We explain what decision-making is and what its characteristics are. How to make a decision, its advantages and disadvantages.
What is decision making?
Decision-making is a very important factor in the business world , since these imply, in general terms, having to choose a path between different alternatives, as a way of solving problems or continuous improvement.
Decision-making implies a high responsibility for the administrators of organizations and companies , be they small, medium or large. They are themselves the engine of business. A good decision will result in higher profits or benefits, and likewise, a bad decision may generate damages or losses of different kinds.
Decision-making characteristics :
Good decision making requires a cold and impartial analysis of the facts , and the consideration of past experiences that allows making predictions or projections. That is why the analysis is comprehensive and objective.
Steps for decision making
Decision making requires the assessment of the need to make a decision.
To make a decision, especially in the business field, it is necessary to take into account the following steps:
- Determine your need. The process involved in making decisions requires as a preliminary step the evaluation of the need to make a decision. It is at this moment that the current state of things and the desired one intersect.
- Evaluate the decision criteria. It is very important to take into consideration the criteria to carry out the decision that, at this point, has already been identified.
- Give weight to the criteria. This means, in other words, giving them more strength and driving power over the decision.
- Be thorough with the variety of alternatives. The administrator must be able to contemplate all the alternatives.
- Choose the best alternative. This means reaching the end of the decision-making process. The best weighted alternative is chosen in the previous point.
Models for decision making :
On the other side of the rational scheme is the creative one, which integrates, for its part, the following sequence: unconscious exploration, intuition, discernment and logical formulation.
It must be considered that there are different models for decision-making ; one that appeals to regularity, the use of the same strategies in the face of similar problems (simplified model of reality), another that acts on the basis of experience (intuitive decision-making) and another that is characterized by choosing an alternative and divert the evaluation of the others (model of the implicit favorite).
The periodicity is what indicates how often a decision is made . It will be a high-level decision when referring to an exceptional decision, while the regular decisions that are usually made are low-level decisions.
A decision made at a low level will affect few activities or areas , whereas when it is made at a high level it will be more important.
The decision will be made at a low or high level, if reversing is easy, it will be low.
According to the reversibility capacity, the decision will be made at a low or high level: if reversing is easy, it will be low , while if it involves a very important restructuring, it will be high.
Decisions are made according to the quantity and, even more, quality of the factors involved - legal, ethical issues, company image, etc. - and this will determine the level of decision (high or low).
Decisions whose influence persists in the long term are considered a high-level decision, while those destined for the short term are low-level decisions .
A programmed decision is routine and its practice is condensed through one method.
Linked to the above, decisions are distinguished according to the following types:
- Decision scheduled. They are routine, repetitive decisions, their practice is condensed through a method. As the problem is in focus, there is no need to go through the entire decision process, there are sequenced steps for resolution.
- Unscheduled decision. When you talk about closing an unprofitable division, for example, you are talking about an unscheduled decision. That is, there is no action plan configured in advance.
Advantages and disadvantages
- Advantages. Decision-making mobilizes the economy , allows more extensive information, can give rise to different perspectives, reduces communication conflicts and increases legitimacy.
- Disadvantages. Note that decisions involve a high degree of commitment, acceptance pressures, time, and ambiguous responsibilities.
To make an effective decision, it is necessary for companies to rely on resources such as qualitative and quantitative surveys , discussion groups (dramatic, creative, operational), economic analysis of supply and demand , CATI (Telephone Survey System), motivational groups.
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