The importance of decision making models
Posted by AxelPrice on June 2nd, 2014
The decision making process in management is generally based on traditional decision making models where an organized step by step procedure is followed to reach a particular decision. Firstly, identifying the decision that is to be made is essential for starters. Next, gathering information from various sources to support the decision and its impact is important. Identifying the various alternatives to the decision, in case of failures, or changes in the external environment, is the third step in the model. Next, the evidence supporting the choices made for the reaching the particular decision is gathered and weighed. Choosing the right decision from the alternatives is next, followed by taking appropriate action, for implementing and reviewing the decision. This completes the decision making model for an organization.
Deliberate and thoughtful decisions that are taken by organizing relevant information and defining alternatives is an effective decision making process in management. While undertaking this intricate process, there should always be a proper understanding of the positive and negative business consequences. This awareness helps to prevent possible losses to the organization and keeps the company running. The entire process could be pretty challenging for the individuals involved, and the company as a whole. Taking care of sensitivities and external factors, and following a fixed model will help to ease the difficulty of making decisions, and lessen the burden on the management.
There are several different types of decision making models. These are rational models, intuitive models and rational iterative models. Rational models revolve around using the most logical and sensible alternative for the desired effects. Intuitive models are those that are based on intuitive, unplanned thinking. This model calls for weighing the risk and the gains that the companies will have to bear, without much detailed meticulous planning. Personally, as individuals experience different emotions, the decision making process could be affected.
Different levels of management are involved in different stages of decision making. The top level management has strategic decisions to make. Mid level management are often involved in tactical decision making, like the management of the company, and the lower level management are involved in the day to day operational level decisions. Thus, the decision making process in management varies at every level, and is important at every level. All the management personnel must be aware of the risks and uncertainty of making all decisions, at all times. Risks in the form of external or internal vulnerabilities must be considered. Uncertainties like unknown nature of things or unpredictable events could take place, and the management should take this fact into consideration.
A decision making tool that is used in high risk situations, is the probability theory, when the decision makers are not entirely assured of the outcome of the implemented alternative. There is also decision trees, i.e. a graphic decision making tool that is used to evaluate decisions involving a series of steps. After following the fixed decision making models, there should always be scope for a back up plan. More often than not, businesses need to be prepared in case the decisions backfire.
There are several decision making models available to assist the decision making process in management. Following them will allow one to make best possible and realistic decisions.
