When you’re faced with challenges, you’re going to have to make a decision. How do you know whether to pick choice “A” or choice “B”? Most people don’t know it, but when you are making a decision you will almost always go through the six stages of the decision making process. This process can relate to everything from everyday life, to business, to the sports field. The decision making process involves identifying and diagnosing the problem, generating alternative solutions, evaluating alternatives, making the choice, implementing the decision, and evaluating the decision.
The first stage of the decision making process is to identify the problem that must be solved. In a business situation, a manager will recognize the difference between the current state of the company and the desired state of the company the manager wants. The difference can be compared to past performance, current performance of competitors, or future expected performance determined by plans and forecasts. In a business situation, a manager might identify a problem when he notices a steep decline in profits. The manager should then ask himself why the profits are declining. The manager assesses the company’s balance sheets and come to the conclusion that the reason for the declining profits is because the increase of the price to create a product and the sales price remaining the same. The manager has now successfully identified and diagnosed the problem of the company.
After identifying the problem, the second step of the decision making is generating alternative solutions to solve the problem. There are two different types of solutions that a manager can choose from. He can choose a ready-made solution which is a solution that has been seen or tried before, or he could try a custom-made solution which is a new and creative solution designed specifically for the problem at hand. The manager might choose a ready-made decision such as raising the price of his product or lowering the cost of production by switching materials or suppliers. The manager might also come up with a few custom-made solutions such as speeding up production of the product to save money on labor costs, or offer special incentives for the sales teams. The manager could also search for solutions by asking employees for ideas to raise profits or lower unnecessary costs the company is wasting. Generating alternative solutions is very important because it gives the manager more options to make and evaluate the decisions that will benefit the company the most.
The alternative solutions have been created and now the manager must evaluate the alternative solutions and decide which one will benefit the company the most. The manager should maximize their decision by realizing and selecting the best possible outcome for each solution. The manager should look at each solution and determine the positive and negative consequences of each decision. There is never a perfect decision in the business world so a manager must decide which on is the best. The manager could see that changing suppliers to get cheaper resources will lower the quality of the product, but it would save costs on production. Raising the price of the product would be unattractive for customers and would not raise the quality of the product, but it would increase the profit margins. Offering special incentives for the sales teams will increase the amount of sales, but it wouldn’t increase the profit margins of the sales. When managers are evaluating solutions, they must also think of contingency plans that can be altered when the future unfolds and adjustments are needed. Evaluating the alternative decisions will cause the manager to think of the pros and cons of each solution and allow him to make the best decision possible.
After evaluating the possible solutions, the manager must make a choice of which solution he thinks is the best for the company. When making a decision, the manager needs to maximize his decision by selecting the best one possible. Managers sometimes tend not to do this when there is time constraint and satisfice by choosing the first option that is minimally acceptable or adequate. The manager should not skip to conclusions and choose the easiest one, which would be raising the price of his product to increase profit margins. After evaluating the solutions, the manager might choose to take a risk and switch suppliers to lower production costs.
The manager has made the decision and he now must implement his decision. The manager can either put the decision into effect himself, or he can delegate the task to subordinates and have them carry out the change. Before implementing the decision, however, the manager must determine a few things first. He must determine how things will look when the decision is operational, the necessary steps to achieve a fully operational decision, list the resources and activities required to implement the steps, estimate the time needed for each step, and assign responsibilities for each step. The managers must also identify possible problems and opportunities that comes with implementing his solution. Implementing the decision to switch suppliers will allow a manager to discover new resources that could increase the product quality or find new ways how to produce a certain product that could save money without sacrificing the product’s quality.
The final step of the decision making process is to evaluate the decision. The manager can evaluate the decision by asking for feedback from customers, employees, or looking at the financial sheets. If the manager receives positive feedback, he knows that his planning is operating successfully. However, if the feedback is negative, the manager must decide if he needs more time, resources, effort, or thought. He might also need to decide if he made a bad decision and must go find a new solution.
Most people don’t realize that when they make a decision they are following the decision making process. They realize a problem and then try to solve the problem by evaluating the consequences of each solution. To make a decision, a person or manager generally follows the six steps of the decision making process. The manager can tell if he made the best decision by evaluating the decisions by practicing vigilance and evaluating if he followed all the steps of the decision making process. If the decision is a bad one, the decision maker will need to go through the process again and decide on new solutions that will solve their problem.