STEPS IN DECISION MAKING PROCESS

STEPS IN DECISION MAKING PROCESS

Decision making process is like a school exam. Those who take good decisions will pass the exam and the rest who does not take right decisions will have to bear the consequences. Being able to take good decision is important for everyone, whether he/she is a student, teacher, administrator, principal, president, leader of any institution etc. A student has to take decisions about his career, a president has to take decisions regarding his country’s benefit, and an administrator has to take decisions regarding his organization and likewise the leader of any institution. So every single person has to pass this step in order to progress in their field.

In our view decision making power is the key to progress in life. You might have seen many people who do not take proper decisions and then they have to suffer. On the other hand people who have this decision making power, continues to progress in their life. Not all of us have this decision making power. We try to make right decisions but sometimes we make mistakes because we don’t know the steps that we should follow during the decision making process. So in order to take right decisions, it is important that we should know all the steps of decision making process and follow them.

The decision making process involves the following steps:

1.      Identify a problem or opportunity

The first step in the process is to recognize that there is a decision to be made. Decisions are not made arbitrarily; they result from an attempt to address a specific problem, need or opportunity. An administrator may realize that he has too many employees on the floor compared with the day's current sales volume, for example, requiring him to make a decision to keep costs under control.

Steps:

• The first step is to recognize a problem or to see opportunities
• Will it really make a difference to our clients?
• How meaningful will it be to solve this problem or realize this opportunity?

2.      Gather information

Administrators seek out a range of information to clarify their options once they have identified an issue that requires a decision. Managers may seek to determine potential causes of a problem, the people and procedures involved in the issue and any constraints placed on the decision-making process.

Steps:

• What is relevant and what is not relevant to the decision?
• What do you need to know before you can make a decision, or that will help you make the right one?
• Who knows, who can help, who has the power and influence to make this happen?

3.      Analyze the situation

Having a more complete understanding of the issue at hand, administrator’s move on to make a list of potential solutions. This step can involve anything from a few seconds of thought to a few months or more of formal collaborative planning, depending on the nature of the decision.

Steps:

• What alternative courses of action may be available to you?
• What different interpretations of the data may be possible?

4.      Develop options

Administrators evaluate the pros and cons of each potential solution, seek additional information if needed and select the option they feel has the best chance of success at the least cost. Consider seeking outside advice if they have gone through all the previous steps on their own; asking for a second opinion which can provide a new perspective on the problem and your potential solutions.

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• Generate several possible options.
• Be creative and positive.
• Ask “what if” questions.

5.      Select a preferred alternative

Administrators evaluate the possible choices and select the best potential solution for the problems from amongst the several alternatives he/she has.

Steps:

• Explore the provisional preferred alternative for future possible adverse consequences.
• What problems might it create?
• What are the risks of making this decision?

6.      Act on the decision

There is no time to second guess yourself when you put your decision into action. Once you have committed to putting a specific solution in place, get all of your employees on board and put the decision into action with conviction. That is not to say that a managerial decision cannot change after it has been enacted; intelligent administrators put monitoring systems in place to evaluate the outcomes of their decisions.

• Put a plan in place to implement the decision.
• Have you allocated resources to implement?
• Is the decision accepted and supported by colleagues?
• Are they committed to making the decision work?

7.      Evaluate Outcomes

Even the most experienced professional can learn from their mistakes. Always monitor the results of intentional decisions you make as a decision maker; be ready to adapt your plan as necessary, or to switch to another potential solution if your chosen solution does not work out the way you expected.

DECISION MAKING

DECISION MAKING

Decision making is part of everyone’s life and all of us have to make decisions every moment. Right from choosing what to wear to what to eat to where we live and work and extending to whom we marry, decisions are an integral part of our lives. In an organizational context, it is worthwhile to note that decision making needs:

• ·         The right kind of information,
• ·         The complete information and
• ·         The ability to synthesize and make sense of the information.

While the first two attributes depend on external sources, the ability to make informed decisions is a personality trait. Hence, successful administrators are those who can take into account the different viewpoints and divergent perspectives and arrive at the right decision.

The other aspect that relates to decision making in an organizational context is that there must be complete and accurate information made available to the decision maker. In Economics, there is a term called “asymmetries of information” that indicates how incomplete and insufficient information leads to poor decisions and wrong choices. What this concept means is that having partial information or faulty information often leads to “analysis paralysis” which is another term for poor decision making abilities. Finally, even with reliable and accurate information, the decision maker ought to have good problem solving skills and sharp decision making abilities to arrive at sound judgments regarding the everyday problems and issues.

The overriding rule in decision making is that the decision maker ought to have legitimacy and authority over the people who he or she is deciding upon. In other words, decision makers succeed only when their decisions are honored and followed by the people or groups that the decision impacts.

Decision-making is an integral part of modern administration. Essentially, Rational or sound decision making is taken as primary function of administration. Every administrator takes hundreds and hundreds of decisions subconsciously or consciously making it as the key component in the role of an administrator. Decisions play important roles as they determine organizational activities. A decision can be defined as a course of action purposely chosen from a set of alternatives to achieve organizational objectives or goals. Decision making process is continuous and indispensable component of managing any organization or business activities.

Definition of Decision Making

The meaning of decision in Latin is to ‘cut off’. This means that from all the available alternatives you choose one thing and then cut off from all the other alternatives. Due to this, the decision making process sometimes becomes very difficult. Choosing the right option from all the available alternatives is very hard to do.

Decision making process requires thinking process, time, efforts, resources, knowledge and past experiences. Thinking process plays an important role in decision making process because it allows you to judge each and every thing. Timing is also important.

According to the Oxford Advanced Learner’s Dictionary the term decision making means - the process of deciding about something important, especially in a group of people or in an organization.

Trewatha & Newport defines decision making process as, “Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem”.

As evidenced by the foregone definitions, decision making process is a consultative affair done by a comity of professionals to drive better functioning of any organization. Thereby, it is a continuous and dynamic activity that saturates all other activities affecting the organization.

Further, decision making process can be regarded as check and balance system that keeps the organization growing both in vertical and linear directions. It means that decision making process seeks a goal. The goals are pre-set objectives, establishment missions and its vision. To achieve these goals, company may face lot of obstacles in administrative, operational, marketing wings and operational domains. Such problems are sorted out through comprehensive decision making process. No decision comes as end in itself, since in may evolve new problems to solve. When one problem is solved another arises and so on, such that decision making process, as said earlier, is a continuous and dynamic.

Theories on Decision Making

There are many theories of decision making but we will discuss the following:

1. Organizational Process Model

2. Rationality in Decision Making

Organizational Process Model

All organization follows rules, procedures & system. Decisions in organizations are made according to the procedures and systems that organizations have for example a centralized organization decisions will come from top done. In organization where authority is dispersed participative decisions will be made. So the processes and standard operating procedure (SOP) will determine the quality of decisions made.

Rationality in Decision Making

It is said that effective decision making must be rational. But what is rationality. When is a thinking person deciding rationally? People deciding rationally are attempting to reach goals in a systematic way.

They collect all:

•                     Relevant information,

•                     Analyze information,

•                     Evaluate and

•                     Make Choice

So these are 4 basic steps in making a rational decision. If we follow these steps we can make "best decision. When deciding about one alternative, administrators can use three basic approaches:

•                     Experience

•                     Experimentation

•                     Research and Analysis

Usually administrators use their experience and judgment to select an alternative. Experience and judgment is really reliance on the past.

The other method by which managers select alternatives is experimentation, i.e., managers would try an alternative and see its results.

The 3rd method is arriving at alternatives through researching and analysis.

Individual vs Administrative Organizational Decision Making

• An individual generally makes prompt decisions. While an organization is dominated by various people, making decision-making very time consuming. Moreover assembling group members consumes lot of time.
• Individuals do not escape responsibilities. They are accountable for their acts and performance. While in an organization it is not easy to hold any one person accountable for a wrong decision.
• Individual decision making saves time, money and energy as individuals make prompt and logical decisions generally. While organizational decision making involves lot of time, money and energy.

• An organization has potential of collecting more and full information compared to an individual while making decisions.
• An individual while making any decision uses his own intuition and views. While organization has many members, so many views and many approaches and hence better decision making.
• An organization discovers hidden talent and core competency of employees.
• An individual will not take into consideration every members interest. While an organization will take into account interest of all members of an organization.

MAX WEBER'S IDEAL TYPE OF BUREAUCRACY

MAX WEBER'S IDEAL TYPE OF BUREAUCRACY

Weberian bureaucracy was a term coined by Max Weber, a notable German sociologist, political economist, and administrative scholar, who contributed to the study of bureaucracy, administrative discourses, and literature during the mid-1800s and early 1900s. In his 1922 masterpiece, Economy and Society, Weber described many ideal types of public administration and governance. His critical study of the bureaucratization of society was one of the most enduring parts of this work. It was Weber who began the study of bureaucracy and whose works led to the popularization of this term. Many aspects of modern public administration date back to him. This is epitomized in the fact that a classic, hierarchically-organized civil service is still called a "Weberian civil service.”

Weber listed the following as preconditions for the emergence of bureaucracy: the growth in size and density of the population being administered, the growth in complexity of the administrative tasks being carried out, and the existence of a monetary economy requiring a more efficient administrative system. As a result of the development of communication and transportation technologies, like telegraphs and automobiles, a more efficient administration became not only possible but demanded by the public. Accompanying this shift was an increasing democratization and rationalization of culture. This resulted in public demands for a new administrative system that treated all humans equally.

Rational-Legal Authority

The term ‘bureaucracy’ has been widely used with invidious connotations directed at government and business. Bureaucracy is an administrative system designed to accomplish large-scale administrative tasks by systematically coordinating the work of many individuals. Weber has observed three types of power in organizations: traditional, charismatic and rational-legal or bureaucratic. He has emphasized that bureaucratic type of power is the ideal one.

Weber identified in bureaucracies a rational-legal authority in which legitimacy is seen as coming from a legal order. The majority of modern bureaucratic officials and political leaders represent this type of authority. However, while recognizing bureaucracy as the most efficient form of organization, and perhaps indispensable for the modern state, Weber also saw it as a threat to individual freedoms. For Weber, the implementation of bureaucracies in government was a kind of rationalization, in which traditional motivators for behavior were cast aside. Instead of utilizing traditions, emotions, or values to motivate behavior, in a bureaucracy, people used rational calculation. Regarding Western societies, Weber called this increasing rationalization an "iron cage" that trapped individuals in systems based solely on efficiency, rational calculation, and control. In his theory, the "iron cage" is the one set of rules and laws that we are all subjected to. According to Weber, the shift from old forms of mobility, like kinship, to new forms, like strict, legal rules, was a direct result of the growth of bureaucracy and capitalism.

FEATURES (CHARACTERISTICS) OF WEBER’S BUREAUCRACY:

Weber has given a number of features of bureaucracy. Accordingly, following features suggest the characteristics of bureaucratic organizations.

1.      ADMINISTRATIVE CLASS:

Bureaucratic organizations generally have administrative class responsible for maintaining coordinative activities of the members.

Main features of this class are as follows:

·         People are paid and are whole time employees,

·         They receive salary and other privileges normally based on their positions,

·         Their tenure in the organization is determined by the rules and regulations of the organization,

·         They do not have any exclusive interest in the organization,

·         They are selected for the purpose of employment based on their competence.

2.       HIERARCHY:

The basic feature of bureaucratic organization is that there is hierarchy of positions in the organization. Hierarchy is a system of ranking various positions in descending scale from top to bottom of the organization. In bureaucratic organization, offices also follow the principle of hierarchy that is each lower office is subject to control and supervision by higher office. Thus, no office is left uncontrolled in the organization. This is the fundamental concept of hierarchy in bureaucratic organization. This hierarchy serves as lines of communication and delegation of authority. It implies that communication coming down or going up must pass through each position.

Similarly, a subordinate will get authority from his immediate superior. However, this hierarchy is net unitary but sub-pyramids of officials within the large organization corresponding etc. functional divisions exist.

Thus, there are offices with the same amount of authority but with different kinds of functions operating in different areas of competence. For example, the Government organizations, we can observe separate offices looking after particular functions. This happens in business organizations too.

3.       DIVISION OF WORK:

Work of the organization is divided on the basis of specialization to take the advantages of division of labor. Each office in the bureaucratic organization has specific sphere of competence.

This involves:

·         A sphere of obligations to perform functions which has been marked off as part of a systematic division of labor;

·         The provision of the subordinate with necessary authority to carry out these functions; and

·         The necessary means of compulsion are clearly defined and their use is subject to definite conditions.

Thus, division of labor try to ensure that each office has a clearly-defined area of competence within the organization and each official knows the areas in which he operates and the areas in which he must abstain from action so that he does not overstep the boundary between his role and those of others. Further, division of labor also tries to ensure that no work is left uncovered.

4.       OFFICIAL RULES:

A basic and most emphasized feature of bureaucratic organization is that administrative process is continuous and governed by official rules. Bureaucratic organization is the antithesis of ad-hoc, temporary, and temporary and unstable relations. A rational approach to organization calls for a system of maintaining rules to ensure twin requirements of uniformity and coordination of efforts by individual members in the organization.

These rules are more or less stable and more or less comprehensive. When there is no rule on any aspect of organizational operation, the matter is referred upward for decision which subsequently becomes precedent for future decision on the similar matter. Rules provide the benefits of stability, continuity, and predictability and each official knows precisely the outcome of his behavior in a particular matter.

5.       IMPERSONAL RELATIONSHIPS:

A notable feature of bureaucracy is that relationships among individuals are governed through the system of official authority and rules. Official positions are free from personal involvement, emotions and sentiments. Thus, decisions are governed by rational factors rather than personal factors. This impersonality concept is used in dealing with organizational relations as well as relations between the organization and outsiders.

6.      OFFICIAL RECORD:

Bureaucratic organization is characterized by maintenance of proper official records. The decisions and activities of the organization are formally recorded and preserved for future reference. This is made possible by extensive use of filling system in the organization. An official record is almost regarded as encyclopedia of various activities performed by the people in the organization.

COST & BENEFITS OF BUREAUCRACY:

Bureaucracy organization has been considered once superior than ad hoc or temporary structure. It has been termed as rational and ideal leading to efficiency. The efficiency in bureaucratic organization comes through rationality and predictability of behavior because everyone knows the consequence of his action become actually the action is undertaken.

However, bureaucracy has been criticized because of its inefficiency and has been termed as a symbol of inefficiency. There are many dis-functional aspects of bureaucracy which is referred to as bureau pathology.

ADVANTAGES OF BUREAUCRACY:

The following are the advantages of Bureaucracy:

• ·         The rules and procedures are decided for every work it leads to, consistency in employee behavior. Since employees are bound to follow the rules etc., the management process becomes easy.
• ·         The duties and responsibilities of each job are clearly defined there is no question of overlapping or conflicting job duties.
• ·         The selection process and promotion procedures are based on merit and expertise. It assists in putting right persons on right jobs. There is best utilization of human resources.
• ·         The division of labor assists workers in becoming experts in their jobs. The performance of employees improves considerably.
• ·         The enterprise does not suffer when some persons leave it. If one person leaves then some other occupies that place and the work does not suffer.

DISADVANTAGES OF BUREAUCRACY:

The following are the disadvantages of Bureaucracy:

In fact, the source of bureau pathology lies in the invalidity of various assumptions of ideal bureaucracy. Many authors have questioned the validity of bureaucracy. In most of these cases, either the conditions are not found in practice, or even if found, may not result in efficiency. Especially the following aspects of bureaucracy work against efficiency of the organization, though they are supposed to contribute to efficiency:

• ·         Rules are normally provided for guidelines but often they become source of inefficiency because of too much emphasis on rules, their misuse, and people’s apathy from rules.
• ·         Rigid organizational hierarchy works against efficiency. It overemphasizes superior- subordinate relationships unnecessarily which is detrimental to congenial organizational climate.
• ·         In dealing with people, total impersonal approach cannot be adopted because people have feelings, emotions and sentiments which affect decision. Thus, people cannot work totally according to rules and prescriptions.
• ·         This system suffers from too much of red tape and paper work.
• ·         The employees do not develop belongingness to the organization.
• ·         The excessive reliance on rules and regulations and adherence to these policies inhibit initiative and growth of the employees. They are treated like machines and not like individuals. There is neglect of human factor.
• ·         The employees become so used to the system, they resist to any change and introduction of new techniques of operations.

EVALUATION:

Weber’s model will be performed in those enterprises where change is not anticipated. Big business houses and government departments use this type of organization. Weber is credited for attempting to develop Bureaucratic model for the first time.

Weber’s model has some drawbacks. It has rigidity, impersonality, excessive cost of control, excessive dependence on superiors, tendency to ignore organizational goals. In spite of these limitations this model is very useful in large enterprises.

TERMS USED

·         ideal type

An ideal type is not a particular person or thing that exists in the world, but an extreme form of a concept used by sociologists in theories. For example, although there is not a perfectly "modern" society, the term "modern" is used as an ideal type in certain theories to make large-scale points.

·         Rational-legal authority

A form of leadership in which the authority of an organization or a ruling regime is largely tied to legal rationality, legal legitimacy and bureaucracy.

·         Iron Cage

A theory proposed by Max Weber which argues that rationalization and rules trap humans in a figurative "cage" of thought based on rational calculations

ROLE OF BUREAUCRACY: FUNCTIONS:

ROLE OF BUREAUCRACY: FUNCTIONS:

Bureaucracy or Civil Service plays a key role in running the Public Administration by performing the following functions:

Implementation of Governmental Policies and Laws:

It is the responsibility of the bureaucracy to carry out and implement the policies of the government. Good policies and laws can really serve their objectives only when these are efficiently implemented by the civil servants.

Role in Policy-Formulation:

Policy-making is the function of the political executive. However, the Bureaucracy plays an active role in this exercise. Civil Servants supply the data needed by the political executive for formulating the policies. In fact, Civil servants formulate several alternative policies and describe the merits and demerits of each. The Political Executive then selects and adopts one such policy alternative as the governmental policy.

Running of Administration:

To run the day to day administration in accordance with the policies, laws, rules, regulations and decisions of the government is also the key responsibility of the Bureaucracy. The political executive simply exercises guiding, controlling and supervising functions.

Advisory Function:

One of the important functions of the Bureaucracy is to advise the political executive. The ministers receive all the information and advice regarding the functioning of their respective departments from the civil servants. Sometimes the ministers have little knowledge about the functions of their departments. They, therefore, depend upon the advice of bureaucracy. As qualified, experienced and expert civil servants working in all government departments, they provide expert and professional advice and information to the ministers.

Role in Legislative Work:

The civil servants play an important but indirect role in law-making. They draft the bills which the ministers submit to the legislature for law-making. The ministers provide all the information asked for by the legislature by taking the help of the civil servants.

Semi-judicial Work:

The emergence of the system of administrative justice, under which several types of the cases and disputes are decided by the executive, has further been a source of increased semi-judicial work of the bureaucracy. The disputes involving the grant of permits, licenses, tax concessions, quotas etc. are now settled by the civil servants.

Collection of Taxes and Disbursement of Financial Benefits:

The civil servants play a vitally important role in financial administration. They advise the political executive in respect of all financial planning, tax-structure, tax-administration and the like. They collect taxes and settle disputes involving recovery of taxes. They play a vital role in preparing the budget and taxation proposals. They carry out the function of granting of legally sanctioned financial benefits, tax reliefs, subsidies and other concessions to the people.

Record-Keeping:

The Civil Service has the sole responsibility of keeping systematically all government records. They collect, classify and analyses all data pertaining to all activities of the government. They collect and maintain vital socio­economic statistics which are used for the formulation of Public policies and plans.

Role in Public Relations:

The era of modern welfare state and democratic politics has made it essential for the government to keep close relations with the people of the state. The need for maintaining active and full public relations is a vital necessity of every state. The civil servants play an active role in this sphere. They are the main agents who establish direct contacts with the people. They serve as a two way link. On the one hand, they communicate all government decisions to the people, and on the other hand, they communicate to the government the needs, interests and views of the people. Thus, Bureaucracy plays a vigorously active and highly important role in the working of the government.

CONTROL OVER BUREAUCRACY:

The rise of modern welfare state and increase in its functions has been a source of big increase in the powers and role of Bureaucracy. It has, therefore, given rise to an additional need for exercising control over bureaucracy. An effective control system has become essential both for preventing the civil servants from abusing their powers as well as for ensuring their active and positive role. In fact, every state maintains a system of internal and external control over Bureaucracy.

Internal Control:

It means control applied from within the organization i.e. by the administrative machinery. The administrative organization is hierarchical and is divided into wings, divisions, branches and sections. There are present some internal controls in its every section. The tools of control are budgeting, accounting, auditing, reports, inspections, efficiency surveys, personnel control, code of conduct, and discipline and leadership control.

In particular, regular internal inspections, auditing of accounts and evaluation of the performance of each civil servant act as main means of internal control over Bureaucracy. Internal control is necessary for keeping the bureaucracy efficient and productive of desired results.

External Control:

External control is that which flows from outside agencies. These agencies are the people, the legislature, the executive and the judiciary.

BUREAUCRATIC PROBLEMS

Following are the major problems with bureaucracies:

Red Tape:

Red tape is the existence of complex rules and procedures that must be followed to get something done. Any large organization must have some way of ensuring that one part of the organization does not operate out of step with another.

Duplication:

Duplication occurs when two government agencies seem to be doing the same thing, such as when the Customs Service and the Drug Enforcement Administration both attempt to intercept illegally smuggled drugs.

Imperialism:

It refers to the tendency of agencies to grow without regard to the benefits their programs confer or the costs they entail. Because government agencies seek vague goals and have vague mandates from legislature, it is not surprising that they often take the broadest possible view of their powers. If they do not, interest groups and judges may prod them into doing so.

Waste:

Waste occurs when an agency spends more than is necessary to buy some product or service.

Status Quo / Absence of Profits:

Unlike businesses, bureaucracy do not have the direct and powerful goal of earning profits. That has a deep effect on efficiency and improvement. Without the profit goal, organizations have little reason to restrain costs and stem wasteful spending. Nor do organizations have a strong incentive to improve the quality of their services or the effectiveness of their management. It is easier for organizations to live the quiet life than to take risks and try to enhance performance.

Absence of Losses:

Poorly performing bureaucratic organizations do not go ruined, so there is no built-in mechanism to end low-value activities. There is no automatic corrective to programs that have rising costs and falling quality. In the private sector, businesses abandon activities that no longer make sense, but "the moment government undertakes anything, it becomes fixed and permanent.

Monopoly:

Adding to the problem caused by the absence of profits and losses, many bureaucratic activities are monopolies. That further reduces incentives to restrain costs and improve quality. It also means there are no alternative sources of information for people to gauge the efficiency of a government activity. In competitive markets, people can compare the performance of different companies and products, but with monopolies, poor performance is harder to identify.

Rigid Compensation:

Bureaucratic employee’s compensation is based on standardized scales generally tied to longevity, not performance. The rigid salary and benefits structure makes it hard to encourage improved employee efforts or to reward outstanding achievements. Rigid pay scales reduce morale among the best workers because they see the poor workers being rewarded equally. With rigid pay scales, the best workers have the most incentive to leave, while the poor workers will stay, decade after decade.

Corruption/Nepotism/Favoritism:

Corruption is a major problem in Bureaucracy, especially in South Asian states. Bureaucrats use their authority and connections for different activities beyond laws. Many of them prefer and facilitate their friends and relatives at the cost of law or other common peoples. Malpractices, favoritism, nepotism, undue favors, intellectual dishonesty, indiscipline, misconduct, invisible corrupt practices in financial matters etc. are few evils which are manifest in some of the officers and staff of Public Services.