Decision making process of an organization?

Answer 1

Decision-making is a crucial part of good business. The question then is 'how is a good decision made?

One part of the answer is good information, and experience in interpreting information. Consultation ie seeking the views and expertise of other people also helps, as does the ability to admit one was wrong and change one's mind. There are also aids to decision-making, various techniques which help to make information clearer and better analysed, and to add numerical and objective precision to decision-making (where appropriate) to reduce the amount of subjectivity.

Managers can be trained to make better decisions. They also need a supportive environment where they won't be unfairly criticised for making wrong decisions (as we all do sometimes) and will receive proper support from their colleague and superiors. A climate of criticism and fear stifles risk-taking and creativity; managers will respond by 'playing it safe' to minimise the risk of criticism which diminishes the business' effectiveness in responding to market changes. It may also mean managers spend too much time trying to pass the blame around rather than getting on with running the business.

Decision-making increasingly happens at all levels of a business. The Board of Directors may make the grand strategic decisions about investment and direction of future growth, and managers may make the more tactical decisions about how their own department may contribute most effectively to the overall business objectives. But quite ordinary employees are increasingly expected to make decisions about the conduct of their own tasks, responses to customers and improvements to business practice. This needs careful recruitment and selection, good training, and enlightened management.

Types of Business Decisions

1. Programmed Decisions These are standard decisions which always follow the same routine. As such, they can be written down into a series of fixed steps which anyone can follow. They could even be written as computer program

2. Non-Programmed Decisions. These are non-standard and non-routine. Each decision is not quite the same as any previous decision.

3. Strategic Decisions. These affect the long-term direction of the business eg whether to take over Company A or Company B

4. Tactical Decisions. These are medium-term decisions about how to implement strategy eg what kind of marketing to have, or how many extra staff to recruit

5. Operational Decisions. These are short-term decisions (also called administrative decisions) about how to implement the tactics eg which firm to use to make deliveries.