Decision making and its qualitative techniques

Meaning of decision making

Decision making is the process of choosing one course of action from two or more alternatives in order to achieve an objective or solve a problem. It is the core of every managerial function: planning, organising, directing and controlling all involve decisions. A decision may be programmed (routine, handled by set rules, such as reordering stock) or non-programmed (new and unstructured, such as entering a new market).

Decisions are taken under certainty (outcomes known), risk (outcomes uncertain but probabilities can be estimated) or uncertainty (probabilities unknown). The rational process involves defining the problem, identifying alternatives, evaluating them, choosing the best, implementing it and following up.

Techniques that help in choosing are quantitative (based on numbers and models, such as break-even analysis, decision trees or linear programming) or qualitative (based on judgement, experience and group thinking). Qualitative techniques are used when the problem is new, the facts are incomplete or the factors cannot be measured.

Qualitative techniques of decision making

Techniques that draw on a group

1. Delphi technique. Experts who never meet give their views in writing and without names; each round they see how the others answered and may change their minds, until the panel's views come close together. It is useful for forecasting and long-range questions and avoids pressure to conform.
2. Brainstorming. A small group generates as many ideas as possible on a problem in a free session. Criticism is postponed, unusual ideas are welcome, and ideas are combined and built upon; evaluation comes later. It is used for creative problems such as naming a product or finding new uses for it.
3. Nominal group technique. Members first write their ideas individually and silently; each idea is then presented in turn and recorded; the group discusses them; finally each member ranks the ideas privately and the decision is the one with the highest total. It avoids domination by a few vocal members.
4. Consensus and participative decision making. The group discusses the problem until a solution that all members can accept emerges. It improves commitment, though it takes time.
5. Mutual consultation. Meetings and committees bring in ideas and specialist views from several people before the manager decides.
6. Consensus mapping. When several small teams have each worked on a problem, a facilitator gathers their ideas, sorts them into categories, and the teams then merge the categories into one shared picture of the problem and its remedies that all of them accept.
7. Didactic interaction (debate). For a yes-or-no decision, the group is divided into two sides that argue for and against; the decision follows from the strongest arguments.
8. Quality circles. Small groups of workers from the same area meet regularly to identify and solve work problems, bringing practical knowledge into decisions.

Techniques a manager uses alone

9. Facts. Gathering and interpreting the relevant facts gives each alternative a fair test; facts support judgement, they do not replace it.
10. Standard plans. For routine, recurring decisions, a plan settled in advance (a standard procedure or rule) saves the manager deciding the same thing afresh each time.
11. Heuristics (rules of thumb). Simple rules drawn from experience, for instance, keeping a set number of days of stock, give quick, satisfactory decisions for recurring problems.
12. Experience and intuition. A manager draws on what worked and failed in past decisions, while checking whether conditions have changed since; intuition, a feel for the situation, lets an experienced manager decide quickly. Both are useful when time is short, but they are subjective and can be biased.

Example. A publisher deciding whether demand for printed textbooks will survive the next decade might use a Delphi panel of teachers, booksellers and technology experts, and then a nominal group of its editors to choose among new product ideas.

Conclusion

Qualitative techniques bring experience, creativity and the views of many people into decisions that numbers alone cannot settle. In practice managers combine them with quantitative analysis wherever data are available.