Explain the importance of decision-making. Describe few models of decision making. Illustrate the process of decision making in your organization or any organization you are familiar with. Suggest measures to improve the same. Briefly describe the organization you are referring to.
We are referring to LKG India Pvt.Ltd. as a point of view of manager.
Managers/Supervisors constantly make decisions that affect the work of others'. Day-to-day situations involving supervisory decisions include employee morale, the allocation of effort, the materials used on the job, and the coordination of schedules and work areas. The supervisor must recognize problems, make a decision, initiate an action, and evaluate the results. In order to make decisions that are consistent with the overall goals of the organization, supervisors use guidelines set by top management. Thus, it is difficult for supervisors to make good decisions without good planning.
An objective becomes a criterion by which decisions are made. A decision is a solution chosen from among alternatives. Decisions must be made when the supervisor is faced with a problem. Decision-making is the process of selecting an alternative course of action that will solve a problem. The first decision is whether or not to take corrective action. A simple solution might be to change the objective. Yet, the job of the supervisor is to achieve objectives. Thus, supervisors will attempt to solve most problems.
A problem exists whenever there is a difference between what actually happens and what the supervisor wants to have happen. Some of the problems faced by the supervisor may occur frequently. The solutions to these problems may be systematized by establishing policies that will provide a ready solution to them. In these repetitive situations, the problem solving process is used once and then the solution (decision) can be used again in similar situations.
Exceptions to established routines or policies become the more difficult decisions that supervisors must make. When no previous policy exists, the supervisor must invent a solution. Problem solving is the process of taking corrective action in order to meet objectives. Some of the more effective decisions involve creativity. To get better ideas, the supervisor follows the steps in the problem solving process. The steps are built on a logical analysis.
Making decisions has been identified as one of the primary responsibilities of any manager/supervisor. Decision may involve allocating resources, appointing people, investing capital or introducing new products. If resources like men, money, materials, machines, time and space were abundant, clearly any planning would be unnecessary. But, typically, resources are scarce and so there is a need for planning. Decision making is at the core of all planned activities. We can ill afford to waste scarce resources by making too many wrong decisions or by remaining indecisive for to long a time.
Decision making to an extent depends on individual to individual, information and time available, nature of decision (structured, unstructured, routine, repetitive, etc.), degree of risk involved, etc. Among these, individual factors such as bias, knowledge of individual making decision, analytical ability', intuition, etc. are crucial factors which need to be given attention to. This is so because given the other factors, these are the factors which can influence the quality of decision in similar circumstances.
Generally, the supervisor can think through all aspects of the problem by answering the following questions. What seems to be the trouble? Why is it causing the trouble? What are the causal factors? What can be done in all possibilities? Are all these possibilities workable? What are the probabilities of success for each of the solutions? What are the appropriate alternatives? What is the correct choice? Have I logically eliminated the other choices? When and how can the solution be implemented? What is the best way to implement the solution? Has the solution solved the original problem? Have I planned, organized, and provided for the control of actions leading to solutions?
Ideally, the steps in the problem solving process are (1) define the problem, (2) identify decision criteria, (3) develop alternatives, (4) decide, (5) implement the decision, and (6) evaluate the decision.
Step 1: Define the problem. The decisionHmaking process begins when the supervisor recognizes the problem, experiences pressure to act on it, and has the resources to do something about it. This means that the supervisor must correctly define the problem. Problem identification is not easy. The problem statement can be too broad or too narrow. Supervisors are easily swayed by a solution orientation that allows them to gloss over this first and most important step. Or, what is perceived, as the cause of a problem may actually be a symptom.
The supervisor must solve the right problem. In order to define the problem, the supervisor must describe the factors that are causing the problem. These are the symptoms, visible as circumstances or conditions that indicate the existence of the problem — the difference between what is desired and what exists. By not clearly defining the problem, ineffective action will be taken.
Step 2: Identify decision criteria. The supervisor determines what is relevant in making a decision by isolating the facts pertinent to the problem. Since there is no single best criterion for decision making where a perfect knowledge of all the facts is present, a set of criteria must be used for the problem at hand. These decision criteria identify what will guide the decision-making process. They are the important facts relevant to the problem as defined. It is important that decision criteria be established early in the problem solving process because if the criteria are developed as analysis of data is taking place, the chances are good that the data will determine the criteria. Thus, setting the criteria early introduces objectivity. These facts can be tangible as well as intangible. Tangible facts might include the work assignments, the work schedules, or work orders. Intangible facts could include morale, motivation, and personal feelings and perceptions..
This process is somewhat subjective, because what serves as important criteria for one supervisor may be less important for another. For instance, the decision-making criteria used to hire employees differs across departments; the sales department uses the number of new store openings in different geographic areas, while the manufacturing department uses how many units of the product needs to be produced and how quickly.
Key uncertainties, the variables that result from simple chance, must be identified. Regardless of the solution chosen, key uncertainties are important because they can be plusses or minuses. What are the chance variables? Which way would these variables fall, relative to each of the workable solutions?
Not all criteria have the same importance. (Criteria weights can vary among different supervisors as
well.) Assigning weights indicates the importance a supervisor places on each criterion for resolving the
problem and helps establish priorities. Criteria that are extremely important can .be given more weight,
while those that are least important can be given less weight.
Step 3: Develop alternatives. The supervisor must identify all workable alternative solutions for resolving the problem. The term workable prevents alternative solutions that are too expensive, too time-consuming, or too elaborate. The best approach in determining workable solutions is to state all possible alternatives, without evaluating any of the options. This helps to ensure that a thorough list of possibilities is created.
Generating alternative solutions requires divergent thinking (deviating from traditional.) Groups can be used to generate alternative solutions. Brainstorming is the process of suggesting as many alternatives as possible without evaluation.
The supervisor must judge what would happen with each alternative and its effect on the problem. The
strengths and weaknesses of each alternative are critically analyzed by comparing the weights assigned
and then eliminating the alternatives that are not workable. Probability factors — such as risk,
uncertainty, and ignorance - must be considered.
Step 4: Decide. The supervisor must make a choice among the alternatives. The alternative that rates the highest score should be the preferred solution. The decision can be assisted by the supervisor's experience, past judgment, advice from others, or even a hunch.
Timing impacts the decision. The probable outcome and its advantages versus its disadvantages are affected at any given time. Which alternative is most appropriate at a given time?
Decisions are made by consensus when solutions are acceptable to everyone in the group, not just a majority. Everyone is included, and the decision is a win-win situation. Consensus does not include voting, averaging, compromising, negotiating, or trading (win-lose situations). Every member accepts the solution, even though some members may not be convinced that it is the best solution. The "right" decision is the best collective judgment of the group as a whole.
Step 5: Implement the decision. Once the solution is chosen, the decision is shared with those whose work will be affected. Ultimately, human beings will determine whether or not a decision is effectively implemented. If this fact is neglected, the solution will fail. Thus, implementation is a crucial part of the decision-making process. Including employees who are directly involved in the implementation of a decision, or who are indirectly affected by that decision, will help foster their commitment. Without their commitment, gaining support and achieving outcomes becomes increasingly difficult. With this commitment, the supervisor has a reasonable degree of assurance that the decision will be accepted and has the necessary support.
Step 6: Evaluate the decision. The supervisor must follow up and appraise the outcomes from the decision to determine if desired results were achieved. If not, then the process needs to be reviewed from the beginning to determine where errors may have been made. Evaluation can take many forms, depending on the type of decision, the environment, working conditions, needs of managers and employees, and technical problems. Generally, feedback and reports are necessary to learn of the decision's outcome. Sometimes, corrections can be introduced for different steps. Other times, the entire decision-making process needs to start over.
Having gone through the study materials and understood the decision making models, if I am asked to, I would rather honestly categories the decision making process at LKG India Ltd. into Bounded Rationality Model or Administrative Man Model wherein sequential attention to alternative solutions are given. Various alternatives are identified and evaluated one at a time. When an acceptable-solution is found, the search is discontinued. At LKG India Ltd., many times heuristics are also used for sorting out large number of alternatives.
Having understood the difference between the Econological model and Bounded Rationality model and the drawbacks of the later, I would now suggest my organisation to adopt the former one. Because in Bounded Rationality model, all possible solutions are not identified at a time and thus the outcome may be 'good enough' but not necessarily 'the best'. Secondly, use of heuristics introduces bias in the decision making process. What have been good may not be good in future as well or even if it will be good, we must always attempt to seek better one and ultimately the best one. Thirdly, while the Bounded Rationality attempts to 'satisfy', Econological model attempts to optimise. There is big difference between the two. And as a manager we must attempt to optimise. Last but not the least, LKG is in involved in business and certain economic activities and hence, economic rationality should be preferred which is assured by the Econological model.
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We are referring to LKG India Pvt.Ltd. as a point of view of manager.
Managers/Supervisors constantly make decisions that affect the work of others'. Day-to-day situations involving supervisory decisions include employee morale, the allocation of effort, the materials used on the job, and the coordination of schedules and work areas. The supervisor must recognize problems, make a decision, initiate an action, and evaluate the results. In order to make decisions that are consistent with the overall goals of the organization, supervisors use guidelines set by top management. Thus, it is difficult for supervisors to make good decisions without good planning.
An objective becomes a criterion by which decisions are made. A decision is a solution chosen from among alternatives. Decisions must be made when the supervisor is faced with a problem. Decision-making is the process of selecting an alternative course of action that will solve a problem. The first decision is whether or not to take corrective action. A simple solution might be to change the objective. Yet, the job of the supervisor is to achieve objectives. Thus, supervisors will attempt to solve most problems.
A problem exists whenever there is a difference between what actually happens and what the supervisor wants to have happen. Some of the problems faced by the supervisor may occur frequently. The solutions to these problems may be systematized by establishing policies that will provide a ready solution to them. In these repetitive situations, the problem solving process is used once and then the solution (decision) can be used again in similar situations.
Exceptions to established routines or policies become the more difficult decisions that supervisors must make. When no previous policy exists, the supervisor must invent a solution. Problem solving is the process of taking corrective action in order to meet objectives. Some of the more effective decisions involve creativity. To get better ideas, the supervisor follows the steps in the problem solving process. The steps are built on a logical analysis.
Making decisions has been identified as one of the primary responsibilities of any manager/supervisor. Decision may involve allocating resources, appointing people, investing capital or introducing new products. If resources like men, money, materials, machines, time and space were abundant, clearly any planning would be unnecessary. But, typically, resources are scarce and so there is a need for planning. Decision making is at the core of all planned activities. We can ill afford to waste scarce resources by making too many wrong decisions or by remaining indecisive for to long a time.
Decision making to an extent depends on individual to individual, information and time available, nature of decision (structured, unstructured, routine, repetitive, etc.), degree of risk involved, etc. Among these, individual factors such as bias, knowledge of individual making decision, analytical ability', intuition, etc. are crucial factors which need to be given attention to. This is so because given the other factors, these are the factors which can influence the quality of decision in similar circumstances.
Generally, the supervisor can think through all aspects of the problem by answering the following questions. What seems to be the trouble? Why is it causing the trouble? What are the causal factors? What can be done in all possibilities? Are all these possibilities workable? What are the probabilities of success for each of the solutions? What are the appropriate alternatives? What is the correct choice? Have I logically eliminated the other choices? When and how can the solution be implemented? What is the best way to implement the solution? Has the solution solved the original problem? Have I planned, organized, and provided for the control of actions leading to solutions?
Ideally, the steps in the problem solving process are (1) define the problem, (2) identify decision criteria, (3) develop alternatives, (4) decide, (5) implement the decision, and (6) evaluate the decision.
Step 1: Define the problem. The decisionHmaking process begins when the supervisor recognizes the problem, experiences pressure to act on it, and has the resources to do something about it. This means that the supervisor must correctly define the problem. Problem identification is not easy. The problem statement can be too broad or too narrow. Supervisors are easily swayed by a solution orientation that allows them to gloss over this first and most important step. Or, what is perceived, as the cause of a problem may actually be a symptom.
The supervisor must solve the right problem. In order to define the problem, the supervisor must describe the factors that are causing the problem. These are the symptoms, visible as circumstances or conditions that indicate the existence of the problem — the difference between what is desired and what exists. By not clearly defining the problem, ineffective action will be taken.
Step 2: Identify decision criteria. The supervisor determines what is relevant in making a decision by isolating the facts pertinent to the problem. Since there is no single best criterion for decision making where a perfect knowledge of all the facts is present, a set of criteria must be used for the problem at hand. These decision criteria identify what will guide the decision-making process. They are the important facts relevant to the problem as defined. It is important that decision criteria be established early in the problem solving process because if the criteria are developed as analysis of data is taking place, the chances are good that the data will determine the criteria. Thus, setting the criteria early introduces objectivity. These facts can be tangible as well as intangible. Tangible facts might include the work assignments, the work schedules, or work orders. Intangible facts could include morale, motivation, and personal feelings and perceptions..
This process is somewhat subjective, because what serves as important criteria for one supervisor may be less important for another. For instance, the decision-making criteria used to hire employees differs across departments; the sales department uses the number of new store openings in different geographic areas, while the manufacturing department uses how many units of the product needs to be produced and how quickly.
Key uncertainties, the variables that result from simple chance, must be identified. Regardless of the solution chosen, key uncertainties are important because they can be plusses or minuses. What are the chance variables? Which way would these variables fall, relative to each of the workable solutions?
Not all criteria have the same importance. (Criteria weights can vary among different supervisors as
well.) Assigning weights indicates the importance a supervisor places on each criterion for resolving the
problem and helps establish priorities. Criteria that are extremely important can .be given more weight,
while those that are least important can be given less weight.
Step 3: Develop alternatives. The supervisor must identify all workable alternative solutions for resolving the problem. The term workable prevents alternative solutions that are too expensive, too time-consuming, or too elaborate. The best approach in determining workable solutions is to state all possible alternatives, without evaluating any of the options. This helps to ensure that a thorough list of possibilities is created.
Generating alternative solutions requires divergent thinking (deviating from traditional.) Groups can be used to generate alternative solutions. Brainstorming is the process of suggesting as many alternatives as possible without evaluation.
The supervisor must judge what would happen with each alternative and its effect on the problem. The
strengths and weaknesses of each alternative are critically analyzed by comparing the weights assigned
and then eliminating the alternatives that are not workable. Probability factors — such as risk,
uncertainty, and ignorance - must be considered.
Step 4: Decide. The supervisor must make a choice among the alternatives. The alternative that rates the highest score should be the preferred solution. The decision can be assisted by the supervisor's experience, past judgment, advice from others, or even a hunch.
Timing impacts the decision. The probable outcome and its advantages versus its disadvantages are affected at any given time. Which alternative is most appropriate at a given time?
Decisions are made by consensus when solutions are acceptable to everyone in the group, not just a majority. Everyone is included, and the decision is a win-win situation. Consensus does not include voting, averaging, compromising, negotiating, or trading (win-lose situations). Every member accepts the solution, even though some members may not be convinced that it is the best solution. The "right" decision is the best collective judgment of the group as a whole.
Step 5: Implement the decision. Once the solution is chosen, the decision is shared with those whose work will be affected. Ultimately, human beings will determine whether or not a decision is effectively implemented. If this fact is neglected, the solution will fail. Thus, implementation is a crucial part of the decision-making process. Including employees who are directly involved in the implementation of a decision, or who are indirectly affected by that decision, will help foster their commitment. Without their commitment, gaining support and achieving outcomes becomes increasingly difficult. With this commitment, the supervisor has a reasonable degree of assurance that the decision will be accepted and has the necessary support.
Step 6: Evaluate the decision. The supervisor must follow up and appraise the outcomes from the decision to determine if desired results were achieved. If not, then the process needs to be reviewed from the beginning to determine where errors may have been made. Evaluation can take many forms, depending on the type of decision, the environment, working conditions, needs of managers and employees, and technical problems. Generally, feedback and reports are necessary to learn of the decision's outcome. Sometimes, corrections can be introduced for different steps. Other times, the entire decision-making process needs to start over.
Having gone through the study materials and understood the decision making models, if I am asked to, I would rather honestly categories the decision making process at LKG India Ltd. into Bounded Rationality Model or Administrative Man Model wherein sequential attention to alternative solutions are given. Various alternatives are identified and evaluated one at a time. When an acceptable-solution is found, the search is discontinued. At LKG India Ltd., many times heuristics are also used for sorting out large number of alternatives.
Having understood the difference between the Econological model and Bounded Rationality model and the drawbacks of the later, I would now suggest my organisation to adopt the former one. Because in Bounded Rationality model, all possible solutions are not identified at a time and thus the outcome may be 'good enough' but not necessarily 'the best'. Secondly, use of heuristics introduces bias in the decision making process. What have been good may not be good in future as well or even if it will be good, we must always attempt to seek better one and ultimately the best one. Thirdly, while the Bounded Rationality attempts to 'satisfy', Econological model attempts to optimise. There is big difference between the two. And as a manager we must attempt to optimise. Last but not the least, LKG is in involved in business and certain economic activities and hence, economic rationality should be preferred which is assured by the Econological model.
