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Jun 7, 2010

Decision Making Process

Managers facing either programmed or non-programmed decisions can follow this six-step process for more effective decision making. Of course, there is no guarantee that managers who apply the process will make correct decisions, but they will increase the odds of achieving good results.

Also, managers must take into account organizational goals and the broader implications of their own decisions when following the process. Although the steps are generally followed in order, managers sometimes lack the information to continue to the next step, or they uncover information that prompts them to return to earlier steps before the process is complete.
Step 1: Identify the Problem
The first step for the manager is to recognize the need for a decision and to define its parameters. Managers must be aware of a problem and analyze its scope and nature before they can take any steps to solve it.
• Recognize the problem. Managers recognize a problem by noticing changes in their organization's performance or changes in their internal or external environment that can potentially affect performance.
• Define the problem. Once managers recognize that a problem exists, they need to consider the elements that make up the problem and the relationships among the elements.
• Diagnose the situation. In this phase, managers gather additional informa¬tion and consider the causes of the problem so that they can come up with meaningful alternatives.

Step 2: Generate Alternatives
The second step of the process is to generate alternatives. It is usually best to try to identify standard and obvious alternatives as well as innovative and unusual ones. Standard solutions are those that come to mind with little thought; such as things that the organization or the manager has done in the past. Innovative approaches may be devel¬oped through such strategies as brainstorming—bringing people together and encouraging a free and open discussion of creative solutions to a problem
Managers can make better deci¬sions when they have a large range of alternatives to consider, because they will not feel pressured to choose an option simply because it seems to be the only available solution.

Step 3: Evaluate Alternatives
The third step in the process is evaluating the alternatives by considering the implications and the likely consequences of each. In this step, managers assess the attractiveness of each alternative and weed out those that seem unfeasible, inadequate, too expensive, or otherwise unacceptable. Of course, if a solution cannot be effectively implemented, or if it does not help the organization achieve its goals, then it's not a realistic alternative. Moreover, the way a decision might influence other parts of the organization or the environment is another consider¬ation.14

Step 4: Make the Decision
After evaluating the alternatives, managers make the decision. They select the best alternative by weighing the risks and benefits of each one. The manager must decide which alternative best solves the problem or takes advantage of the opportunity.
The manager should also consider the way in which the decision was originally defined. This may provide clues as to which alternative is truly best. For example, assume that the original goal was to reduce turnover as much as possible, regardless of the costs. If that is still the goal, the manager might choose an alternative that promises to reduce turnover substantially but that car¬ries a high cost rather than an alternative that would reduce turnover by a moderate level and cost only a moderate amount. If the original goat was to reduce turnover by a reasonable amount, or if that goal is more desirable now, the second alternative might be better.

Step 5: Implement the Decision
After they select the best alternative, managers implement the decision. Because decision-making managers generally depend on others to carry our decisions, they must carefully consider how implementation will affect these people and their functions. By openly discussing anticipated changes and expected results, managers can help their employees adjust to any changes that stem from deci¬sions.

Step 6: Evaluate the Results and Provide Feedback
The final step of the decision making process is to evaluate the results and provide feedback of the implementation of the chosen alternative.
This allows managers to see whether the results meet expectations and to make any changes needed to improve the decision or its implementation. If the original decision does not achieve the desired results, then perhaps the problem was incorrectly defined, or perhaps another alternative should be substituted. It is important to give the decision enough time to work before retracing the decision-making process in search of another solution.