Decision Making
Decision making is the responsibility of every managers regardless their departments and roles and some decisions may have huge impact on the organizational performance and some may have less. The alternatives that are analyzed in the Decision Making Process should be selected keeping in mind various factors like cost involved, time required to implement those alternatives, available resources, etc. Decision making can be a part of any sales team, disaster managers, top management and not necessary if its related to any particular activity or department it affects the whole organization.
Factors affecting decision making (Decision making variables):
Some decisions may be the demand of any specific course of action and some decisions are to be taken in some variables that are beyond the management control. There are some decision making variables Generally there are three types of variables: Certainty, Risk and Uncertainty.
Certainty: Decisions under predetermined conditions are some easy things but yes rare. The future can't be certain and so the chances of certain conditions for managers are quite less. For example if a HR manager plans to hire 20 candidates in the second quarter can be a predetermined factor as the second quarter is the hiring season for many industries.
Risk: Risk factors arises when the managers take any decision assuming favourable conditions in the near future. For example when a sales manager takes a decision of increasing discount rates for the next couple of months assuming that the demand of that the price of particular product/service will increase. Making such assumptions may be due to the experience of the managers in their respective fields and in such assumptions involves high level of risks. Managers though should be prepared always with some alternative actions as to use them when required.
Uncertainty: The main component in the Decision Making Process is the historical data or say the past experience of the organization. The experience of the managers can be different with that of the organization. Every decision in any organization is taken keeping in mind the past experience of the organization or the impacts of any particular decision or variable. Uncertain variable arises when the mangers undertake decision making without knowing or having such historical data. In such case the manager can choose one of the below mentioned options:
a) Increase possibility of results,
b) Increase the number of results to choose from,
c) Increase the chances of getting results that have least possibilities,
d) Postpone decision making for a while.
Types of Decisions:
Though very important part component and surrounded by various factors there are three different type of decisions:
1) Regular/Periodic/Programmed Decisions: Decisions are taken to overcome any problems or situations. Some problems are periodic and decisions are needed to be taken very frequently. Examples can be with the sales targets, employee incentive programs, etc. These situations occur very frequently and timely decisions are needed to be taken. Not only decision making is enough in this situation but timely review meetings and planning schedules are also necessary. Such decisions are called 'Periodic decisions'.
2) Irregular/Non-programmed Decisions: Some situations are not regular and don't have any regular patterns. These can include annual targets. However targets are to be reviewed regularly but they are planned and designed in advance at the start of every financial year. These decisions don't come under the organizational planning and so there is not specific procedure.