Steps of decision making process in management

Steps of decision making process in management

Making the right decisions is a priority to any organisation. This is why possessing a knowledge of the decision making process is important. At least, on a daily basis, managers need to make decisions on issues that affect the day-to-day operations of the organisation. There are also moments when they will need to make strategic plans on a long-term basis. Interestingly, when the processes involved in decision-making are followed, it helps managers to make informed decisions in a more deliberate manner. This means that such decisions will not be haphazard as different alternatives would have been weighed. With this, there is the higher chance of choosing a satisfactory option that is possible. Therefore, in this article, we appraise different steps involved in decision making process.

what is managerial decision making process
decision making process graphic
e-commerce decision making process

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Managers are daily faced with the need to make decisions. This has to do with making the right choices. The process begins with being able to identify the decision as well as the ability to gather relevant information that would be needed in the process. Then, it also involves assessing different resolution options that are available. By implication, among these various available alternatives, a manager is expected to choose one that he sees to be the best and then let go of other alternatives. However, this process of making a decision takes time, effort and other resources. This is because every wrong decision made impacts negatively on the advancement of the organisation.

What is managerial decision making process?

A managerial decision-making process has to do with the steps which a manager follows in deciding on issues that concern the smooth operation of an organisation. Some of the decision making process examples involve issues that affect areas of an organisation including the size, their rate of growth as well as the methods of compensating employees. When the decisions are successful, the organisation enjoys a profitable outcome but when the decisions are wrong, the organisation suffers.

However, in a way to help a manager to make the right and productive decisions, there are several tools and techniques that are available to guide him through. An example of such is the decision matrix. This is used to evaluate various options of a decision that is available through the creation of a table which is used to weigh each option in their order of importance.

Another type of such tools and techniques is the T-Chart. What this works for simply is to weigh both the positive and negative sides of the options. It is good because it helps to take into consideration both sides of each option during the decision-making process. Other tools are the Pareto analysis, Decision tree, Cost-benefit analysis and so on.

Stages in decision making process

In making decision, knowledge and detailed research are two vital elements that must be present. This is because with knowledge, it is easy to access alternatives that are available in facing a particular problem. The depth and quality of knowledge available to a manager can influence and determine the quality of decisions that such would make. Therefore, let us take a look at the various steps that are involved in making quality-based decisions.

1. Problem identification

The first step involved in making any decision is an understanding of what the existing problem exactly is. Being able to define the problem as it is obtainable will help the manager or those that are involved in the decision-making process to come up with the best approach to give it. In analysing the problem, it is important to discover the symptoms and the losses which are likely involved. To define or identify the problem, it is advisable to ask questions like:

  • What exactly is the problem at hand?
  • How did it start?
  • Why do we have to solve it?
  • Who are the parties affected by this existing problem?
  • What are the constraints?

When the right questions are asked, identifying the problem becomes easier.

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2. Information gathering

In order to make a quality decision, it is important to gather thorough information that relates to the existing problem. To help out with this stage, it is important to also ask questions such as the following:

  • What information do we need?
  • What are the best sources where the required information can be gathered?
  • How can the information be gathered?

In the process, you should be able to differentiate between the internal and external sources for gathering the information you need. It may involve interviewing people, checking online, and reading through books. The most important thing is to make sure that the right information that is needed is made available so that the wrong decision alternative is not chosen eventually.

3. Identify various available alternatives

In the process of gathering information, various alternatives or possible steps to solve the problem will be showing up. Apart from this, after the adequate information has been gathered, a manager would have become better informed so that he can also come up with additional alternatives. These are the options he feels may also work in solving the problem at hand.

stages in decision making process
customer decision making process
decision making process example
values based decision making process

In essence, at this stage, the manager will need to list out all the possible alternatives that he considers may work in the process of solving the problem. However, if the best alternative would be arrived at, it is worth considering the ethics of the organisation. An ethical decision making process helps to consider the best option that aligns and is consistent with the ethics of the organisation. This is essential because any decision that is made that will be at the detriment of the organisation is not worth it in the first place.

4. Weigh the alternatives

It is important for you to consider the level and extent to which all the alternatives which you have found in your information-gathering process will be able to solve the identified problem. With the tools and techniques that are available in the decision-making process which were discussed earlier, you will be able to appraise the best alternative that will be potent enough to solve the existing problem. You need to weigh each of them to find out which one will work best. However, while embarking on this, you must be able to draw a line on your emotions so as to avoid making sentimental decisions. If it also requires you to get some more information on any of the alternatives, you should consider going for it.

5. Choose the best alternative

Once you have weighed both the positive and the negative sides of each of the alternatives, choosing the best one that will solve the existing problem will become easier. Remember that the essence of going through all these processes is to make sure that you arrive at the best possible solution that will not cause any damage or cost the organisation in the long run. Occasionally, it may require that you seek some external advice. This option can give you a new perspective on the existing problem and the best possible solutions to go for.

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Remembering the values based decision making process is critical at this stage. Making decisions in light of the core values of your organisation will help you to know what alternative will work best while the values of your firm are not stabbed or murdered. The decision-making process also helps you to be sure that the alternative you are going for will not affect your organisation in the long run.

6. Implementation of plan

After you have gone through all the processes discussed earlier and you have finally come up with a workable alternative, then you will convert it into a plan. Once you have the plan on the ground, all you have to do next is to implement it. Remember that it is not enough for you to come up with a solution, an action is very important. You need to commit yourself and every other person in the organisation or that is affected by the problem on the ground to the solution.

7. Evaluate the outcome

It is not enough to just implement a plan and let it be, you need to evaluate how effective the plan is in solving the problem on ground. You need to ask yourself or your team questions like:

  • How well as the plan been able to solve the identified problem?
  • What is left and needs to be solved?
  • Are there other challenges associated with the implemented plan?
  • What lessons can be learned from this plan?
  • What do we need to work more on or avoid in the future?

All these questions and others that you come up with are important to be answered so as to be sure that the expected result has been achieved. While no one is too perfect to make a mistake, if you find out that the plan is not yielding the expected result, then you may have to switch. Work on another possible alternative and see how far that will be able to solve the problem on ground.

Below is a decision making process graphical illustration. It illustrates the processes involved in making a decision in an organisation while trying to solve an identified problem as explained above.

what is managerial decision making process
decision making process graphic
e-commerce decision making process

Apart from the managerial decision making process, another point that is worth taking note of is the fact that there are processes that customers also go through in making a purchase decision. This process is called the customer decision making process. These processes have to do with an identification of what their needs are and then, a collection of the information that is relevant to them. Apart from these, they also evaluate various available alternatives before they finally decide on what to purchase. There are a few factors that influence the decision making of any customer. These factors include the psychological status and economic factor. There are also environmental factors like their social and cultural values.

Then, there is also the e-commerce decision making process. This process explains how customers who visit e-stores or web shops form their decision before they make any purchase. Based on the AIDA Model, they consider of the product grabs their attention enough and then if it arouses their interest. Once that is achieved, they also see if there is a desire for the product before they then take an action which is making a purchase.

Based on all that has been discussed so far in the decision making process, it is evident that making decisions are inevitable for managers. They need to make daily decisions as well as long-term decisions. As such, the kind of decision made impacts positively or negatively on the organisation. This is why it is important to have a working knowledge of the various steps that are involved in making the right decisions.

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