DECISION MAKING1. INTRODUCTION'Decision Making is the act of choosing between two or more courses of action'.Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. However, it must always be remembered that there may not always be a 'correct' decision among the available choices.When trying to make a good decision, a person must weigh the positives and negatives of each option, and consider all the alternatives. For effective decision making, a person must be able to forecast the outcome of each option as well, and based on all these items, determine which option is the best for that particular situation.Decision making is a process of selecting the best among the different alternatives. It is the act of making a choice. There are so many alternatives found in the organization and departments. Decision making is defined as the selection of choice of one best alternative. Before making decisions all alternatives should be evaluated from which advantages and disadvantages are known. It helps to make the best decisions. It is also one of the important functions of management. Without other management functions such as planning, Organizing, directing, controlling, staffing cant be conducted because in this managerial function decision is very important. According to Stephen P. Robbins, decision making is defines as the selection of a preferred course of action from two or more alternatives.Decision making is a daily activity for any human being. There is no exception about that. When it comes to business organizations, decision making is a habit and a process as well.Effective and successful decisions make profit to the company and unsuccessful ones make losses. Therefore, corporate decision making process is the most critical process in any organization.In the decision making process, we choose one course of action from a few possible alternatives. In the process of decision making, we may use many tools, techniques and perceptions.1.1 The Components of Decision Making The Decision EnvironmentEvery decision is made within a decision environment, which is defined as the collection of information, alternatives, values, and preferences available at the time of the decision. An ideal decision environment would include all possible information, all of it accurate, and every possible alternative. However, both information and alternatives are constrained because the time and effort to gain information or identify alternatives are limited. The time constraint simply means that a decision must be made by a certain time. The effort constraint reflects the limits of manpower, money, and priorities. Since decisions must be made within this constrained environment, we can say that the major challenge of decision making is uncertainty, and a major goal of decision analysis is to reduce uncertainty. We can almost never have all information needed to make a decision with certainty, so most decisions involve an undeniable amount of risk. The fact that decisions must be made within a limiting decision environment suggests two things. First, it explains why hindsight is so much more accurate and better at making decisions that foresight. As time passes, the decision environment continues to grow and expand. New information and new alternatives appear--even after the decision must be made. Armed with new information after the fact, the hindsighters can many times look back and make a much better decision than the original maker, because the decision environment has continued to expand.The second thing suggested by the decision-within-an-environment idea follows from the above point. Since the decision environment continues to expand as time passes, it is often advisable to put off making a decision until close to the deadline. Information and alternatives continue to grow as time passes, so to have access to the most information and to the best alternatives, do not make the decision too soon. Now, since we are dealing with real life, it is obvious that some alternatives might no longer be available if too much time passes; that is a tension we have to work with, a tension that helps to shape the cutoff date for the decision.

Delaying a decision as long as reasonably possible, then, provides three benefits:1. The decision environment will be larger, providing more information. There is also time for more thoughtful and extended analysis.2. New alternatives might be recognized or created. Version 2.0 might be released.3. The decision maker's preferences might change. With further thought, wisdom, and maturity, you may decide not to buy car X and instead to buy car Y. Delaying a decision involves several risks:1. As the decision environment continues to grow, the decision maker might become overwhelmed with too much information and either make a poorer decision or else face decision paralysis.2. Some alternatives might become unavailable because of events occurring during the delay. In a few cases, where the decision was between two alternatives (attack the pass or circle around behind the large rock), both alternatives might become unavailable, leaving the decision maker with nothing. And we have all had the experience of seeing some amazing bargain only to hesitate and find that when we go back to buy the item, it is sold out.3. In a competitive environment, a faster rival might make the decision and gain advantage. Another manufacturer might bring a similar product to market before you (because that company didn't delay the decision) or the opposing army might have seized the pass while the other army was "letting the decision environment grow."These decision making tools are general, they are based on common sense and are used in all the trades for backing up the decisions taken by the decision making authorities.

2. TYPES OF DECISION MAKING

IrreversibleThese decisions are permanent, once taken, they can't be undone. The effects of these decisions are far-reaching and are taken only when all other options have been exhausted. ReversibleReversible decisions are not final and binding, they can be retracted at any point, and another more fitting decision made. It allows one to acknowledge mistakes and undertake relevant damage control, depending on how the new circumstances play out. DelayedSuch decisions are put on hold until the decision maker thinks that the right time has come. This delay might cause one to miss certain opportunities that may present themselves, especially in the case of businesses, and may lead to losses. However, such decisions are the norm for large bodies like the government, which decide policies that affect the lives of millions of people. The time taken to collect all information required and to organize plans of implementation, is crucial to the ultimate well-being of the public. Quick DecisionsThese decisions enable one to make maximum use of the opportunity available at hand. However, only a very astute personality can take decisions that are both instantaneous and correct. In order to be able to take the right decision within a short span of time, one should also take the long-term results into consideration.

ExperimentalOne of the ways of decision-making is the experimental type, where the final decision cannot be taken until the preliminary results appear and are positive. This approach is used when one is sure of the final destination but is not convinced of the course to be taken. Experimental decisions are common in fields such as medicine, where the product being tested goes through several phases, and decisions may change with every iteration. Trial and ErrorThis approach involves trying out a certain course of action. If the result is positive it is followed further, if not, then a fresh course is adopted. Such a trial and error method is continued until the decision-maker finally arrives at a course of action that convinces him of success. This allows a manager to change and adjust his plans until the final commitment is made. ConditionalConditional decisions allow an individual to keep all his options open. He sticks to one decision as long as the circumstances remain the same. Once the competitor makes a new move, conditional decisions allow a person to take up a different course of action.2.1 Kinds of Decisions Programmed decisions:Programmed decisions are routine and repetitive, and the organization typically develops specific ways to handle them. A programmed decision might involve determining how products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard arrangement decisions are typically made according to established management guidelines. Non programmed decisions:Non programmed decisions are typically one shot decisions that are usually less structured than programmed decision. Strategic decisionsThese are big choices of identity and direction. Who are we? Where are we heading? These decisions are often complex and multi-dimensional. They may involve large sums of money, have a long-term impact and are usually taken by senior management. Tactical decisionsThese are about how to manage performance to achieve the strategy. What resources are needed? What is the timescale? These decisions are distinctive but within clearer boundaries. They may involve significant resources, have medium-term implications and may be taken by senior or middle managers.

3. PROCESS OF DECISION MAKING SKILLSMany different techniques of decision making have been developed, ranging from simple rules of thumb, to extremely complex procedures. The method used depends on the nature of the decision to be made and how complex it is.The method described here follows seven stages:

Identification of problem Analysis of problem Listing all possible solutions/options Setting a time scale and deciding who is responsible for the decision Information gathering Weighing up the risks involved Deciding on values, or in other words what is important Weighing up the pros and cons of each course of action Implementing the best alternative Review of implementation

Identification of problems: The first step of decision making is identification of problems. First of all, managers must identify the problem. The problem has to be found and defined. Symptoms are identified and problems should be judged, symptoms are not problems. They are warning signs of problems. So, managers should search for symptoms for identification of problems. Such symptoms can be falling of sales, profit etc. It is said that problem identified is half solved is identification of problem should be effective.

Analysis of problem:

After identification of problems, the problem should be analyzed by the decision maker. It is the assembly of fact and clarifying it. Relevant information must be collected and analyzed according to the complexity and nature of problems. Listing Possible Solutions/OptionsIn order to come up with a list of all the possible solutions and/or options available it is usually appropriate to work on a group (or individual) problem-solving process. This process could include brainstorming or some other 'idea generating' process This stage is important to the overall decision making processes as a decision will be made from a selection of fixed choices. Always remember to consider the possibility of not making a decision or doing nothing and be aware that both options are actually potential solutions in themselves. Setting a Time Scale and deciding who Responsible is for the DecisionIn deciding how much time to make available for the decision making process, it helps to consider the following: How much time is available to spend on this decision? Is there a deadline for making a decision and what are the consequences of missing this deadline? Is there an advantage in making a quick decision? How important is it to make a decision? How important is it that the decision is right? Will spending more time improve the quality of the decision? Before making a decision, it needs to be clear who is going to take responsibility for the decision. Remember that it is not always those making the decision that have to assume responsibility for it. Is it an individual, a group or an organization? This is a key question because the degree to which responsibility for a decision is shared can greatly influence how much risk people are willing to take.If the decision making is for work then it is helpful to consider the structure of the organization that you are in. Is the individual responsible for the decisions he or she makes or does the organization hold ultimate responsibility? Who has to carry out the course of action decided? Who will it affect if something goes wrong? Are you willing to take responsibility for a mistake?Finally, you need to know who can actually make the decision. When helping a friend, colleague or client to reach a decision, in most circumstances the final decision and responsibility will be taken by them. Whenever possible, and if it is not obvious, it is better to make a formal decision as to who is responsible for a decision. This idea of responsibility also highlights the need to keep a record of how any decision was made, what information it was based on and who was involved. Enough information needs to be kept to justify that decision in the future so that, if something does go wrong, it is possible to show that your decision was reasonable in the circumstance and given the knowledge you held at the time. Information GatheringBefore starting on the process of making a decision, all relevant information needs to be gathered.If there is inadequate or out-dated information then it is more likely that a wrong decision might be made. Also, if there is a lot of irrelevant information then the decision will be difficult to make, it will be easier to become distracted by unnecessary factors. There is a need for up-to-date, accurate information on which to make decisions. Such information needs to be gathered so that a well-informed decision can be made. The amount of time spent on information gathering has to be weighed against how much you are willing to risk making the wrong decision. In a group situation, such as at work, it may be appropriate for different people to research different aspects of the information required. For example different people might be allocated to concentrate their research on costs, facilities, availability, and so on.

Weighing up the Risks InvolvedOne key question is how much risk should be taken in making the decision? Generally, the amount of risk an individual is willing to take depends on: The seriousness of the consequences of taking the wrong decision. The benefits of making the right decision. Not only how bad the worst outcome might be, but also how likely that outcome is to happen.It is also useful to consider what the risk of the worst possible outcome occurring might be, and to decide if the risk is acceptable. The choice can be between going 'all out for success' or taking a safe decision. Deciding on ValuesEverybody has their own unique set of values - what they believe to be important.Many people decide to buy a car for themselves but different people buy different cars based on their own personal values. One person might feel that price is the most important feature, whereas another person might be more concerned with its speed and performance. Others might value safety, luggage space or the cars impact on the environment or a combination of these features.Depending on which values are considered important, different opinions may seem more or less attractive. If the responsibility for a decision is shared it is possible that one person might not have the same values as the others. In such cases, it is important to obtain a consensus as to which values are to be given the most weight. It is important that the values on which a decision is made are understood because they will have a strong influence on the final choice. People do not make decisions based on just one of their values. They will consider all their values which are relevant to the decision and prioritize them in order of importance. If you were to buy a car, what would be the five most important factors to you?

Weighing up the Pros and ConsIt is possible to evaluate the pros and cons of each possible solution/option by considering the possible advantages and disadvantages. One aid to evaluating any solution/option is to use a 'balance sheet', weighing up the pros and cons (benefits and costs) associated with that solution. Implementation of best alternative: After selection of finest alternative, it must be used in the organization effectively. Effectiveness of decisions in achieving the desired goals depends upon its implementation. It they are not implemented effectively then best results cant be obtained. Therefore proper implementation of best alternative is necessary. Review of implementation: It is the last step of decision making process. When the implementation of best alternative is reviewed, the process of decision making is finished. The result of implementation should be monitored and evaluated through which effectiveness can be measured.

4. EFFECTIVE DECISION MAKING The Decision-Making ProcessDecision-making is the reasoning process we use to select a course of action from among any number of possibilities that present themselves mentally or otherwise. Making a decision either can involve a period of deliberation or seemingly none at all. For many of lifes decisions, we find ourselves having to decide precisely how we should make a decision: Should I sleep on it, go away for a few days, consult someone, flip a coin? Friends, family and others, sometimes even complete strangers, will advise us to stop and think before making a decision and never do the first thing that comes into our heads. Contrast that with wisdom passed down through the ages recommending we go with our instincts or that we listen to our hearts. "Once you make a decision, the universe conspires to make it happen." Ralph Waldo Emerson.We often have you or someone you know lamented: "That was a bad decision," "I wish I had it to do over again," "I let my emotions get in the way." It turns out that our emotions are much more important in the decision-making process than previously thought. The Institute of HeartMath has conducted more than 23 years of research and has compiled substantial data about the role of emotions and the brain in decision-making. It turns out that quite often, the choices we make that end in regret are the products of unmanaged emotions, but when we allow calm and intuitive heart-based feelings to guide us the outcomes of our decisions are far more favorable. When the Heart DecidesResearchers with HeartMath and other organizations believe intuitive feelings emanate from the heart. They have found evidence showing the human heart has an intuitive intelligence greater than science and medicine have historically believed. Even without our realizing it, the heart guides us in much of what we do, but often we allow our brains or our unmanaged emotions to take the lead role in our decision-making and later regret our choices.

"I should have gone with my heart," some people say in hindsight, unaware that the very act of making such a statement may have originated in the heart itself. We now know the heart has a powerful electromagnetic field and complex nervous system and circuitry that generate up to an estimated 60 times the electrical amplitude of the brain. The electromagnetic signal our heart rhythms produce can actually be measured in the brain waves of people around us. We also know our heart-rhythm patterns say a lot about our emotional balance and the stress we are experiencing: The calmer we are, the more regular our heart-rhythm patterns are, and the more stress we feel, the more irregular the patterns are. Researchers at HeartMath and elsewhere have concluded the heart possesses its own organized intelligence network that enables it to act independently, learn, remember and produce feelings. Until recently it was believed only the brain was capable of these functions. Through years of studies involving thousands of people, researchers at HeartMath and elsewhere have shown when we intentionally experience positive feelings such as care and appreciation we can improve our heart-rhythm patterns. That means reduced stress, getting sick less frequently, thinking more clearly, even living longer. So go ahead, let your heart decide. The Stress of Making DecisionsEver wonder how many decisions you make each day. Hundreds, thousands? The conscious ones we make every few seconds: Should I get out of bed? Should I hit the snooze button? Hit it again? Remember my dreams? Plan my day? And the countless ones our bodys systems, including trillions of cells, make every fraction of a second. In todays fast-paced, rapidly changing world, were expected to make countless decisions quickly: Give the correct answer in class; make a left turn at the signal, finish that project by 3 p.m.; meet the cable guy. The pressure to think and act quickly never seems to let up and the consequences of not keeping up are always hanging over our heads. No wonder stress levels are at all-time highs among Americans.

Lifes Big DecisionsNot all decisions are equal, and not all take the same toll on us. "What should I have for lunch?" or "Should I go somewhere this weekend?" dont compare to "Should we start saving for the kids college education or pay off our debts first?" or "Should I change careers?" The big decisions take much more intellectual thought, clarity and focus. Weighty decisions such as these are stressful enough, but if we put them off until later, were bargaining for the stress that comes with indecision and we dont need any more stess. Organizational Decision-Making"The results (of HeartMath interventions) speak for themselves. Our airline, Cathay Pacific, now prides itself on delivering an individual style of service, straight from the heart. This has resulted in consistently being rated as having the best in-flight service in the world."Researchers investigated the impact of HeartMaths Inner Quality Management program on managers and staff within the California Personnel Retirement Systems Information Technology Services Division, which had recently initiated profound changes to meet the changing information services marketplace. Learning new technology skills proved challenging. The results suggested that by facilitating increased self-management of the participants mental and emotional turmoil, the program enhanced employees ability to defuse personal and organizational stress.

5. Importance of decision making Implementation of managerial function: Without decision making different managerial function such as planning, organizing, directing, controlling, staffing cant be conducted. In other words, when an employee does, s/he does the work through decision making function. Therefore, we can say that decision is important element to implement the managerial function. Pervasiveness of decision making: The decision is made in all managerial activities and in all functions of the organization. It must be taken by all staff. Without decision making any kinds of function is not possible. So it is pervasive. Evaluation of managerial performance: Decisions can evaluate managerial performance. When decision is correct it is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial performance. Helpful in planning and policies: Any policy or plan is established through decision making. Without decision making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so many alternatives. Therefore decision making is an important process which is helpful in planning. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It is necessary in every organization because there are many alternatives. So decision makers evaluate various advantages and disadvantages of every alternative and select the best alternative. Successful; operation of business: Every individual, departments and organization make the decisions. In this competitive world; organization can exist when the correct and appropriate decisions are made. Therefore correct decisions help in successful operation of business.

6. MODELS OF DECISION MAKING

SWOT AnalysisThis is a very common decision making model specifically used during feasibility study of the project. SWOT analysis brings unsorted issue to a conclusion when the project is gauges based on Strength, Weakness, Opportunity and Threat.The steps for SWOT analysis are the same as mentioned above, but there is one caution which needs to be followed which is the emphasis on deep analysis of strength and weaknesses similarly, opportunities and threats. Maslows PyramidMaslows Pyramid of hierarchical need has been very well spoken and discussed in the HR industry which is an integral part of Project Management. Deduced in 1943, by Abraham Maslow, this decision model speaks volumes about basic human needs and their effect on human behaviour. While working on the projects the most inconsistent variable which a project manager faces is a human resource. Understanding Maslows pyramid helps project manager to identify problems related to human resources.Maslow typically says that there are five levels of human needs and it is through their accomplishment one by one that the human can reach self-actualization.The pyramid consists of physiological needs, security requirements, social relationships, and recognition and self- actualization.This theory of understood properly can help a project manager a great deal while working with human resources.

Pareto PrincipleThis is also called as 80-20 rule wherein you prioritize your problems and then find out solutions. In order to understand the concept, this 80-20 rule can be described as an example of problems in organization created by people. We can say that the 80% of the problems are created by 20% of the people in any organization.Let us say you have a BPO and 5 of the problems in your organization are due to lack of promptness, 3 problems are due to poor linguistic ability and 2 problems are due to poor organization skills. So you can say that major problem here is caused by the lack of training and development because if you impart training to your employees automatically promptness and linguistics will be taken care.

Monte Carlo SimulationNow here is a cache, Monte Carlo simulation is a model which essentially focusses on the numerous simulations over random sampling yielding results which are approximate. It just tells us that even models can be random and have very less reality attached to it. This Monte Carlo simulation model is interesting because of the random sampling and use of probability and statistics to determine the result. In project management Monte Carlo simulation method is used for quantitative risk analysis wherein you will be able to identify quantitative impact of a risk on projects objective. Decision tree analysisThis decision model is used while performing procurement analysis. The question of whether to build or buy is answered using this decision tree analysis. You can give each of the possibility a chance of yes and no in percentages and calculate the amount invested against the amount received. Based on the profits you can decide whether to build or buy for a particular project.There are many more decision making models and those can be effectively used in professional as well as personal life. These tools are sometimes regarded highly in the sphere of project management as their capacity of backing up decisions taken by project manager is enormous. A good project manager can understand the need of these effective tools which can be used all through the life cycle of project management

7. CASE ANALYSIS