Lesson 4: Decision Making Process

The decision-making process represents an ongoing activity of managers. Contrary to the

common one, the strategic decision is being made in a longer time and on a detailed basis.
The managers can use models of decision-making in their activity to be more effective.
Organizations are constantly making decisions at every level. Decision making ranges
from strategic decisions through to managerial decisions and routine operational decisions.
Decision making in business is about selecting choices or compromises in order to meet
business objectives. Effective decisions result from a systematic process, with clearly
defined elements, that is handled in a distinct sequence of steps.
The decision making process can be illustrated as a proposal considered by decision
makers in the context of the organization and its strategic position. Alternatives, risks and
potential outcomes are considered and then a decision is reached. There may also be a
post audit and a feedback loop. The decision making process is subject to human error as
the decision makers have personalities, prejudices and a self-interest bias. Importantly,
they have different attitudes to and appetites for risk.

Methods of Decision Making:

Authority without discussion: The leader makes decisions without consultation, input, or
feedback from group members.
Advantages: This approach is most useful for routine administrative decisions when little
time is available.
Disadvantages: It provides little group ownership; lack of input may lead to hasty or
poorly thought-out decisions.
Decisions by an expert member: The individual in the group who has the most expertise in
a given area decides what the group shall do.
Advantages: This approach is appropriate when an individual's expertise is clearly
superior to that of other members.
Disadvantages: It is often difficult to identify the expert.
Averaging of members' opinions: This is also referred to as a polling approach. Each
member is asked for an opinion, and the results are averaged.
Advantages- This approach is applicable when it is difficult to get group members
together and/or a decision needs to be made before a meeting can be organized.
 Disadvantages- Members do no benefit from group discussion and may not
understand issues; innovative approaches are seldom chosen.
Decision by authority with discussion: The group discusses the issue and ideas together,
and the leader then takes the alternatives under advisement and makes the decision.
Advantages: This is a relatively quick method, which utilizes members' ideas. This
method gains some benefit from the discussion, which may bring forth information or ideas,
which the leader had not previously considered.
Disadvantages: It does not provide ownership of the decision by the group.
Competition rather than cooperation is fostered to impress the leader.
Minority control: The decision is delegated to a subgroup, most typically a specialized
committee.
Advantages: This approach is useful when the committee has special expertise or
when time prohibits the large group from making the decision.
Disadvantages: This method does not utilize the resources of the whole group.
Majority control: Ideas and issues are discussed then a vote is taken. The choice, which
receives the most votes, is the group's decision.
Advantages: Majority control involves all members in the process; it allows for input
and idea exchange among the whole group.
Disadvantages: This approach may create a resistant, disgruntled minority.
Consensus: Ideally it involves everyone in the process and results in a decision, which is
agreed upon by all participants. It can be achieved when there is ample time for all
positions to be stated, communication is open, the climate is cooperative and supportive,
and the decision is clearly understood by everyone. An important aspect of consensus is
that members are allowed to express themselves fully without interruption.
Advantages: In this approach group members take ownership of decision and positive
morale is maintained; the group fully explores options, ideas, and resources.
Disadvantages: Reaching consensus is time consuming and sometimes difficult to
achieve.

The Decision-Making Process

No matter which decision-making method is chosen, a standard process should be
followed.
 Step 1: Identify the Decision to be Made: Specifically define the problem or decision and
ensure that all those involved in the decision-making process understand and agree upon
the decision to be made.
Step 2: Gather Information: Consult as many sources as possible to collect all the
relevant information regarding the decision to be made.
Step 3: Identify Alternatives: List many possible ideas, solutions, or courses of action,
which will specifically address the decision.
Step 4: Weigh Evidence - Take into account all the information you have gathered,
including resources, strengths, and weaknesses of both yourself and your group; project
the outcome of each alternative; prioritize the alternatives based on the values and needs
of the group.
Step 5: Select the Best Alternative: Review the various options and choose an option
based on what is best for your organization at this time.
Step 6: Take Action: Develop an action plan for implementing the decision; structure the
plan to include time frame, who is responsible, how to communicate to those responsible
the objective and their roles, how to obtain any resources needed, how to measure
progress, and how to evaluate the decision.
Step 7: Review Decision and Consequences- Review the results of your decision to see if
it successfully dealt with the issue you identified; you may need to make adjustments to
your plan or choose another alternative at this time.
Throughout the decision-making process, participants should be encouraged to consider
all viewpoints and to state their own positions freely. Explore controversies and search for
areas of agreement. Constructive debate can often yield the best decisions.

Ethical Decision Making

To ensure that your decision is ethical, ask yourself the following questions:
1. Is it legal? Will I be violating civil law or company policy?
2. Is it balanced? Does it promote win-win relationships?
3. How will it make me feel about myself? Will it make me feel proud?