The Decision Making Process

It involves six basic steps:

Step 1:    Define the problem as an idea to be acted upon

This step involves an accurate assessment of the problem so that management does not treat mere symptoms. This step should result in a statement of the desired results.

Step 2:    Develop alternative solutions

Alternatives are the possible courses of action, only one of which may ultimately be chosen. There is need to have as many alternatives as possible.

Step 3:    Gather information pertinent to alternatives

Once alternatives have been identified the next step in decision-making is to collect pertinent information. The main information for decision-making are existing rules, procedures, policies, available facts, research, feasibility studies, simulation, opinion of advisers, experience, public hearings and forecast.

Step 4:    Consider constraints and evaluate problems

At this step the manager eliminates some alternatives because of constraints. Constraints may be either from external factors e.g. custom, organizational charters, limited money and personnel, organizational policies, procedures, rules, higher level managers, laws and political considerations, the public, competitors actions, labour unions, the education of potential employees, society and economy. The most common methods of evaluation include: risk analysis, cost benefit analysis, decision trees.

Step 5:    Selection

This step involves selection of an alternative from those that have been proposed and not eliminated. It is the most difficult and managers should take into account the effects of the decisions.

Step 6:    Follow-Up

Involves implementation of the decision reached in step 5. It requires that the appropriate action be carried out. It may involve appropriating funds, assigning personnel, hiring new personnel, arranging for work space, or purchase of equipment, real estate supplies or inventory.