Effective Decisions

Effective Decisions Making a decision is comparable to giving a verdict. It is a choice between different alternatives. It is seldom a choice between wrong and right. It is mostly a choice between ‘almost right’ and ‘perhaps wrong’. It is very often a choice between two courses of action neither of which can be considered more correct than the other. Most of the literature on decision making advises that the decision maker is to find the facts first. But it is also a point that management executives who make effective decisions are aware that one does not start with facts. Instead, they start with opinions. These opinions are, naturally, nothing but untested suppositions and, hence, worthless unless tested against reality. To determine what is a fact, requires first a decision on the criteria of relevance, especially on the suitable measurement. This is the core of the effective decision, and usually it is the most controversial aspect. Further, most of the literature on decision making states that the effective decisions flow from a consensus on the facts. To the contrary, the understanding which underlies the right decision grows out of the clash and conflict of divergent opinions and out of the serious consideration of competing alternatives. To obtain the facts first is impossible. There are no facts unless one has a norm of relevance. Events by themselves are not facts. As an example, the taste or colour of a substance is not a fact in physics, while in cooking the taste is a fact of highest importance, and in painting, the colour matters the most. Physics, cooking, and painting consider different things as relevant and therefore consider different things to be facts. Executive, who is making effective decisions, also knows that people do not start...

Elements of Decision making...

Elements of Decision making One of the important tasks of an executive is the decision making. It generally takes a small fraction of his time. Nevertheless the decision making is a very important aspect of his work since the decisions he makes by virtue of his position, knowledge or experience have significant impact on the entire organization, its performance, and the results. Hence, executives to be effective are to make wise decisions. They are to make the decisions as a systematic process with clearly defined elements and in a distinct sequence of steps. For an effective decision making, the executive is to normally concentrate on those important and strategic decisions which have big impact for the organization. These strategic decisions need to have the highest level of conceptual understanding. The executive is required to find the constants in a situation and is to apply his skill to manipulate a great many variables arising out of the chaotic thinking in order to make an effective decision. He is to know what the decision is all about and what the underlying realities are which the decision is required to satisfy. The executive is to look out for impact rather than the technique. He is to ensure that the decision he makes needs to be sound rather than clever. An executive while making a decision is required to know whether the decision is to be based on principle or it is to be made on the merits of the case and logically. He is to be aware that the trickiest decision is the one which is between the right and the wrong compromise he has to make and he is to be able to judge one from the other. Further, the executive is to be aware that...

Quality of Decisions and Organizational Performance...

Quality of Decisions and Organizational Performance Quality of decisions made is very important for the smooth functioning of an organization. It is a known fact that decision making is not just about selecting the right choices or compromises. Unless a decision has degenerated into work, it is not a decision. It is at best a good intention. Decisions made become effective only after they are implemented. Organizational management is required to make a large number of decisions on a continuous basis. These decisions are required to be made for the smooth running of the organization. The performance of the organization is greatly influenced by these decisions. Hence, making decisions is a matter of a huge responsibility for the management not only against the organization itself, but against their employees and other stakeholders, as well. The decision making process can be explained as a proposal considered by the management in the context of the organization and its strategic position. Alternatives, risks and potential outcomes are considered and then a decision is reached. There can also be a post audit and a feedback loop. The decision making process of the management is subject to human error as the management personnel have personalities, prejudices and a self-interest bias. Importantly, they have different attitudes to and appetites for risk. The decisions of the management are influenced by the decision making environment which consists of a unity of management’s experience, beliefs and perceptions on one side, and decision support tools and techniques on the other side. For determining the effectiveness of the decision made, the performance of the organization is normally measured on the basis of eight performance parameters. These performance parameters include (i) profitability, (ii) organizational effectiveness, (iii) continuous improvement, (iv) productivity of the processes, (v) quality of...

The process of decision making...

The process of decision making  People make decisions of varying importance every day. Studies have shown that most people are much poorer at decision making than they think. An understanding of what decision making involves, together with a few effective techniques, helps make better decisions. A simple decision making process is shown in Fig 1. Fig 1 Simple decision making process  Definitions and concepts  Decision making process is defined in many ways. Some of the definitions are given below. Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. Decision making is regarded as the result of the mental processing for the selection of a course of action from several alternatives. Each decision making process results into a final choice which can be an action or an opinion. Decision making is the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them. The various concepts in the decision making process are as follows. Information-This is knowledge about the decision, the effects of its alternatives, the probability of each alternative, and so forth. A major point to make here is that while substantial information is desirable, the statement that “the more information, the better” is not true. Too much information can actually reduce the quality of a decision. Alternatives – These are the possibilities one has to choose from. Alternatives can be identified (that is, searched for and located) or even developed (created where they did not previously exist). Merely searching for preexisting alternatives will result in less effective decision making. Criteria – These are the characteristics or requirements that each alternative must possess to a greater or lesser extent. Usually the alternatives are rated on how...