“Decision making is crucial in business, involving selecting the best course of action among several alternatives. It impacts profitability and organizational success.”
Steps of Decision Making Process:
Step 1: Identification of the Purpose of the Decision
- Analyze the Problem: Understand the issue thoroughly.
- Key Questions: What is the problem? Why solve it? Who is affected? Is there a deadline?
Step 2: Information Gathering
- Collect Data: Gather all relevant information about factors and stakeholders involved in the problem.
- Tools: Use tools like Check Sheets for efficient data collection.
Step 3: Principles for Judging the Alternatives
- Set Criteria: Define baseline criteria for evaluating alternatives, considering organizational goals and culture.
- Example: Profitability is a common criterion unless exceptional circumstances dictate otherwise.
Step 4: Brainstorm and Analyze the Different Choices
- Idea Generation: Brainstorm to list all possible solutions.
- Understand Causes: Use Cause-and-Effect diagrams and Pareto Charts to identify and prioritize causes.
- Generate Alternatives: Develop all potential solutions for the problem.
Step 5: Evaluation of Alternatives
- Assess Options: Evaluate each alternative using judgment principles and decision-making criteria.
- Compare Positives and Negatives: Weigh the pros and cons of each option.
Step 6: Select the Best Alternative
- Make an Informed Choice: Choose the best alternative based on thorough analysis.
- Ease of Selection: This step is straightforward if the previous steps are followed diligently.
Step 7: Execute the Decision
- Action Plan: Convert the decision into a plan or sequence of activities.
- Implementation: Execute the plan with or without the help of subordinates.
Step 8: Evaluate the Results
- Assess Outcomes: Review the results of the decision.
- Learn and Improve: Identify lessons learned to enhance future decision-making skills.
Key Points:
- Balance Consequences: Weigh positive and negative outcomes to avoid losses and ensure sustained growth.
- Confrontation and Control: Making and accepting tough decisions is crucial for maintaining control over corporate life and time.