Every organization has to make decisions for literally every work. Decision making includes making choices. Also, it includes selecting compromises. From higher to lower stage, decision making is necessary. However, decision making is not only about making choices. It is also about performing them.
First of all, effective decision making is the process of selecting alternatives. On top of that, it also involves managing and implementing those alternatives. Hence, this leads to the achievement of organizational goals. All the managers should be careful during the decision making. It is because they play a significant role. Managers know the company better than anyone. So, they need to focus on it.
For a decision to be effective, there must be a systematic process. The elements should be clear and understandable. In addition to this, the managers should carry it out in the sequence of steps.
STEPS OF EFFECTIVE DECISION MAKING
Effective decisions are made step-by-step. Effective decisions help managers to solve problems. Problems are solved by analyzing evidence, testing alternatives, or selecting a path. Moreover, effective decisions provide a review of whether the decisions were correct or not.
The steps can vary. Still, a manager can use the following steps:
1. Identify the problem
A manager should know the problem that s/he needs to solve. After understanding the problem, the decision making can be useful. It is because you know what factors to work. If the problem is not understandable, the decisions cannot be clear. So, identifying the problem is the first step.
2. Collect information
After identifying the problem, there arise a lot of questions. A manager needs to solve them. For this, collecting information is necessary. There are many ways to gather information. For instance, you can conduct an internal evaluation. The evaluation can check the consequences of the previous decisions. See in which area it succeeded and failed. Also, you can collect information from external sources. Sources like studies, surveys, market research, and paid consultants are helpful.
3. Identify the alternatives
After collecting the information, you need to find the solutions to the problem. Start brainstorming. There can be many options and alternatives. For instance, a company wants to increase its sales online. So, it can either create an app or hire a social media handler.
4. Weigh the alternatives
After identifying the possible alternatives, now you need to find out the best one. You can select the option by looking at the organization records. See what type of choices have helped. Also, check what kind of alternatives led to the loss. In this way, you can weigh the alternatives.
5. Select an alternative
In this step, you make the decision. You have identified the problem. Then, you collected relevant information. After that, you identified a few alternatives and weighed them. After analyzing the solutions, you are ready to choose one.
6. Act on the decision
After making a decision, you need to take action. Firstly, prepare a plan to make the decision effective. At the same time, explain the decision to your teammates. Make the goal achievable.
7. Review the decision
After some time, check the effects of the decision. See if they resulted in profit or not. If yes, continue with the same kind of decisions. If not, make the necessary changes.
IMPORTANCE OF EFFECTIVE DECISION MAKING
- To achieve organizational goals.
Decision making gives the best alternative. It utilizes the resources properly. Also, decision making helps in employee satisfaction. The task completes within the given time and budget. Therefore, effective decision making is necessary to achieve the objectives.
- To motivate employees.
Decision making gives an overall framework of the task. It provides guidelines to the employees. Moreover, effective decisions lead to more opportunities. It issues facilities and benefits to employees. Hence, effective decision results in employee motivation.
- To properly utilize the available resources.
An organization consists of various resources. The resources can be in the form of labor or capital. Also, many data and information are resources for an organization. With effective decision making, an organization can utilize these resources properly. Making decisions at the right time reduces wastage. It helps to minimize the cost of a company.
- To choose the best solution.
There come many solutions to a problem. But only one is best for a particular organization. So, effective decision making analyzes all the choices. It uses different statistical and financial tools. Decision making gives an idea about which alternative is best for the company.
- To evaluate the performance.
The success of a manager depends on the decisions that s/he made. Therefore, decision making is also important to judge the performance of the management.
- Decision making is a crucial element.
No organization works without an effective decision making. It is an indispensable component of a company. The work is not successful if it is not as planned. For this, effective decision making is necessary.
OBSTACLES OF EFFECTIVE DECISION MAKING
Few hurdles prevent effective decision making. Some of them are:
- Not enough information
Information is necessary to have a base to make a decision. Lack of data means deciding on no basis. So, relevant information is vital.
- Too many people
Agreeing to one decision by a large number of people is hard. The ideas differ from person to person. Also, this can lead to conflict. Therefore, too many people is an obstacle for effective decision making.
- Lack of time
Sometimes, organizations have to decide in a short time. Less time results in hasty decisions. When there is no time to analyze, the conclusion may not be fruitful. So, lack of time is a hurdle.
- Too many choices
Sometimes a problem can have many solutions. It puts the manager in a dilemma. It can be challenging to choose one alternative.
- Lack of resources
A decision cannot be effective without enough resources. A manager should have the necessary time, staff, and equipment. The shortage of these resources leads to ineffective decisions.