Decision making in organizations

Introduction

Decision-making includes an assortment of processes that are all amid thought and action. These processes are an antecedent to behavior; expressing ideas into tangible consequences. Decision-making as a concept is not well defined. This is as result of the aspects and the avenues through with different people view decision-making from. The scope of decisions that people make range from matters that would potentially affect them into their lifetime to mattes as trivial as what to wear for the day. These indicating why decision making as process is not well defined.

According to Bazerman, (1999), decision making in organizations. He points out that when individuals are faced with tough choices, their focus shifts to making the right choice and not making the choice in the right way (Bazerman, 1999). Further indicating that people tend to focus on securing:

More expertise

More inclusion

More resources

Better data regarding the issue

More time to come up with a conclusive decision

With a better decision-making process, individuals would have the best platform for stronger implementation for decisions made.

Decision Issues

Distortions

This comes about due to the irrational nature of man. The decision made are often affected by social pressure, we often care of other people’s opinions, we have preconceived ideas regarding what is acceptable or not therefore making us prone to all kind of illogical thought. Decisions are often informed by emotional and cognitive backgrounds increasing the odds for a distortion free decision –making process.

Distortions in Decision Making

The distortions that come about in decision-making are brought about by distortions in perceptions and by distortions in choice.

Distortion in Perception

Confirmation Bias: distortion occurs because of using of information with the preconceived notion of its outcome. This is often influenced by other organization supporting desired outcome

Wishful thinking: Distortions arise due to seeing organizations prospects in an overlay optimistic light

Primary Effect: This is as a result of the use of recent materials only to aid in the decision-making process

Repetition Bias: This is brought about by the use of information that is favored by many of interested parties

Anchoring: basing a decision on an inappropriate reference point

Source Credibility: arises from favoring the use of information from sources that we like

Attribution asymmetry: occurs as a result of attributing our successes to talents and attributing our failures to circumstances.

Distortion in Choice

Incremental Decision-Making and Escalating Commitment: when individuals are faced by the choice of becoming a manager or a parent. They are probably going to make distortions in their decision-making as a result of choice

Groupthink: this occurs when decisions are arrived at as a result of consensus instead of the quality of the decision made

Authority : distortion occurs when the figure of authority are sensitive to allowing contributions that inform decision-making to come from their juniors

Sunk costs: Distortions arise when organizations choose to allocate less or no budgetary funds to aid decision-making processes.

Meta-Decision Making

These are the decisions that people make regarding decision-making. These decisions often go unnoticed as they are entrenched on a word, a glance and sometimes on an unintentional casing. For Meta-Decision Making processes to be exposed, we would have to analyze our more fleeting thoughts and slow down our thought process.

Challenges

Decision making is often made difficult by the situation that individuals find themselves in. these is as a result of situations being characterized by challenges that further complicate the decision-making process.

Making Good Decisions

It is everyone’s intention to make good decisions. It is therefore justified to look at how to make decisions and how to improve the decisions that we make. The answer to better decisions lies in the content. We therefore have to adjust our decision-making style and understand the avenues and forums within which we base the decision.

Reasons for the decline in quality of Managerial Decision-making

Limited time frames due to the nature of contracting business cycles

Distorted data that is sometimes used in decision-making

The rate of change invalidates the data behind a decision before implementation

The Decision-making Process

Organizations are run by decisions that people in authority make. The soundness of the decisions adhered to is mirrored by the success of the organizations. This lays out the effectiveness and the quality of the decision making-process. The quality of the decision-making process often determines how flourishing a manager will be. Decision-Making is an ongoing process of evaluating circumstances and making choices. The process is dependant of reliable information made available at adequate and opportune moments. The decision-making process entails:

Defining the problem

The definition of the challenge is the first step in the decision-making process. The correct definition of the challenge is key; as it has the potential to affect the secondary steps. The most appropriate way to go about definition of the problem is identifying the problem separately from its indicators.

Identifying the Limiting Factors

Managers should ensure that they have adequate resources to preempt the likelihood of not having the facilities necessary for the adequate decision-making practices at his or her disposal. Identifying limiting factors is bore by the need of managers wanting to make the best decisions with regard to the running of the organizations (Bazerman & Moore, 2008).

Developing Potential Alternatives

Time constraints often-precipitate managers to using quick fixes for their problems and not fully exhausting the possible solutions at their disposal. Managers are encouraged to consider several solutions before settling on one. A practice such as brainstorming is recommended, as the group dynamic Propagates thinking (Thaler & Sunstein, 2008).

Analyzing the Alternatives

This process culminates with the benefits of each idea, giving a clear picture of the advantages and disadvantages that would follow the adaption of a certain decision. This can be done through:

Determine the pros and cons of each alternative.

Perform a cost-benefit analysis for each alternative.

Weight each factor important in the decision, ranking each alternative relative to its ability to meet each factor, and then multiply by a probability factor to provide a final value for each alternative.

Selecting the Best Alternative

This is achieved after carefully analyzing all the alternatives and deciding on the best choice. The choice is often informed by the alternatives that offer the most advantages and pose fewer potential regrets. Managers can also look at the feasibility of the alternatives, as well as the cost effectiveness of each of the alternatives (Cialdini, 2008).

Implementation of the Decision

It is the role of managers to make decisions and ensure that positive outcomes follow up their decisions. It is therefore up to the managers to delegate responsibilities efficiently to ensure the successful implementation of their decisions.

Establish a Control and Evaluation System

This system is important to continuously check on the efficiency of the implemented decisions. It provides managers with information whether to adjust decisions made to attain the objectives intended when selecting the solution.

References:

Bazerman, M. H. & Moore, D., (2008). Judgment in Managerial Decision Making. 7th Ed. NJ: John Wiley & Sons, Inc.

Bazerman, M. H., (1999). Smart Money Decisions. N Y: John Wiley.

Cialdini, R., (2008). Influence: Science and Practice. 5th Ed. Prentice Hall.

Thaler, R.H. & Sunstein, C.R., (2008). Nudge: Improving Decisions about Health, Wealth, &Happiness. New Haven, CT: Yale University Press.