INTRODUCTION

Decision making in business policy involves the process of analyzing various

options and selecting the most appropriate course of action to achieve the
organization's objectives and goals. Business policy refers to the guidelines and
principles that guide the overall direction and strategic decisions of a company.

DEFINITION

According to Monahan (2000), making a decision involves selecting from various

options, and it plays a vital role in the functioning of an organization. By making
decisions, a manager can choose different paths to enhance the organization’s
operations. The success of an organization relies on the actions taken as a result of
decision making.

The outcome of a decision can be viewed as an accomplishment or an evaluation

of the chosen option. Every organization operates through the decision-making
process carried out by individuals. A manager, through planning, organizing,
staffing, leading, and controlling, guides their team by implementing decisions.
The effectiveness and quality of these decisions determine the level of success a
manager achieves (Ray, 2009).

Throughout their work, administrators consistently engage in decision making.

Being an administrator is a demanding role as they frequently encounter
situations that require them to make difficult choices.

On any given day, administrators make numerous decisions, whether consciously

or unconsciously. Decisions typically involve applying significant human judgment
and drawing from experience until a solution is reached (Monahan, 2000).

TYPES OF MANAGERIAL DECISIONS

Monahan (2000) categorized managerial decisions into five types, namely:

1. Organizational and Personal Decisions

2. Individual and Group Decisions

3. Routine and Strategic Decisions

4. Programmes and Non-Programmes Decisions

5. Policy and Creative Decisions

Organizational decisions refer to decisions made to advance the interests of the

organization as a whole. They are intended to promote the organization’s goals
and objectives.

When administrators fulfill their formal roles within the organization, they make
decisions on behalf of the organization. The authority to make decisions may also
be delegated to other members, leading to decision-making at various levels
within the organization. This creates a chain of behavior that permeates
throughout the organization.

The choices made by managers have a profound impact on all aspects of an

organization. Managers make decisions as individuals rather than as
representatives of the organization itself. Consequently, these decisions influence
the overall culture and behavior of the organization.

Typically, management is responsible for making personal decisions within an

organization. Managers make these decisions in their individual capacity rather
than on behalf of the organization. The decisions they make can have both direct
and indirect effects on the organization.

Individual decisions are made by specific individuals within an organization, often

addressing common issues that arise during regular operations. These types of
decisions are commonly found in small autocratic organizations. On the other
hand, group decisions involve a collective effort by a group of individuals who
share a common purpose. Making decisions as a group encourages active
participation from all members. Routine decisions are made regularly and follow
established rules, measures, and policies. They do not require the collection of
new data and can be made without much debate or negotiation. Conversely,
strategic decisions are significant choices that can significantly impact the
organization's functioning. Therefore, these decisions are typically made by key
managerial figures within the organization. They involve extensive data collection
and analysis to determine the best course of action for the organization.
Introducing a new program or system can be considered a strategic decision.
Programmed decisions address routine and recurring problems. They have short-
term effects and can be made by analyzing the situation from an analytical
perspective to determine the appropriate solution.

Non-programmed decisions occur when the situation is complex and finding a

suitable solution is challenging. Policy decisions are crucial and are made by top
management. Operational decisions, which involve implementing policies, are
typically made by those responsible for their implementation.

STEPS IN DECISION MAKING

In any organization, decision-making plays a crucial role in problem-solving and

effective management. It is an ongoing process that requires administrators like
managers to utilize the right information, adopt appropriate strategies, and make
timely decisions. The decision-making process is pivotal for the smooth operation
and efficiency of an organization.

According to Ray (2009), William & Stephen G. M. (2010), and Monahan (2000),
the decision-making process comprises several steps:

1. Defining the problem: Managers must accurately identify and define the real
problem that needs to be addressed in order to facilitate effective decision-
making. This involves separating the problem from its symptoms and uncovering
the underlying factors causing those symptoms. Symptoms can include issues like
low profits, high production costs, employee turnover, absenteeism, low morale,
and declining sales.

2. Identifying limiting factors: Managers need to be aware of the constraints and

limitations that may impact the decision-making process. These constraints can
include limited resources such as time, supplies, equipment, personnel, and
information. Even if resources are scarce or outdated, managers should make an
effort to explore factors that can improve productivity.
3. Developing potential alternatives: Managers should generate multiple
alternative solutions for a given problem. It is beneficial to brainstorm ideas with
other team members, as even seemingly outrageous suggestions can inspire new
and valuable insights from the group.

4. Analyzing the alternatives: Managers need to assess and evaluate the various
alternatives they have generated. This step involves considering the advantages,
importance, and potential impact of each option. Additionally, managers should
weigh the pros and cons of each alternative, conduct a cost-benefit analysis, and
evaluate the feasibility, effectiveness, and consequences for the organization.

5. Selecting the best alternative: After thorough analysis, managers must choose
the most suitable alternative from the options available. They should consider the
predicted consequences and potential outcomes of each alternative for the
organization.

6. Implementing the decision: Once a decision has been made, managers need to
put it into action. Implementation requires planning, coordination, and effective
communication to ensure that the chosen alternative is executed successfully.

7. Establishing a control and evaluation system: Managers should establish a

system to monitor and evaluate the outcomes of the decision. This control system
helps assess the effectiveness and efficiency of the chosen alternative, making
adjustments if necessary.

Overall, the decision-making process in organizations necessitates accurate

problem definition, resource utilization, generation of alternative solutions,
careful analysis, selection of the best option, effective implementation, and
continuous evaluation.

After considering all the options, the manager must select the optimal one that
offers more benefits than drawbacks. The manager now needs to generate the
most practical and efficient alternative.

The manager needs to exercise discernment in their decision-making. They should

establish policies, rules, and procedures that communicate the roles of employees
or subordinates, facilitating the problem-solving process (Charles and Benjamin,
1965).

The manager must gather information to assess the effectiveness of a decision. If

the plan has not been executed successfully, they need to identify what went
wrong. This allows the manager to identify any actions taken during the decision-
making process. Managers should conduct a comprehensive examination of the
choice.

DECISION MAKING STAGES

The decision-making process consists of four distinct phases that are crucial for its
successful execution (Annon, 2008). These phases are as follows:

1. Initial Stage:

During this orientation stage, individuals gather and engage in social interactions
to discuss the relevant issues at hand.

2. Conflict Stage:

Following the initial stage, the conflict stage emerges as group members become
more familiar with one another. At this point, varying perspectives and ideas often
lead to disagreements and numerous arguments.

3. Resolution Stage:

In the emergence stage, individuals actively defend their viewpoints and assert
their rights in relation to the decisions made. Ultimately, the group works towards
reaching a consensus and collectively making a choice.

4. Reinforcement Stage:

The reinforcement stage represents the final phase of the decision-making

process. Here, the group solidifies their chosen decision and strengthens their
commitment to its implementation.

DECISION MAKING MODELS

There are four decision-making models available, namely ad-hoc decision-making,
multi-attribute utility theory (MAUT), Analytical Hierarchy Process (AHP), and
Bayesian team support. In situations where time constraints prevent the use of
structured approaches, organizations resort to ad-hoc decision-making, which
depends on the specific problem at hand (Monahan, 2000).

When faced with problems that can be tackled using multiple criteria, these are
known as multi-attribute problems (Monahan, 2000). Various methods, including
mathematical approaches and informal methods, can be employed to address
such issues (Monahan, 2000).

AHP is an extension of MAUT, utilizing pair comparisons for decision-making.

Additionally, the Bayesian team support model is utilized to aid decision-making in
scenarios where there is limited information available (Monahan, 2000). This
method is commonly used to handle uncertain problems.

MAKING HIGH QUALITY DECISIONS

A high-quality decision is one that has been carefully and thoroughly made using
the best available process. It is essential to break down decisions into components
and consider each alternative separately. Without a proper process, decisions are
likely to be influenced by personal comfort zones. Each problem should be tackled
individually and approached in a unique manner (Monahan, 2000).

Having a well-defined process or framework provides the necessary mechanisms

to ensure the quality of your decisions. Equally important, it establishes a
common language and mental models that facilitate efficient and effective
decision discussions (Noe, 2008).

By fostering a shared understanding of decision processes, criteria, and roles,

many common organizational decision pitfalls can be avoided. This enables
individuals within the organization to focus their conversations on generating
better alternatives, validating assumptions, and ultimately justifying their own
decisions (Jock, 2011).

Managers make decisions on a daily basis that impact their teams and
organizations. Before making any decision, managers should first clarify their
goals. It is important to assess whether the decision is the right one and
determine how to gain commitment from staff members for its implementation
(Noe, 2008).

The significance of decision-making lies in establishing a solid process or step-by-

step approach from the initial stages to the ultimate outcomes. Effective
leadership skills should be applied to ensure each step of the decision-making
process is accomplished (Ray, 2009).

Jock (2011) argues that successful business managers understand that the
effectiveness of their decision-making often determines the success or failure of
their enterprise. Well-informed decisions lead to organizational success, while
prolonged decision-making can have negative repercussions. Effective decision-
making is a skill that develops over years through experience (Triantaphyllou,
2000).

A strong decision-making process relies on sound logic. Employees are more

comfortable when they have a clear understanding of the reasoning behind a
decision. Managers should utilize available resources to make the best possible
choice.

Managers are personally and sometimes legally accountable for the outcomes of
their decisions. Therefore, it is important to operate within the boundaries of
their authority. Managers must make good decisions that promote business
growth and facilitate employee development and success (Hal, 2007).

During the decision-making process, it is crucial to avoid distorting information to

support a particular decision (James, 1990). Managers should welcome challenges
from others regarding their decisions and view them as opportunities for
improvement. Seeking input from colleagues can provide alternative perspectives
and different problem-solving approaches before reaching a final decision. Hastily
made decisions without careful evaluation often lead to significant failures (Noe,
2008).

Managers have the responsibility to make the right decisions for their
organizations. Indecisiveness on the part of a manager may give the impression to
employees that they are incapable of making tough choices or taking a stand on
issues affecting the organization.

Managers should keep in mind that when employees disagree with their opinion,
it is not a rejection of them personally (Hal, 2007).

It is also valuable to leverage the expertise of individuals within and outside the
organization. Seeking advice strengthens relationships and enhances managerial
effectiveness. Depending on the nature of the decision, managers may need to
gather more information about customers and the organization itself (Noe, 2008).

To make sound decisions, managers should gather input from those involved and
affected by the decision. Involving employees fosters a sense of ownership and
engagement in decisions that impact them.

Even if a manager believes they can make a decision independently, it is advisable

to involve those who believe their input is necessary. Considering multiple
perspectives provides a broader evaluation of the situation (Noe, 2008).

CONCLUSION

Every day, organizations engage in an ongoing process of decision making. It is

crucial for managers to be aware of the necessary steps to ensure the correct
decisions are made. This paper explores different types of managerial decisions,
emphasizing the importance of addressing each problem individually using the
appropriate model.

Decision making comprises several phases that managers should consider prior to
reaching a final decision. By following these steps diligently, managers can arrive
at effective decisions that involve all stakeholders within the organization.
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James, R. (1990). Human Error. New York: Ashgate.

Jock, F. (2011) Managerial Decision Making. Web.

Monahan, G. (2000). Management Decision Making. Cambridge: Cambridge

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Noe, D. ( 2008). Managerial Decision Making and Decision Process. Web.

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