This project is designed to enable the learner to:
Step 1: Problem identification and diagnosis
The first stage in the decision-making process is recognizing that a problem exists and that action has to be taken.
Unless the problem is identified in precise terms solutions are very difficult to find. In seeking to identify a problem, managers can use a variety of sources of data including comparing organizational performance against previous years or the current performance of other organizations.
Problem identification must be followed by a willingness to do something to rectify the situation. Before taking action the problem needs accurate diagnosis. Diagnosis involves assessing the true cause of the problem.
Step 2: Identification of alternatives
Managers should try to identify as many alternatives to solve the problem as possible in order for the broad options for the organization. In generating alternatives the organization may look toward ready-made solutions that have been tried before or custom-made solutions that have to be designed specifically for the problem at hand.
In today’s business environment more and more organizations are applying custom-made solutions to enhance competitive advantage.
Step 3: Evaluating alternatives
Having identified the available alternatives, a manager needs to evaluate each alternative in order to choose the best one. Consideration should be given to the advantages and disadvantages as well as the costs and benefits associated with each one. Most alternatives will have positive and negative aspects and the manager will have to try to balance anticipated outcomes.
When evaluating alternatives managers may consider the potential consequences of alternatives under several different scenarios.
Step 4: Choice of alternatives
Having evaluated the various alternatives the next step is to choose the most suitable one. If for some reason none of the options considered are suitable then the manager should revert back to step 2 and begin again. When there are suitable alternatives and Steps 2 and 3 have been conducted skilfully, selecting alternatives may be relatively eased.
In practice, however, alternatives may not differ significantly in terms of their outcomes and therefore decisions will be a matter of judgment. In coming to a decision a manager will be confronted by many conflicting requirements which will have to be taken into account.
Step 5: Implementation
Once the decision has been made it needs to be implemented. This stage of the process is critical to the success of the decision and is the key to effective decision making. The best alternative is worth nothing if it is not implemented properly.
In order to successfully implement a decision, managers must ensure that those who are implementing it fully understand why the choice was made, why it is being implemented and are fully committed to its success.
Many organizations are attempting to push decision making further down the organization to ensure that employees feel some sense of ownership in the decisions that are made.
Step 6: Evaluation
Having implemented the decision, it then needs to be evaluated to provide feedback. The process of evaluation should take place at all managerial levels. This step allows managers to see what the results of the decision have been and to identify any adjustments which need to be executed.
In almost all cases some form of adjustment will be made to ensure a more favorable outcome. Evaluation and feedback are not on-off activities and should form part of an ongoing process.
As conditions change decisions should be re-evaluated to ensure that they are still the most appropriate for the organization.