What are the basic elements of decision making ?
How can a manager make an effective decision ? Explain
Decision making is a common cognitive process. It is generally the process of evaluating alternatives and choosing a course of action. It is a systematic way of thinking about and solving problems. Decision making is one of the most important, difficult and essential skills.
Decisions can be at personal level or at work. There are multiple factors, internal or external, that influence the decision making process. A decision maker needs to consider a situation or problem from multiple perspectives before coming to a conclusion. Despite the nature of decisions taken, there are some basic elements of decision making.
Peter Drucker, one of the influencer thinkers on management, has presented 6 elements of decision making.
- The Situation
- The Objective
- The Alternatives
- The Consequences
- The Decision
Peter Drucker developed these elements to help managers make better and informed decisions and to avoid mistakes in their decision making process.
Situation indicates the context, condition or rationale for which one needs to make a decision. In another term, this means identification of a problem or rationale for the problem. The clear idea about the situation further eases the decision making process. It defines the rationale of decision making. This includes the set of facts, conditions, and factors that exist at the time when decision is made.
For instance: The situation for manager can be hiring employees for the organization.
The second element of decision making is the objective. This includes the expectation or the end result or the desired outcome from the decision. After understanding the situation, managers need to be clear about what is expected out of that situation. A context may have multiple approaches and the need of the situation determines the objective of the decision making.
For instance: There must be some thoughtful reason for hiring employees. Employment impacts various functions of an organization and can affect organization in different ways. Managers must be clear about the need of hiring employees. Managers must be clear about what s/he wishes to achieve from that hiring.
The alternative refers to what is open for consideration. It’s all of the available alternatives under consideration. There may be multiple paths to fulfill the set objective. Such multiple alternatives may have some traits and may impact the cause in different ways. In this step, we consider all the possible alternatives that help in decision making.
For instance: Hiring employees’ decisions may have multiple considerations. One can hire employees on contract basis or as a fulltime employee. Also, managers can hire employees from vacancy announcement or internally. The company can hire a recruitment company for employment or the company can recruit from its HR department. All these are alternatives to hiring the employees.
The consequences are what might happen as a result of the decision. They are the possible outcomes and effects that would come from the decision. Calculating the consequences of all the alternatives is necessary before implementation of the decision. Once the decision is implemented, it’s too late to change anything.
For instance: For hiring decisions, we consider all the consequences from all the selected alternatives. The cost of selecting the alternatives, the ability of alternatives to fulfill the need of decision, the impact each individual alternative may have over the decision etc. are pre-evaluated in this step.
The decision is the final outcome of the alternatives under consideration. It is what will happen as a result of what was decided upon. This is the best alternative selected after considering all the consequences. The decision will be the one with higher benefits and lower cost.
For instance: Considering the need, sensitivity and nature of the organization, the manager might go for hiring an employee based on reference from the existing employee. This will remain cost effective, less publicity, less scanning of candidates and quicker employment process.
This is the final element of decision making. Implementation means execution of decisions selected. This element also includes impact assessment of the decision taken and effectiveness of the decision. In this step managers post, evaluate and report the decision.
For instance: Managers consider the quality of candidates selected from reference and evaluate the candidate if they are suitable for the job. They evaluate the effectiveness of the process selected and report to authorities.
Effective decision making by Managers
No matter which school of thought one follows, the above presented elements are the basics for a decision making for any managers. Decision making is a cognitive process, which means the cognitive ability of the manager influences the quality and effectiveness of the decision made.
The effectiveness of decisions can be evaluated right from the ability of managers to identify the problem out of the presented context. Right identification of problems further takes the decision making process towards the desired outcomes. Also, decision making is an essential business skill that drives organizational performance. It is also valid that it is upto the managers to make key decisions that influence the business strategies. Apart from the above presented elements or steps while considering the decision making process, managers can follow some effective decision making techniques. Such techniques will help managers to make effective decisions.
- Process-oriented approach
- Involve team in the process
- Create and uphold psychological safety
- Reiterate the goals and purpose of the decision
For effective decision making, managers need to follow a process. A manager needs to clear and frame the issue to ensure the right approach/direction is followed. By following a structured, multi-step process, you can achieve the desired outcome.
Involve team in the process
For effective decision making, a manager needs to involve individuals from different organizational levels. Such a participative approach, will provide different perspectives to the same context. Such valuable inputs ease the decision making process and help to make better decisions.
Decision making is effective when decision making is collaborative and involves a pool of individuals with different knowledge and experience. In such a collaborative approach, managers can make the most innovative decisions.
Apart from this, such involvement of teammates and other level employees will help during the implementation of the decision. Participation during the process makes the participant own the decision.
Create and uphold psychological safety
A manager upholds the responsibility of a leader. Therefore, a manager is responsible for comforting all the individuals involved during the decision making process. A manager must maintain an environment of psychological safety.
Psychological safety is the most important dynamic found among the high performing teams. To help the team feel psychologically safe, be respectful and give fair consideration when listening to everyone’s opinions.
Reiterate the goals and purpose of the decision
To make effective decisions, managers need to avoid distractions and focus on their goals and purpose. The goals you’re working toward need to be clearly articulated at the outset of the decision-making process, and constantly reiterated throughout, to ensure they’re ultimately achieved. Revisiting purpose is especially important when making decisions related to complex initiatives.