Decision making and its qualitative techniques

What decision making is

A decision is a course of action chosen consciously from among several alternatives in order to reach a desired result. Decision making is the process of selecting the best of the alternatives open to management after evaluating each of them carefully. The decision is the outcome; decision making is the process that produces it. Through a decision a manager tries to narrow the gap between the present situation and the one desired, and Peter F. Drucker went so far as to treat everything a manager does as done through decision making.

Features of decision making

• It involves choice. Without two or more alternatives there is nothing to decide.
• It is goal-oriented. A decision is judged good if it helps the organisation reach its goals.
• It is pervasive. Managers at every level and in every area, and in every function from planning to controlling, make decisions.
• It is an intellectual exercise, calling for creativity and imagination, in which experience and intuition also play a large part.
• It commits resources. Time, effort and physical resources are committed both in planning and in carrying out a decision, so the right decision has to be taken at the right time.
• It depends on the situation. The same manager may decide one way in one situation and the opposite way in another, or decide not to act at all.
• It is continuous, beginning with the organisation and going on throughout its life.

Qualitative techniques of decision making

Techniques that help managers choose among alternatives fall into two groups, qualitative and quantitative. The qualitative techniques are traditional in nature, and the quality of the decision they produce depends on the qualities of the decision maker, such as competence and knowledge. The qualitative techniques are grouped below by whether they draw on many minds or on one.

Group techniques

1. Brainstorming. A problem is put before a number of managers, and each offers an idea for solving it. Only when the session is over is each idea examined critically, and the useful ones are developed further into a solution. It often yields unusual answers to complicated problems. A food-delivery company in Bengaluru might gather its operations, technology and rider-support heads to throw up every possible way of cutting late deliveries before judging any of them.
2. Delphi technique. A panel of experts on the problem is formed, but the experts are kept apart and do not know one another's identity. Each answers a questionnaire prepared in advance. Where their answers differ, they receive feedback and are asked for the reasons behind their differences, and the feedback is sent again; this is repeated until opinions begin to converge, and the decision is made on that converging opinion.
3. Consensus mapping. This technique pulls together the results of several task forces or project groups, and it suits problems with many dimensions whose parts are linked. It starts after the first task group has produced and evaluated a list of ideas. Facilitators help the subgroups look for clusters and categories among the ideas and build a classification scheme; the subgroups' schemes are then combined into one representative draft map for the whole group, which the members revise, round after round, until they agree on a single map and a final decision.
4. Mutual consultation. Meetings are held or committees formed, and the decision maker settles the issue with the help of the varied and creative ideas of those present. The decision gains from their specialised knowledge and expert comment.

Techniques that rest on the individual manager

1. Intuition. Intuition, or hunch, is understanding a matter through feeling rather than facts; it is shaped by the decision maker's beliefs, attitudes and perception. It is cheap and quick, but the chance of a wrong decision is very high.
2. Experience. The manager learns from past judgments, using feedback on earlier performance to decide the present course. It must be used with care when conditions have changed, because it can then prove unscientific and misleading. A textile mill owner in Surat who has lived through several cotton price cycles may sense when to stock up, but a new kind of market shock can make that experience a poor guide.
3. Standard plans. These are guidelines fixed in advance for performing a particular task. They are used for routine decisions, mostly by lower-level managers, and they help them decide quickly.
4. Facts. Facts are the background information on which alternatives are developed and evaluated. They do not speak for themselves and must be processed and interpreted; they are less a technique on their own than a basis for a manager who wants to decide on sound grounds.

Conclusion

Decision making is choosing the best course of action from the alternatives available, and it runs through every function and level of management. The qualitative techniques depend on human judgment: individual methods such as intuition, experience, standard plans and facts are quick but only as good as the manager using them, while group methods such as brainstorming, the Delphi technique, consensus mapping and mutual consultation pool many minds at the cost of time. Quantitative techniques, by contrast, aim at a high degree of precision and accuracy; both kinds were developed to help managers reach objective decisions in a turbulent business environment.