STEPS iN DE.CISION MAKING PROCESS
Yrd. Doç. Dr. Asuman TÜRKEL It iis a miısıtake to assume that .only businessmen make im-portant decisions. Each day in (a: vartety of s'irtuation&-shoppmg or playing, aıt scihool or at wıork we are calıled on to solıve prdblems and make decisions. We: can define a decision. as a choice among
alternatives. Mosıt of us ha ve dıif ficulty :maJking an effective
de-c±sıion when faced wiıth a new problem. We can not fiınd a ~ajic
foımula thaıt give;s a good solution to all problems an the time. But there is a methoıd, ofıten used by businessmen, systematic şer:ies of sıteps in solving anıalyıtical and creative prdb1ems. Analy-tical pTdblems can be solved 1by logic because the
conditıimıs aıre
sta:ted
and only one or a few solutions are po88ihle; arithmetic problems are examples. Creative problems arıe open to a varti.etyOf solutions and solving the~ requires ~eart fle~ibiliıty:. THE S'l'EPS iN DECIDING
The systematic aıpproacıh to decision making inıvolves sıix steps. Let us consider them in tuırn.
Step ı ~ Define the problem :
Definitıion of a problem hıas three ~si: (1) stating , tbe
specific dbjeotives to be aclıieved in problem solution, (2) i®n-tifying the time, cost,
and
other const·raints that restricıt thepos-Sible solrutions, and (3) specifyinıg a measure of success.
Two. important teıcihniqua.s should be used in obtaining sa-tisfactory prablem definitions.
Fiırst, the deciısion maker should wrirte down the · objectives,
constrainıt'S and measures of success tihaıt maike up the proıblem def.iniıtion. Second, the deciısion maker should show tıhe written
definiıtion to some pe:oıple who have an inıterrort in tı:J:ıe prob[em and who may provide suıgg·elS'tionıs that will refine and improrve the prolblem strutemenıt. On the other hand. mı.magerıs should · also begin to deıtermine w!hich parts of the pr.obiem tıhey «must». solve and wh:ich parts tıhey «sihould» or would like to solve. Mosıt
prob-le!IIlS involıve sever.al elements, and it is not p:o:asiıble to fiınd a solution tJhat will worik for all of them. If mana:g:ers achieve to
deteıımine their · «must» and «shoulds» tihhey will ha ve a basis for
proposinıg and evaluıaıting alıternaıti.ve solutions.
Step 2 - Enumarıa.te the de'Ciısion factors:
'l\he. teITn dedsion factors means two sets of variahles that together deterımine the oıutcome of a decision. These two sets diff.er by tıhe degree of control tha~c; the dıeciston maker does.. The·
first group is the alternativd3 whicih the decision maker has control ovea-. them-contmHaıble factons. The sec:0nd group is the
uncertainties over which the decision maker has no control. In step 2, the deciısiori maker has to identify; ( ı) tihe
pdn-cipa~ı aLteırnatives tihat can be considerıed reasonable approaches to solving the problem and, (2) the principaıl uncertainties that oan effect an altteırnative.
Step 3 - C:ollect relevant information:
Thi13 infoımation can be divided into two main categ.ories: me:thods and data. Methods arıe appioaches used to analyze the prolblem; data ar~ the f acts anıd figures relevant to the piI'oblem. When you analyze a business proıblem, the methods and data comlbine to suıgıgest posısible: soluti;ons".
ünce marragers hıa:ve determined and defined their proiblem1 they mul3rt begin to decide whaıt they wiıll do aıbout it.. To ac· complisih this, tihey musıt frrst determinıe what · facıts they. wiıll need to make a correct decision anıd tıhen try to olbtain a.s much of this infoiI'mrution as -..posıs:ible. They can asik themselves such questiorus as: Who in our organrnation is most directiy a.ffec:ted
by our problem? C:an they tell us more about its practical effects? Could tıhey suggest how the problem might be solved? How are our customers affected by our problem? Are there certain solu-tions some peop1e in our organiızation will oppose? What resour-ces will be a:ba.ilable us solve the problem? If mş,nagers get ans-wers to those questions, they should have enough information t.o be aıble to formulate possible solutions.
Step 4 - Ildentify the best alternative:
Af ter the decisi on maker has def ined the problem, enumar-ra.ted both alternatives and uncertainties, and collected rele-vant information~ he muıst organize and interpret the informa-tion
in
such a manner that the best alternative can be identified. This best alternıaitve will .be based on the amount of informationavailaıble to the manageTS .and by their imperfect judgment. If
this step is implemented, the · alternativ.e becomes the accepted solutfon. T.o organize data pertinent to pmblems and to identify the be.::t alternative, businessmeın who have analyzed the decision making process ha ve d~v:eloped the «choice selection method». This method, is one: of the most powerful analytical techniques currently available. Because of i;ts flexibility, this technique can be a pplied to many problems-personal ar business, simple or complex, qualitative or quantitative.
Step · 5 - Develop and impliement a detailed plan to put the chosen :alter-native into eff ect :
Decıiısion making does not stop wiıth identifying the best alterna.tive. ünce managers have selected their best alternative, they must try to anticipate what problems will occur when implementing their decision. In .organizat.ion ot.her departments
· that might be aff ected by the decision have to be consulted. If
ccmpetitors a~e affected by the decision their reactions will lın:ve
to be taken into account. Somet.imes detailed analysi~ of such considera.tions. may cause managers to :r:e:ject their first choice and subs.titude another alternative that might be more wor-kable.
On the other hand, for personıal decisions, this step presents few problems becauEe the ~ame person defines the problem,
enumeraıtes the alternative'S and uncerlainties, collects the rele-vanıt information and identifie'S and implements the best alter-native. However many ·important businesıs decisions may in:volve a l:arge number of people. In e,omplex busineı2s situations an a;ssistant may f ollow the decide process from step I throu.gh sıtep 4, manag,er make the actual deciısion and in turn delegate the authority for implemcnıting it to someone else.
Effective implemen:bation of a plan involves the following elements:
1 __, A clear, debtjJ.ed presıentation of the plan to be imple-menıteıd to all persons whme appraval is required. 2 - . A1ssiıgıment of full autıhority and responsiibiliıty to eme
individual for implementing the decision.
3 __. Eistablisihment of controls to determin·e wherther · tihe deta;iled plan is. beinıg accomplished.
4 - Periodic foHow-up to insure tihaıt the controls are ef-fective.
S:tep 6 - Eıvıaluate the declsion and tıhe decision procıesıs, : Thi!s sıtep emphasiızes that good · decision ma!lrnrs learn from past miıstakes. This requıires an evıaluation oıf both the decision and the en:ti:rıe: decisi.on proces/3 after the plan has been implemen-ted. In tıhe long run to review the decision prôces:s, following queıstions should be aslked;
1 --ı Was the problem really defined in terms of objectives, .
conısıtraints, and me:a:sures of succ€f3s?
2 - Were pertinent altern!aıtives and uncertainties idenıtifi ed?
3 - Was relevant infomnaıt~on oıbtained?
4 - Was the availaıble information analyzed and interpre-red logicaUy?
5 _;.__ Was the prıe:ferred altemative implemented properly? Honesrt answers· to thes.e quesıt.i:0ns will improve the chances of making effective decfuions in simHar -situations in the futu-re (1). ·
1'YPES OF D'ECISIONS
After a short ıook to the deciısion-maikinıg process,
now
.we~ıı ~onside:r the· types of decisions, progrıammed and nonprogrammed decisions, and we will also distin:guisıh betwe·en decisions made under conditions of cerrtainty, risk anıd uncerta:inty. ProıgrammeddeciLions a.re tıhose that a:re sugıgeısteıd by · halbit or policy. Non-programmed deci'Sions ar1e: thosıe: that are new or oriıginal. Mosıt
iımportant de'C'i:stons are nonpr:ogrıammed and they require care-ful and logical consideration.
The condiıtions under which manaıgeiI's make decirsions will vary witıh the amouriıt o[ informat:ion theyhave.
Un!der conıditions of c.ertainty, manıag1ers know what the
reısult:s will . be of each of the alt·ematives availaıble to them. Under condrtions of rfülk, they know tıhe prdbabJe ouıtcome of each
alternaıtive within
a small margin. of
erıror.Under conditions of uncıertainty, thıe· probabilities are noıt
known· precisely. In order to make a decision mıaınag.ers must estimate proıbıruble ouıtcomes. Most mıanagement decisions are ma-de un ma-der seme degrıeıe of uncerıtainıty. Genemlly manag;eı:"s don't wait .prolbl1ems to ariıse but a~30 ıook f or problems · and
opportu-nities. üne of the mosıt important responsiıbilities of mana:gers is deciding which problems a]]d opportunities should receive their
aıttenticn. When manaıgerıs face an impıoırıtant problem
or
oppor-tunity, tıhey reach the best deciısion by using the formal decisi-on-maıking proce!Js. And also they sıhould ask themselves the following questions :'~;.7
1 - Is the problem easy t;o deal with? Some problems are difficult and expensi.ve to deal with, others are not. 2 - Might the prolblem r·eıs.olve iıts1elf?
3 - Is this my decision to make? Wh·en we: are confronted with, an impmtant problem requiring
a
dectsion. MANAGERS AND SUBORDINATESIn solving a ;profblem, Victor Vrıoorn and Philip Yetton have developed a method to help managers decide when an to whait 3'11
extent they should involve StiboodinateG. To do this, at first Vroom
and Yetton stated five styles of decision maning (2) :
1 - Managers, make the decision themselv~s with the in-formation
on
hand.2 - Managers . make the decision themse:lves, but first get more information from their suibordinates.
3 - Mana.gem discuss the problem with approprila.t·e subor-dinates individually, but make the decision themselves. 4 ~ ManageTS discuss thıe pro!blem With their subordinates
as a group, but stm make the decision themseives w1th or wiıthout letting. the · group's ideas influence them.
5 - Managero -arrange for group diıscussion, but this time
they have suibor.dinates gıenerıate and evaluate alterna-tives w1th them. Managers accept and implement the decision eıven if iıt is not theirs.
The auıthors then suggest several questions tıhat inanagers can ask themselves to help determine wh.ich deciliion-maiking style to use for the problem they are facing:
- Do we havıe enough infornıation to solvıe the problem?
If not, then style 1, would be inappıropriuıte.
- Do we need to ma!ke· a high-quality decision, which
our
subordinates are likely to disagree wi:th?If so, style 5, where we seıe!k the consensus of the group, would not be aıppropriate.
- ırs tihe problem strucıtured? That iıs, whaıt information we need and where to get it?
If not, styles 4 and 5, would be preferable ..
- Is the acceptance of the group critical for the success of the decisi on?
Then styles ı and 2, would not be approprfüıte.
- If acceptance of the decision is important; then styles 4 and 5, which involue group dec.ision making, are pref
- Is acceptıance of the decision the most critical factor?
Then style 5 would be the most logicaı choice.
This approach lıeaveıs mana:gens with a greıat deal of flexibi·
lity. As irt is known there are Iois of proıblems which can be applied
more than .eme management style. EN"ecy application results with
diff erent solution. Ev en if a decisi on worıks well, a manager can nev.er be completely sure another one equlally effe'Ctive or .even
better. For these rea:sons ,many mana:gerls agree that decisions should be evaluated aıt the time they were made rather tıhan the
results are taken.
CRITERIA FOR EVALUATION OF DECISIONS
Norinan Maier haıs sıtated two criteria by which a. decision's
potenıtial effectivıeness can be appra:Lsed. The first is the objective quality of the decisi:on, and the second ~3 the acceptance of the
decision by those who must execute it.- ·The objective quaHty af
the dıedsion. is determin.ed by how well the manager · executes the
forma! deci'sion-maikinıg proces:s. Maier su:ggests tıhat if the
prob-lem is llargely a technical one, a quality dedsion may be enough to solve it. If people hals become a part of the problem, tıhıen a
quality decisıion may not be sufficient, accordin.g to Maier. Also
the acceptance of the people involved maıy be requirıed to make
it eff ective. ·
A dirfficulty ariıses for mıanagers if ccquality» cons:iderations conflict with ccacceptance» considerations. Pe.ople who ıaffect the
decision may not find irt best and accepta'.ble on the other hand,
the decision most fa vored by subordin:ates may not be the beıs.t
one to make.
This prdbLem can be solve!d bıy givinıg the final responsibility to the manager. Managers should evıaluate eıach type .of problem .
to sıee how importanıt it wiU be for the solution to have qua.Iity · and/or accepıtance.
According. to this evaluation, Maie:r suggests that
decision-makinıg siıtuat:ions can be clıassified in three W1ays:
1 - Those whe:re high q ualiıty is important but high
accep-tance is not.;
Such prolblems can be· eff ectively solved by the ma.nager who car1ries out the formal decision-making process. But acceptance by .subordinates can.'t be compleıtely ignored.
2 - Those where high acceptance is importl.ınt but high quality is noıt;
Such problems can be best solved by group decfüion-making because if suıbordinates don't accepıt the sıolution, iıt will fail.
3 - Th.ose where both hi:gıh quality and high . acceptaınce a.re: important;
Such problems require botih high quality . and high accep-tance to ~olve (3).
Up tm now, we gave some knowled!g·e· aibout formal decisi-on-malkinıg prncess, typeıs of decisions, when artd to what extenıt managerlJ sh:ou.ld involve suıbordinaıtıc.s t.o decision process, · which decision-making. sıtyle will be u:s.eıd in solving a problem and criterias whiclh are used to evaluate decisions. We generally ıoo ked subject froım the point of view of an in.di:vidua.ı dıeci.s.ion ma-ker. In fact, when we looık 1.1ıt decisi()ın makinıg frnm the perspe-ctive orf a larıge organi1zation the proce::s iıs more diffüculıt beca use of tıhe limiıtations on human raıtionality and goal conflict, the
nıeed fÇ>r but3ine'S!smen to ma!ke decisions about the future, and
the li:mitations of rrıanagement information systems.
It is verry importl.mt f:or executives to recogni'ze · that people and c:ampanies don't always behave iın accordance with econo-mic notions of rationality. Prdblems arise in trying to· attain the idıe:al. Beca use acrtual peıople and companies of ten ha ve ıots of goals th\1t oıften work at cross purpal3es (4).
SOME PROBLEMS iN DEVEL9PING COUNTRIES
When we Ioolk at decision-making proces.s in large organi-zations of developing countrie.s there are ıots of problems. These problems in formal decision-making process are a:s follow:
. 1 -- Identifying · the time, -cost and other c.oru3traints that restrict the possible solution.s :
The con:straints in a decision-making situation are the
rest-ri:ctons placed on potentra.ı soluıtions by the nature and
impor-tance of the prıoıblem. In business pmblemt3 common
c:onSıtraintıs
are limita tions on the time and monıey , available · to sol ve the problem.
2 - Uncertainties over which the decision-maker has no control:
A:s it is khown uncertainties are the uncontrollable factors,
those that can't be influenced by· the deıcision-ma!ker. For a de-. cision-maker tıheı-e are lots of uncertainties that can affect the
öu:tcome of a decilsion. These uncertainties ranıge from factors
within thıe: firm to th'ase involving consumers, c:
ompetitors, nati-onal or internationa,ı affairs, and even the weather.
3 - Collecting. relevant informaıtion :
Manag.ers should hav.e enouıgh inıfoırmation.
to be aible to for-·
mulaıte püSiSföle soluti:ons. The best ·aıternative ·
will be based on the amount of information ava:ilable to the nıanagers and by
their imperfecıt. judgment. Information can be divideıd
into two very ~oad cateıgories; methods and data. Methods,
arıe. the app-roach€13 used to anıa.ıyze the problem anıd may be gene'l'ıal
or
spe-ci.fi.c, dependinıg .on the kind of business
p~oıblem under study. The ra.tionale for the «methods · s,eıarch» is to sa ve money and
time by invest:igating how other de:ci:sion-maikers solved suibstan-tally the same prıoblems. A dedsion.-ma!ker wHI probably obtain
a better ısolution by applyinıg, modifyinıg known methods to his particular pr:oblem.
On tihe other hand, busines's dlaıta are the fıacts and flgu!'les pertinenıt
to a busine'S's problem, and usually divided into two types: Primary daıta and seconda·ry da ta. Primary da:ta are da ta· collected foır the first time for the pııoblem aıt
hand and secon-dıaı-y daıta arıe dıata previıously collected by anoıther individuaı
or group for some purpose .or projecıt. Seconıdıary data are divided ·
into two types; inıtemal and exteT'nıal data. In.ternal
!Secondary data are tıhose f'ound within the orıganization
1n which the deci-Sion is being made. Accounting recorıds, customıex ·S'eTvice com-plainıts, quality control reports and per.sonnel
hisıtories 1are the
examples. External seco:ndary dıatıa are· · facts and figures obtained
from out~ıide the firm.
If we .examine all of these elementıs with special reference to developing countries it is obvious that environmental condi-tions that is, market siıgnals, mıacro policies which affected the large business decisions and planıs, are not reliable.
The basic data that decision-makin.g process is bas:ed on, chan:ge suddenly, frequently and unexpectedly. · The typical examples of. these changes are the fluctur.ı,tions of macro econo-mic variahles. Theıse changes depend on the economic policies and especially in decision-makinıg procesıs of Iarıge organ:iızat,ionS.
they hav1e a kind of determ:ine:stic role. In formal deci:sioın-ma
kin:g process we placeld them in the second step as uncıextainties. When these changes begin, if Ilarge orıganiza ti ons don't ha ve alternative plam in oıtheT words, if tiheir decision-making process ar:e not nexible, the changes of macro economic variables will
be the cause of important failures.
While carrying-out the deci:sion-making process, managers have to be carefull a:bout environmenfül conditions that is un-cextainty, macro chang,es, market signıals and ete.
. The most importanıt factor herıe is the management. In or-der words, a_ perfect decision-making pr.oceı3s should be based on good managemenıt and organi'zıa.tion. If there is a perfect ma-nagement and organiza.tion .in a large business, i,t will be easy
to have reliable data.
To sum up, in de.veloping countries environmental conditions which affect the organiz1ations, especially Iıarge organizations, change sudidenly, fııequently and unexpectedly. Because of these changes, deciı3ion-making process will have to be a flexiıble st-ructure.
Principals of this are: a) Sufficient staff,
b) Scienıtific delagation of authority,
c)' Good organization,
d) Minimizıation of risk factor,
e) And alternative plans whicıh are based on differıent data. As a resuıt, each day in a variety of si tuation we ha ve to solve problems and ma!ke decrsions. Although we can not find a
ma.gic formula th!at gives a good sıolution to all problem3 but
thern is a method often used by businessmen which is called de-.
cision.-making process. '
It shoulid be clear that thıe decide pr:oceıss doe1s not magically
resolve all problems. · U.sinıg decide, we can dıe:fine the problem
praperly, enumJ.rate the decision factors, collect relevant
infor-m1tion on methods and data, iden.ıtiiy tıhe best alternative,
de-velop and implement a detailed plan to put the chos.en
alteTna-tive into eHect, ana at last evaluate the dıecisıion and the deciston
process.
When we loa.k at decision-mlaking process from the
perspec-tive of a Iarge organization, the procet3S is more difficult because
of the limitations on human · rationali:t.y and goal con.flict, the
neeıd for businessmen to make decisions aıbout the future and the
Iimitations of mana.gemenıt inforrnation systems.
On tihıe: .oıther hland, it is natura! tha.t aıpplying
decision-ma-king process in large· organi:zat;ıions of developing c:ounıtries
re-sults in great difficulties.
The cause of those difficultues and problems are ; (1)
iden-tifying thıe time cost and · other con:strainıts tha t restrict the possible solutions, (2) uncertainties over which the
decision-maker lia.s no c:0ntrol, (3) collecting relevant informaUon.
In developıinıg countries, environmental conıd'iton~ that ·is,
market si.gnals, mf.3.cro policies and ete. are not relia!ble. The
ba-sic data which decision-ma!kinıg proce'S's is based on, change
sud-denly, frequentıy, and unexpectedly. To reduce the bad affects
of theıse changes and to prevent the failures, large organizations
.should have alternative pl!.ms and deciısion-making process should
be based on good managemenıt and organization.
BİBLİOGRAPHY :
ı(1·) 'Rudelius Wilnam, Eridkson Bruce,
1
Ba1kula WilH-am, «An ıntroıduction to Con- '
temporary BusineısıS», Harcourt Brace Jovanovich, l·nc., p.p. 1001-161.
(2) Stoner, A.F., James, «Management», Prentice Hıall, lınc., 19178, p.p. 164 1-88.
(3) See, Stoner, A.F., J·ames, p.p. 164-1•68.
(4) Deep D. Samuel, Brinokloe D. Wil'İ1i.am, «<lntrodıuction to Business», Prent.ıce
H:all, ine., 1974, p.p. 200 . .
