Decision making simply refers to the process of making sound choices among the available courses of action. These courses of action may include inaction (Harris, O. J., & Hartman, S. J., 2002). In as much as, decision making is a vital aspect of management, most of manager’s decision fail due to several reasons. This trend can however be corrected by improving the effectiveness in decision making and ultimately increasing the effectiveness at work (Harris & Hartman, 2002). The number of decisions made within a job set-up may change the course of the organization as well as affecting others’ lives. Additionally, decision making can have a negative impact on the entire nation’s economy. For instance, the decision of trading in the mortgage-backed securities had a great negative effect on the entire US economy. Peter Drucker in his work on managerial, denotes that, the assumption that only senior executives make decisions is strongly dangerous mistake” (p 260). Therefore, it is such a mistake to think that the process of decision making is a task of the executives alone. For it to be effective, all the stakeholders should be involved and brought on board (Harris & Hartman, 2002).
There are two main types of decisions; programmed decisions and non-programmed. The non-programmed decisions are those decisions that require precise thinking, careful gathering and information gathering (Harris & Hartman, 2002). For instance, McDonalds, in 2005, became fully aware of the need of responding to the growing customer concerns regarding high levels of calories and fats in the foodstuffs they sell. It became a non-programmed decision since most fast food stores like McDonalds were not concerned with the healthiness of the foods they sell, but with the taste and the profits from the sales of the food. In response to the customers concerns, McDonalds reached a decision of coming up with healthy food alternatives such as apple slices and banning use of the trans-fat in their stores (Walker, 2009).
Contrary to the above, programmed decisions are those decisions that don’t require any critical analysis of the situation. They are those decisions that occur repeatedly enough and hence we develop automated response to them. This decision can be referred to as a decision rule. A good example of the decision rule is the when the restaurants receive numerous complaints on routinely basis. In such cases, they’ll come up with a programmed decision in response to these daily customers’ concerns. An example of a workable decision rule in such scenarios would be giving the customer a free dessert should he/she complain (Harris & Hartman, 2002).
Depending on the levels at which they occur, decision can be classified as either strategic, tactical or operational decisions. Strategic decisions refer to those decisions that are made as a way of setting course of an organization. These decisions can be made in an attempt to answer some queries such as should we pursue a new product line? Should we merge with another company? Or should we lay down some of our workers? Tactical decisions deals with managerial roles such as firing and hiring among many others. The last category is the operational decision; decisions that are made by employees on their day to day operations and organization functions. They can be decisions like how to communicate to a co-worker, how to tell the customer about the new product, and how to balance the work demands (Walker, 2009).
There are a number of models and approaches that have been designed to evaluate and understand the efficacy of the non-programmed decisions. The first model is a rational decision-making model. This model provides a series of steps that the decision maker considers in case their main goal of the model is to maximize the quality of their results (Harris & Hartman, 2002). It entails going through a series of formal steps until an ultimate decision is established. In most cases, the outcome greatly influences the next step of decision making. The main steps in rational decision making are; 1. Identifying the problem, 2. Establishing decision criteria, 3. Weighing the decision criteria, 4. Generating the alternatives, 5. Evaluating the alternatives, 6. Choosing the best alternative, 7. Implementing the decision and; 8. Evaluating the decision. Should the decision fail, the cycle starts from the first step again (Harris & Hartman, 2002).
The second model for decision making is the Bounded Rationality Model. Although the model has varied advantages, it is still coupled with a number of flaws. “According to this model, a person knowingly minimizes their options to a manageable set and chooses the first acceptable alternative without conducting an exhaustive search for other alternatives. A vital part of the bounded rationality approach is the tendency to satisfice, which refers to accepting the first alternative that meets your minimum criteria.” (p 263). This model greatly helps in saving the cognitive time by accepting the first alternative should it meet the minimum threshold applied (Harris & Hartman, 2002).
The intuitive decision-making model is another alternative that entails arriving at a decision without going through the rigorous process of conscious reasoning. Most managers have used this model over many years. In other words, this model majorly deals with scanning the environment for cues to action. The last model is the Creative model of decision making, which is effective through five steps; 1. Problem recognition, 2. Immersion, 3. Incubation, 4. Illumination and; 5. Verification and Application. In evaluating the effectiveness of the Creative model, the assessors focus on three factors; fluency (number of ideas a person can generate), flexibility (difference of ideas) and; originality (uniqueness of the idea) (Harris & Hartman, 2002).
The above discussed models of decision making can be used in making of very sound and viable decisions. Taking a case of the BSE Veterinary Services who were to carry out 18,000 test due to the current difficulties (Walker, 2009). This would be an additional work since initially; the company used to conduct 12,000 tests periodically. Since this would be a non-programmed type of decision, a sound decision model would do the manager a lot of favors. Therefore, the best model would be the intuitive decision-making model, which entails scanning the environment and turn of events to establish a viable cue to action. In addition, this model has been used by a number of managers to save the situation without straining. As a manager, I would do 12,000 tests since the one for 18,000 would lead the company to a net loss (Walker, 2009). As much as the demand for the test was to increase to 18,000, other costs such as fixed costs and technician’s premium would increase. Although there was a 20% discount for the materials, this could still not cater for the expenses hence the company would end with a loss.
References
Harris, O. J., & Hartman, S. J. (2002). Organizational behavior. New York: Best Business Books.
Walker, J. (2009). Accounting in a nutshell: Accounting for the non-specialist. Amsterdam: Elsevier/CIMA.
