Decision-making is the most important thing that every manager does.
The ability to make decisions is a skill that develops and improves with experience and age. That is why most professional managers are over middle age.
Project managers and program directors have to make decisions about the direction and parameters of the project.
Human resource managers make decisions related to the people in the organization and the recruitment of staff.
Directors make decisions about the overall development of the organization. Reference: “Participating in decisions, Decision Making Process In Management”, https://bvop.org/learn/participating-decisions/
However, it is important to mention that all types of managers often use popular tools through which they make decisions not by intuition, but by database and goals.
The decision is a choice of alternative for the organization, which affects all employees in it, as well as affects the environment of the organization. The decision-making process consists of several stages, they are:
Diagnosing the problem is the first and most important step. It identifies the problem and distinguishes the causes from the symptoms of the problem. At this stage, the symptoms are not eliminated. A large amount of information is analyzed, which is collected formally and informally.
Formulation of restrictions and criteria for choosing a solution – they vary depending on the situation and the manager.
The limitations are – insufficient material resources, insufficient qualified human resources, limited budget, need for new technologies, laws, etc.
At this stage, the manager also sets standards by which he will evaluate the alternatives and make his choice. These standards are called decision criteria.
Identifying alternatives – at this stage, a list of all possible alternatives for solving the problem is made.
Evaluation of alternatives – ie. the advantages and disadvantages of possible alternatives. Here we need to forecast the consequences of future decisions.
Choice of alternative – after going through the previous stages proceed to the choice of alternative.
However, the management decision-making process does not end with the choice of an alternative. It continues with its implementation and evaluation.
The implementation is carried out by assigning the implementation by allocating tasks and resources. As the manager controls the implementation, through the so-called. feedback, which provides information about deviations in the path of execution of the decision.
When these deviations are serious and do not satisfy the manager, he can make other decisions, called corrective.
Other factors that influence the decision-making process are:
Personal evaluations of the leader – which vary depending on his value system.
The environment in which decisions are made – different decisions are made in different circumstances in terms of risk. These circumstances are classified as – certainty, risk, or uncertainty.
A decision is made under conditions of certainty when the manager knows exactly the results for each of the alternatives. When the goal, the selection criteria, and the consequences of the alternatives are quantified, then the decisions are called deterministic.
Decisions that are made in conditions of risk include those whose results cannot be precisely determined, but the probability of each result is known.
Probability is defined as the probability that an event will occur. It ranges from zero to one.
For a manager, the most desirable way to determine probability is objectivity. Probability is objective when it can be determined mathematically or by statistical analysis.
An example of an objective probability is that a tossed coin is heads or tails. Here the probability is equal to 50%.
However, when the information is insufficient, the manager can handle the so-called. subjective or presumed probability. For example, deciding on car insurance.
A decision can also be made in conditions of uncertainty when it is impossible to assess the probable consequences.
This means that many and varied factors influence and it is impossible to obtain sufficient relevant information.
There are two possibilities here – the manager to try to gather enough relevant information and once again to analyze the problem and act strictly following the accumulated experience and intuition.