In the modern ever-growing and ever-evolving business and professional sector, the skill of making optimal decisions that provide the firm with the highest level of returns is of unparalleled importance. Without mastering the skill of optimal decision making, the business or professional company involved can never untangle itself from the chaotic threads of management. Here, we discuss in detail the art of decision making delineating in detail its various aspects that enable an individual or firm to make decisions that affect them positively.
What is decision making?
One of the primary functions of management, decision making is a continuous and indispensable component to make an organization profitable. Let’s take a look at the several definitions given by various business experts.
From the aforementioned definitions, we can infer that decision making is usually a group activity performed by a committee of individuals to ensure the better functioning of an organization. The decision-making committee usually consists of highly intellectual minds which bear an eclectic mix of exhaustive scientific knowledge along with a high level of mental maturity. Therefore, decision making is a check and balance system which enables the organization to grow in both linear and vertical directions.
Decision making is a goal-oriented process, that is, it is directly aimed at eliminating all obstacles that the organization may face in operational, marketing wings, and operational domains before achieving the pre-set goals. Therefore, the process of decision making enables a firm to achieve its goals.
Steps of Data Driven Decision Making
Now that the definition of decision making in management has been delineated in detail, let us take a look at the vital steps that comprise the process of decision making.
● Defining the decision/problem
It is highly important to define the nature of the problem clearly before setting up forces to make decisions. The first step holds utmost importance.
● Gathering and collecting relevant information and data
The next step is to collect the pertinent information before making a decision. This step involves formulating logical and practical strategies to carry out the collection operations. Only data that is directly relevant to the problem/decision should be collected and recorded.
● Identifying and Weighing Alternatives
Once all the information has been collected, there will be numerous alternative paths of action that can be followed. Therefore, this step first involves the identification of close alternatives and then, weighing them on the basis of their effectiveness and efficiency.
● Choosing the best alternative
Once the evidence has been weighed thoroughly, and you have a list of pros and cons for each alternative, it is time to choose among them the best option. The alternative placed at the top of the list during the previous step is the one likely to be chosen.
● Plan and execute
The next step is to formulate a plan of execution for the option chosen which includes the allocation of resources and determining the risk factors. Having formulated the plan, the next step will be to execute the decision.
The last step is to review the functioning of the decision made and to compare the results with any available past data. After reviewing the data, it is important to take the necessary follow-up action.