Decision Making Model

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Published: 17th August 2015
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Decision Making Model
A manager consciously and subconsciously makes hundred's of decisions in a day. Most of the decisions have significant impact on the organisation's profitability and productivity. A timely, well considered decision can lead the organisation to success and can eventually decide the fate of the organisation. . Decision Making is a rational or irrational reasoning process which can be based on assumptions, logic or calculations Decision making is an essential leadership skill a good manager needs to possess. Hence, understanding the role of decision making is very critical for any organisation and for any manager for which they need to have a good understanding of the different models of decision making. Some decision making model assumes that decision making is the same as problem solving. However, many experts believe that every decision is not only about solving a problem. For e.g.: - Selecting "X" candidate or "Y" candidate for a desired post is not always considered as problem solving. It can be selecting the best alternatives among the available choices.
There are Two models in Decision Making Process, namely: -
1. Rational Model: - According to Herbert Simon, Rationality is"a style of behaviour that is appropriate to the achievement of given goals, within the limits imposed by given conditions and constraints" According to Rational Model, any individual follows a cognitive process while making any decisions. The following are the steps involved: -
a. Identifying the problem.
b. Identifying the important criteria for the process and the results.
c. Generating solutions.
d. Selecting the most appropriate solution.
e. Implementing and evaluating the solutions.
The core objective of Rational decision making model is selecting the most logical and sensible alternatives among the available choices to attain the desired result for which it is necessary for any manager to analyze and evaluate each and every available alternative and compare them with each other to select the most suitable one. Few examples of Rational model includes Decision Matrix Analysis, Pugh Matrix, SWOT analysis, Pareto Analysis and Decision Tree. The following are the drawbacks of this model:-
It can be time consuming as it assumes that there is one best alternative to every problem and the manager has to consider every alternative before making any decision.
Considering each and every alterative can even cause delay in decision making.
This model also assumes that decision maker has full or perfect information about the consequences of their decision/ choices made but inn highly competitive and unpredictable universe nothing is constant.
2. Normative Model: - The Normative model of decision making was developed by Victor Vroom, a scholar on leadership and decision making and also a Professor at Yale University. Yale identified 5 types of decision making process:-
i. Decide: - The leader takes the decision with available inputs from subordinates.
ii. Consult (Individually):- The leader approaches each group member, discusses the problem and records their individual solution and then decides whether he/ she wants to use the suggestion or not.
iii. Consult (Group): - The process is same ass above but here the leader presents the problem in a group meeting to all the group members together, he/she then encourages various solutions to the problem and then decides which is the most appropriate solution to solve the problem.
iv. Facilitate: - This is same as the group meeting consultation approach but here the decision is collectively taken by the consensus of the group, then only by a leader.
v. Delegate: - Here the leader provides the required resources and motivation to the subordinates and enourages them to take the final decision.
Vroom further stated that a leader needs to consider various factors like impact of decision on the overall project, department and organisation; team member's expertise, competencies, strengths, commitment to the final decision, to the leader, to the department and the organisation; leaders experience and expertise etc before considering any decision.
The Normative decision making model helps the leader to evaluate the type of effort a decision will require. For e.g.: - Is it economical to outsource the finished products and sell them? Or buy raw materials and convert them into finished goods? Or prefer semi finished materials and process them. For each of the available options they write a paragraph answering the sentence and then select the most appropriate one. The Normative Model considers the fact that managers are bound by certain personal and environmental constraints while making any decision. Such constraints include various elements like availability of resources, time, complexity, red tapism, uncertainty etc.

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