DECISION MAKING

Dr.S.P.DENISIA
Professor
Thiagarajar School of Management,
Thruparankundram - Madurai
 Definition of Decision/dɪˈsɪʒ(ə)n/Making
 The process of examining your possibilities options,
comparing them, and choosing a course of action.
 A decision is a choice made between two or more
available alternatives.
 Decision making is the process of choosing the best
alternative for reaching objectives. (Samuel C.Certo)
 Decision making can be defined as a process of
choosing between alternatives to achieve a goal.
 It is the process by which an individual chooses one
alternative from several to achieve a desired
objective.
 Decision making
• Decision making is a challenge everyday –whether simple
or serious.
• At the time of crisis –Politicians , doctors judges ,
corporate bosses and army officers exhibit high level
of decision making.
• We cannot devise right decisions to our problems.
• Decision making is an opportunity to explore new
ideas.
• We learn new things & new experience teach to
take next better decision. Decision making is the most
informed decision for fruitful settlement of a problem
or an issue.
 Decision making
 “Information is a source of learning. But unless
it is organised, processed, and available to the
right people in a format for decision making , it
is a burden , not a benefit”.-William Pollard.
 Right decision at the right time leaves a
significant influence on our personal &
professional lives.
 Taking right decision is a skill – need to master &
implement like other skills for our growth.
Decision making & problem solving skills essential for
personal & professional growth. One has to balance &
move forward.
It is a reflection on our ability to negotiate and solve our
problems.
 Decision making critically play a vital role in the
progress, productivity & enhancement of an organisation.
Sound decisions need more wisdom & transforms a
professional to a great leader - can make or mar a
leader - adds a value to a great leader.
 A good leader with this virtue can analyze information,
choose the right course of action to settle a crisis.
 Decision making
 We take decisions everyday –big or small,
personal or professional.
 Decision making is intrinsic – take decisions
for people , organisation & nation.
 Sound decisions need more wisdom &
transforms a professional to a great leader.
 The outcome of a decision can make or mar
a leader.
 Decision making
 Decision making & problem solving skills are
essential for personal & professional growth.
We have to balance & move forward.
 DM is a reflection on our ability to negotiate
and solve our problems.
 Organisation critically plays a vital role in the
progress and productivity / enhancement of
the organisation.
 Decision making
 We take decisions for everything in life.
 It is integral in life.
 It is a process to examine available options
and choose the most viable option in the
given circumstance.
 It is an important process to find a way to
evaluate plenty of complex information
related to the issues.
 Decision making
Making Effective Decisions Factors:
 Perception.  Goals.
 Priority  Values
 Acceptability  Demands
 Risk  Style
 Resources  Judgement.
 It adds a value to a great leader.
 The leader is endowed with the virtue of DM
correctly analyzing information choose the
right course of action to settle a crisis.
 Hierarchy of knowledge is instrumental in
effective DM
 Leader should take the best possible decision
to solve the problem.
 Every problem needs thorough investigation to
take the best possible decision to solve it.
 Six C's in Decision Making

1. Construct - a clear picture of precisely what must be

decided.
2. Compile - a list of requirements that must be met.
3. Collect - information on alternatives that meet the
requirements.
4. Compare - alternatives that meet the requirements.
5. Consider - the "what might go wrong" factor with each
alternative.
6. Commit- to a decision and follow through with it.
 Phases of Decision Making

Decision making Choice of

Intelligent Activity
Activity

W
a
n
t

Need
 SIX Steps in Decision making
• Identify the Problem
• Analyse & diagnose the problem
• Develop alternative solutions
• Select the best solutions
• Convert decision to action
• Follow up action
 1 Know your problem
One must be clear about the problem.
Problem is a discrepancy (difference)
between an existing and a desired state.
Example:
“The manager has resigned, and we
need another manager”
The phrase “manager has resigned”
reflects the current state while “need
another manager” represents a desired
state.
Thinking, analyzing scrutinizing and
finalizing involves decision making
2. Analyze and Identify the problem
One has to thoroughly probe from different
aspects to settle any problem
Problem has to be analyzed in totality.
Decision regarding the solution will be more
positive & beneficial if analyzed well.
Ask the following questions:
1.How important is to make a decision?
2.What is the probable impact?
3.What would happen in the case of no decision?
4.What information do you need to come to a
decision?
 SWOT ANALYSIS

STRENGTH WEAKNESS

OPPORTUNITY THREATS
 3 Collect your data
• Effective decision making depends on the kind
of information that one applies to solve a
specific problem.
• Nowadays there is scope for easy access of
information as the workplace is facilitated with
communication technology.
• Relevant & updated information helps to make
decisions based on facts about reality.
• Well researched knowledge in decision making
brings clarity about possible solutions and infuse
confidence in decision making.
 4 Develop Alternatives
• Crucial stage - to think about all possible
solutions to be applied to the problem.
• Alternatives which are practical & cost effective
should be considered.
• Great leaders – consider time, technological
resources & budget along with other constraints
& devise alternative solutions to the problem.
• All the people may be involved to give their
ideas to find the best alternatives.
 5 Choose the best alternative
• After devising alternative solutions –select the
best one.
• The most suitable alternative has more merits.
• Leaders look into feasibility effectiveness &
consequences
• Leaders analyse probability & estimate for the
success of each alternative.
• Select the alternative with higher probability of
acceptance or success in terms of cost a, times &
human resources.
 6 Make a decision
• Examine thoroughly all alternatives, then make a
decision & communicate it.
• Explain to all the important stakeholders why & how
you arrived at this decision.
• An action plan should be put for implementing the
solution & people should be encouraged to support
the solution.
• A good solution creates a positive work environment
by solving the problem.
• It gives good results & positive future directions.
• A decision needs constant monitoring & evaluation to
know how it is implemented .
 7 Have a Backup plan /Feed back
• If the best decision fails to solve the problem then you
need to find out what/where it went wrong.
• Re-look into the problem from a new perspective.
TYPES OF DECISION MAKING
• PROGRAMMED DECISIONS
• NON - PROGRAMMEDDECISIONS
• Strategic Decisions
• Individual decisions
• Administrative decisions
• Group decisions
 Basis of Decision making
• Gut feelings or Intuition- inner feeling (conscious) is
dictating to take a decision.
• Data/ Facts – a complex set of facts form a basis to
make sound and proper decisions.
• Information- complete independent data gathered from
processed data serves as a clear valuable form of
knowledge to make decisions.
• Such a Decision is a ‘doable’ thing - helps managers by
providing scientific basis for solving organized problems
involving interaction of components of the organization.
Techniques‘/ basis of Decision making
 Knowledge/ Research – best form of information,
result of depth analysis & verification – high quality
of robust knowledge based on research, real action
oriented insight, acquired from oceans of
information , authentic gives confidence to make a
decision - by leaders.
 Source of knowledge is instrumental, in
effective decision making.
 The key to good decision making is evaluating
the available information – data & combining it
with your own.
 Techniques‘/ basis of Decision making
• Values - Be clear of one‘s own values other
wise it may affect decision- making ability.
self- awareness through values will clarify
and help to overcome confusion.
• Individual Preference - One should overcome
this honestly and take risks.
 Decision Making Techniques

1.Brainstorming
2.Nominal group
3.Delphi technique
4.5 why’s
5. Cost- benefit analysis
6. Multi – voting
7.Decision matrix analysis
 Decision Making Techniques
Brain storming
• Clear & creative approach in developing alternatives.
• All members of a group are entrusted with solving a
problem.
• Group members think together about the problem.
• All groups contribute fresh ideas to arrive the most
viable solution.
• Basic Idea is to get fresh ideas from all group
members.
• Every idea should be welcomed.
• Group members should refrain from judging each
others ideas on the spot.
 Decision Making Techniques
Nominal Group
 It is a voting process to rank the ideas or solutions
generated by group members .
 Every member gets equal representation to
contribute for decision making.
 Every member states the solution briefly explaining
the reasons why he opted that solution.
 All solutions are listed & later on ranked for
implementation .
 The job of the facilitator is to encourage all the group
members to share their choices & invite them to rank
all the choices & to select the best one
 Decision Making Techniques
DELPHI METHOD
 The facilitator allows team members to individually
brainstorm and submit their ideas “anonymously”.
 Other team members do not know the owner of the
ideas.
 The facilitator then collects all the inputs and
circulates them among others for modifying or
improving them.
 This process of solution search keeps repeating as
members share their responses refines them until a
consensus solution is reached.
 5 Why’s
 No problem has one root cause or reason
 It helps to know the multiple causes of a
problem.
 A single problem is explored extensively by
repeating the question why
 The cause and effect of the given problem is
established.
 The success of the problem depends on how
appropriate are the questions asked to find the
cause of a problem.
 Decision Making Techniques
Cost benefit Analysis
 Helps in weighing the financial implication of
each alternative proposed for a project or
business solution.
 Analysis potential costs and profits
associated with different alternative
solutions
 Explain whether the cost exceeds beyond the
projections or benefits fall short of
expectations.
 Multi-voting
 It is effective when many people are part of
voting.
 A large list of choices is reduced or narrowed
down to a small list of top choices for further
consideration or research .
 Greatly helpful when an option or decision is
favoured by most people but it is not top
priority of any one of them.
 Decision Making Techniques
Decision matrix Analysis
 Powerful technique for making a decision.
 Leaders assess all available options & prioritize them -when searching
for a complex problem.
 Highly useful when there are no of alternatives and many other factors
to look into for taking a crucial decision.
 Use this technique by listing all values ( options) in rows and all
factors in columns .
 Can give a weighted ranking to ascertain which factor is crucial in
decision making.
 While taking any decision leaders must weigh the pros & cons &
choose one or a combination of them to serve the organisational
purpose.
 ‘ During a negotiation , it would be wise not to take anything
personally. If you leave personalities out of it, you will be able to see
opportunities more objectively’ – Brain Koslow.
 EXERCISES
• https://youtu.be/542qgGgL1s4 - Power of
Decision making
• https://youtu.be/INAYVexjv8c -Decision
making
• https://youtu.be/jYrO0fTtmp8 Improve
decision making