Gupta, M. P. (2006). Quantitative Techniques for Decision Making. PHI Learning Pvt. Ltd.. Hammond, J.S., Keeney, R.L. and Raiffa, H. (1999). Smart Choices: A Practical Guide to Making Better Decisions. Harvard Business School Press Heizer, J. H., and Render, B. (20011). Operations management. Pearson Prentice Hall. Keeney, R. L., & Keeney, R. L. (2009). Value-focused thinking: A path to creative decisionmaking. Harvard University Press. Klein G (2003). The Power of Intuition. New York: Doubleday. Lin, C. J., and Wu, W. W. (2008). A causal analytical method for group decision-making under fuzzy environment. Expert Systems with Applications, vol. 34, no. 1, pp. 205-213. Rob, R. (2011). Agile Decision Making: Improving Business Results with Analytics. TM Forum Sjöberg, L. (2003). Intuitive vs. analytical decision making: which is preferred? Scandinavian Journal of Management, vol. 19, no. 1, pp. 17-29. Triantaphyllou, E. (2000). Multi-Criteria Decision Making: A Comparative Study. Dordrecht, Netherlands: Kluwer Academic Publishers, pp. 320 Read More