Decision Making and its Process in Organizational Context
Discuss about the Influencing and Making Decisions.
This report is based upon the study of various models, methods and processes of the decision making in the organisation which is taken by the manager and top management respond to the various situations. Moreover, it is also analysed that the decision making tools and styles helps the manager to the careful evaluation of the all the alternatives in the sequential manner which generated the positive outcomes for the organisation. Furthermore, it also evaluates the decision-making framework and taxonomies tell the management about the influence of various cause and effect of information at the time of decision.
It is an act or process that any employee or manager consider the various alternatives from the range of options and select the best alternative or option that is important to the organisation or people in the long term. It is an integral part of the modern management. Essentially, Rational or sound decision making is an important function to accomplish the organisational and managerial objectives.
Decision-making process is an important process that links the various activities at different functional levels for effective organisational functioning (Xu, et al., 2011). Furthermore, decision making process helps the organisation to maintain and check the organisation system that helps to keep develops in both the directions i.e. vertical and linear directions. The decisions are taken in the company to make the company more competitive and achieve the long and short term goals. To accomplish these objectives company faces the hurdles at the administrative level and operational levels. To solve these problems the comprehensive decision-making process is to be followed in the organisation to solve the problems effectively and accomplish the objectives at each department level. Decision-making process is continuing and dynamic because if one problem solve the other problem arises and so on. Below given are the basic steps is to be followed by the organisation while taking important decisions (Ford and Richardson, 2013).
Figure 1: (Umassd, 2017) Decision Making Process
Above given process are the sequential steps followed by the management to solve the administrative and operational problems in a business setting. The entire process is the time consuming but the outcomes generate from this process is positive and helpful for business for its long-term growth.
A decision-making tool is an important technique followed by the manager and top management to solve the complex problems and take the best decision from the available alternatives. There is a range of available decision-making tools used by the business according to the nature of the problem. Below given is the evaluation of the some of the important decision-making tools (Arens, et al., 2012).
- A) Decision matrix tool is used the manager to evaluate all the alternatives of the business and placed them on the table and list all the factors in one column that affect the various alternatives. The managers put the scores and weigh which factor is more important to consider.
Decision-Making Tools and Styles
Figure 2: (Source: Bruce, 2011)
Above given example of the restaurant indicates which is the most important factor or problem in the restaurant. It is identified that the Customer pain is an important factor that scores high as compared to other factors. It means that the long waiting time in the restaurant increases the customer pain that will probably impact the goodwill of the restaurant in future.
- B) Cost-Benefit: This technique is used by the manager or top management to assess the overall cost and benefits of the organisation in terms of financial perspective. For e.g. in the production department, there is the requirement of the 15 machines that can produce the 70 units per hour (Pettigrew, 2014). In this case, the production manager needs to analyse the overall cost of the machine, time spent on each unit and labour engaged in production. On the other side, the manager also needs to analyse the selling price of the 70 units multiplied by the no of hours engaged in the production and other direct and indirect costs to ascertain the benefit from the particular machine. On the basis of various calculations, the manager can take a decision whether have to purchase or not.
Decision-making styles influence majorly the growth of the organisational performance in the long term. It also impacts the performance of the team and their motivation level. There are some important types of decision making styles which are followed by the manager or top management to solve the problems effectively (Lunenburg, 2011). Below given figure indicated an important decision styles followed commonly in the organisations.
Figure 3: (Source: Goetsch, and Davis, 2014) Types of Decision making styles
- a) Rational Decision-making style is based upon the thorough search of the information and logical evaluation of alternatives.
- b) Intuitive Decision-making style is based on the feeling and emotions associated with the particular tasks.
- c) The dependent decision-making style is based upon the advice and direction of others. In this style, manager needs the direction or advice to select the best alternative from the different options.
- d) Avoidant decision-making style is characterised by attempts to avoid decision making.
- e) Spontaneous decision-making style is based upon the sudden and impulsive decisions taken by the managers and employees according to the situation (Vaiman, et al., 2012).
As per the various decision styles listed above in the figure, it is identified that the rational decision-making style is appropriate for the organization for long term profits. In this style, it collects the appropriate information for the organisation in a logical manner. It reduces the chances of errors, uncertainties and assumptions. It reduces the risk of failure as compared to other styles. The approach and selection process of this method is based upon the logic information and knowledge.
Decision-making methods help management to take decisions according to their consensus. They required team members to discuss debate and decide on a mutual conclusion. The group decision making is the common and important method to take decisions while the problem is complex, but it has its own disadvantages like it is a time consuming process and most of the time employees might not be clear about their roles. If the roles are not clear it will increase the chances of conflicts among them that would ruin their relationships. Moreover, on the other side, it seems that if more people are involved in decision making which generates the more creative ideas with more information flow (Turban Sharda, and Delen, 2011). There are five methods of decision making are adapted by the organisation is as follows:
1) Brainstorming: This is the common method of solving the problem through group discussions. This method helps management to reach the solution to the problem quickly due to an end number of views and ideas of the different people. For e.g. if the manager received the new ‘e-learning project in the organisation and they received the instruction to implement this project into the team. Gather the team of different designers into the room and collect the different inputs of the designers and then takes the final decision (Ingram, et al., 2012).
Decision Making Methods
2) Nominal Group Technique: This technique is also useful to take important decisions in the team. The team is divided into smaller groups and best possible ideas are noted down in the piece of paper and advise team members to vote the best possible option or choice. The choice or alternative receives the maximum responses or vote is accepted as the group decision.
Continuing with above example, the group of designers is divided into smaller teams. Every member of the team gives their idea and at the end, each member votes for the best one. At the end, the idea gets maximum responses would be finalised.
3) Voting method: It starts with a round of voting where individuals cast his vote for the shortlisted options. Each individual gives the one vote at a time. The process is repeated many times if the maximum number of votes is generated for best option (Starcke and Brand, 2012). For instance, from the above-given situation, each team of the designer proposed their strategy in front of other team and that team would vote for the one they prefer best and that would consider final.
4) Delphi Method: In this method of decision making the facilitator allows team members to submit their ideas without writing their names on the paper. Other team members do not know the owner of the ideas. The manager or facilitator collects their views from different employees and circulates them others for improving and modify them and this process continues till the final decision is made. Similarly, in the above example, the facilitator can collect the different strategies of the employees without disclosing their names and later the facilitator collects the improved strategy and selects the best one (Proctor, 2014).
These decision-making methods are commonly adopted in the organisation to carry out the important decisions at every hierarchy level of the organisation.
The decision-making models are rapidly used by the organisations due to the complexity and challenging business environment in the past recent years. There a huge amount of data and algorithms has opened the new ways to improve the corporate performance. There are two types of decision models are used in the organisation i.e. the rational model (Classical model) and bounded rational model. In the rational model, the management or manager or decision maker takes the decision to consider the best alternative. In bounded rational model, decision is based upon those alternatives that satisfy the minimum criteria. According to the modern research, it depicts that the managers who make the best decisions don’t over analyse the rational decision-making approach (Del Missier, et al., 2012). The rational decision approach is used by the manager is falls into three types i.e. classical models, administrative models and political models. The manager selects the model according to the type of decision model whether it is programmed or non programmed and the elements attached with the model i.e. risk, uncertainty and ambiguity. The programme decisions are planned decisions which are taken according to the organisational problems. Non programmed decisions are the outcomes of the strategic planning of the organisation due to high uncertainty and complex decision process is involved.
Decision-Making Models
The classical model of decision making that tells managers to how they should make decisions. In this model, the approach is assumed by the manager is logical and rational. This type of model is based on assumptions and readily information is available for managers and they are capable of taking optimal decision after evaluating every alternative (Tropman, 2013).
Figure 4: Source: Tropman, 2013)
In the above figure, it indicates that the manager faced a situation and then they carefully evaluate the alternatives and takes the final decision for the organisation. Moreover, there are four assumptions behind the model listed as follows:
- Clearly defined problem – It assumes that manager or decision maker is know all the information and objectives
- Certain environment – The model suggests that the decision maker eliminates all the uncertainties that influence the decision. As a result, there is no risk associated with it.
- Full information – The manager is able to recognise the all alternatives and rank them effectively (Ford and Richardson, 2013).
- Rational decisions- Finally the manager or decision maker believes that the decision is based upon the interest of the organisation.
Similarly, there are some drawbacks of this model that decision maker have bounded by time or resources and can continue evaluate the alternatives until he finds the best available alternative that suits the organisational objectives. Furthermore, another drawback is that the decision maker has the cognitive ability to rank all the alternatives accurately and effectively if the full information is available.
Another model which is used by the decision maker in the organisation is bounded rational model; this model says that the decision maker is taking decisions under certain assumptions and constraints due to limited time and resources in the organisation (Saaty and Vargas, 2012). The decision is taken on the basis of the limited time, resource availability and limited cognitive ability of the manager. This model is upon following assumptions
- a) Satisficing (bounded rationality)
- b) Incremental
- c) Intuition
In these assumptions, manager seeks the alternatives until they find the satisfactory, not optimal. These assumptions are taken on the basis of time, resources and ability constraints. For instance, the company has launched the new satellite mobile phone that weighed 1.5 pounds and it could not be used in the buildings and cars. Instead of waiting to improve the technology, Company sells the phone into the open market that covers the cost of the company and product. In this situation, it clearly indicates the bounded decision making of the company due to limited resources and time, the management takes the decision that satisfies the minimum requirement of the organisation.
The Cynefin framework is developed by the Dave Snowden in 1999 in the context of knowledge management and organisational strategy (Kaner, 2014). Below figure indicated the various elements described in the framework that helps the manager to assess, where the organisation stands in the external environment.
Figure 5: (Source: NCBI, 2017) Cynefin framework of decision making
In the above figure, it indicates the different domains and each situation requires the different actions. It is divided into five categories i.e. simple, complicated, complex, Chaotic and disorder. These categories enable the manager to how they perceive the situations and to take decisions according to the other people’s behaviour. Below given are the explanations of different domains according to the different categories.
Simple domain indicates the Known category in the figure it means that if you do ‘X’ the result is ‘Y’. The cause and effect relationship is clear and this is the best practice adopted by the managers in the organisation because it is based on rules (NAP, 2017). The second domain is complicated and it is related to the Known category which indicates the relationship between the cause and effect requires expertise due to many alternatives available. In this situation, the manager needs to sense-analyze and respond the situation for good practice in the organisation. In complex category the cause and effect relationship is unknown and manager not known about the outcomes of the decisions. In this situation, there is no right or wrong answer, so the manager makes series of experiments in case of emergency situations for e.g. bad quarterly results, organisational change and merger and acquisition in the organization (Strategic Content, 2017). In chaotic category cause and effects are unclear so that the manager as the only option to act-sense and respond to handle the complex situations. Finally, the disordered domain is not determined and it lies in the centre. In this type of situation, manager has no clarity which of the other domains applies.
Decision-making Taxonomy consists of policies, procedures and documentation required for effective management. Taxonomy is the process which evolves and grows with the business and it ensures that if the growth happens in the organisation it should be in an organised and predictable manner. Good taxonomy governance in the organisation answers the below questions clearly:
-Who are the stakeholders?
-What are the key responsibilities of the organisation?
-Who is responsible for changes in the organization?
-What is the process of change?
-What are reviewed and updated processes?
To develop the good taxonomy governance policies in the organisation which helps to maintain the structure, workflow and management processes in the company (Springer, 2017).
Conclusion
As per the above report, it is concluded that the decision making is an important process in the organisation to accomplish the objectives effectively. Furthermore, it is also concluded that the decision-making models and processes supports the management to evaluate the alternatives effectively which leads to reducing the chances of uncertainty and risk while taking important decisions.
References
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Umassd (2017). Decision-making process. Retrieved from : https://www.umassd.edu/fycm/decisionmaking/process/
Bruce, J.P. (2011). Understanding Decision-making Processes in Airline Operations Control. UK: Ashgate Publishing Ltd.
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