Chapter 5

CAE10 - MANAGEMENT SCIENCE
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CHAPTER 5 – DECISION MAKING
I. Learning Objectives
 Understand the decision-making
 Explain the steps of decision-making process
 Discuss the importance of decision making to the workplace.
II. Introduction
 Decision making is a daily activity for any human being. There is no exception about
that. When it comes to business organizations, decision making is a habit and a process
as well. Effective and successful decisions make profit to the company and
unsuccessful ones make losses. Therefore, corporate decision making process is the
most critical process in any organization. In the decision making process, we choose
one course of action from a few possible alternatives. In the process of decision making,
we may use many tools, techniques and perceptions. In addition, we may make our
own private decisions or may prefer a collective decision. Usually, decision making is
hard. Majority of corporate decisions involve some level of dissatisfaction or conflict
with another party. Let's have a look at the decision making process in detail.
III. Steps of Decision Making

 Step 1: Identification of the purpose of the decision In this step, the problem is
thoroughly analysed. There are a couple of questions one should ask when it comes to
identifying the purpose of the decision.  What exactly is the problem?  Why the
problem should be solved?  Who are the affected parties of the problem?  Does the
problem have a deadline or a specific time-line?
 Step 2: Information gathering A problem of an organization will have many
stakeholders. In addition, there can be dozens of factors involved and affected by the
problem. In the process of solving the problem, you will have to gather as much as
information related to the factors and stakeholders involved in the problem. For the
process of information gathering, tools such as 'Check Sheets' can be effectively used.
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 Step 3: Principles for judging the alternatives In this step, the baseline criteria for
judging the alternatives should be set up. When it comes to defining the criteria,
organizational goals as well as the corporate culture should be taken into consideration.
As an example, profit is one of the main concerns in every decision making process.
Companies usually do not make decisions that reduce profits, unless it is an exceptional
case. Likewise, baseline principles should be identified related to the problem in hand.
 Step 4: Brainstorm and analyse the different choices. For this step, brainstorming
to list down all the ideas is the best option. Before the idea generation step, it is vital to
understand the causes of the problem and prioritization of causes. For this, you can
make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect
diagram helps you to identify all possible causes of the problem and Pareto chart helps
you to prioritize and identify the causes with highest effect. Then, you can move on
generating all possible solutions (alternatives) for the problem in hand.
 Step 5: Evaluation of alternatives Use your judgement principles and decision-
making criteria to evaluate each alternative. In this step, experience and effectiveness
of the judgement principles come into play. You need to compare each alternative for
their positives and negatives.
 Step 6: Select the best alternative Once you go through from Step 1 to Step 5, this
step is easy. In addition, the selection of the best alternative is an informed decision
since you have already followed a methodology to derive and select the best
alternative. Step 7: Execute the decision Convert your decision into a plan or a
sequence of activities. Execute your plan by yourself or with the help of subordinates.
Step 8: Evaluate the results Evaluate the outcome of your decision. See whether there
is anything you should learn and then correct in future decision making. This is one of
the best practices that will improve your decision-making skills.
IV. Effective Decision-Making

 Decisions need to be capable of being implemented, whether on a personal or
organisational level. You do, therefore, need to be committed to the decision personally,
and be able to persuade others of its merits.
 An effective decision-making process, therefore, needs to ensure that you are able to
do so.
V. What Can Prevent Effective Decision-Making

 There are a number of problems that can prevent effective decision-making. These
include:
 1. Not Enough Information
 If you do not have enough information, it can feel like you are making a decision without
any basis. Take some time to gather the necessary data to inform your decision, even
if the timescale is very tight. If necessary, prioritise your information-gathering by
identifying which information will be most important to you.
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 2. Too Much Information

 The opposite problem, but one that is seen surprisingly often: having so much
conflicting information that it is impossible to see ‘the wood for the trees’.
 This is sometimes called analysis paralysis, and is also used as a tactic to delay
organisational decision-making, with those involved demanding ever more information
before they can decide. This problem can often be resolved by getting everyone
together to decide what information is really important and why, and by setting a clear
timescale for decision-making, including an information-gathering stage.
 3. Too Many People
 Making decisions by committee is difficult. Everyone has their own views, and their own
values. And while it’s important to know what these views are, and why and how they
are important, it may be essential for one person to take responsibility for making a
decision. Sometimes, any decision is better than none.
 4. Vested Interests
 Decision-making processes often founder under the weight of vested interests. These
vested interests are often not overtly expressed, but may be a crucial blockage.
Because they are not overtly expressed, it is hard to identify them clearly, and therefore
address them, but it can sometimes be possible to do so by exploring them with
someone outside the process, but in a similar position.
 It can also help to explore the rational/intuitive aspects with all stakeholders, usually
with an external facilitator to support the process.
 5. Emotional Attachments
 People are often very attached to the status quo. Decisions tend to involve the prospect
of change, which many people find difficult.
 6. No Emotional Attachment
 Sometimes it’s difficult to make a decision because you just don’t care one way or the
other. In this case, a structured decision-making process can often help by identifying
some very real pros and cons of particular actions, that perhaps you hadn’t thought
about before.
 Many of these issues can be overcome by using a structured decision-making process.
This will help to:
o Reduce more complicated decisions down to simpler steps;
o See how any decisions are arrived at; and
o Plan decision making to meet deadlines.
 Many different techniques of decision making have been developed, ranging from
simple rules of thumb, to extremely complex procedures. The method used depends
on the nature of the decision to be made and how complex it is.
VI. References
 DuBrin, Andrew J. (2009). Essentials of Management (8th ed.). Mason, OH: Thomson
Business & Economics. ISBN 978-0-324-35389-1. OCLC 227205643.
 Waring, S.P., 2016. Taylorism transformed: Scientific management theory since 1945. UNC
Press Books.
VII. Link for Video

Introduction to Decision Making https://youtu.be/2qXWsuYzsPM
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Steps of Decision Making Process https://youtu.be/5a0Fe3AchAI

Importance of Decision Making to the https://youtu.be/2tCYy66CyuQ
Workplace
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CAE10 - MANAGEMENT SCIENCE

CHAPTER 5 – DECISION MAKING

III. Steps of Decision Making

IV. Effective Decision-Making

V. What Can Prevent Effective Decision-Making

 2. Too Much Information

VII. Link for Video

Steps of Decision Making Process https://youtu.be/5a0Fe3AchAI

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