Q1:L10 - Decision- Making

All managers and workers/employees in organizations make decisions or make choices that affect their jobs and the organization they work for. This lesson’s focus is on how they make decisions by going through the eight steps of the decision-making process suggested by Robbins and Coulter (2009).

What is Decision - Making

Decision-making – is a process which begins with problem identification and ends with the evaluation of implemented solutions

Types of Decisions

A decision is a choice among possible alternative actions. Like planning, decision-making is a challenge and requires careful consideration for both types of decisions, namely:

Structured or programmed decision – a decision that is repetitive and can be handled using a routine approach. Such repetitive decision applies to resolving structured problems which are straightforward, familiar, and easily defined. 

For example, a restaurant customer complains about the dirty utensils the waiter has given him. This is not an unusual situation, and, therefore, standardized solutions to such a problem may be readily available.

Unstructured or nonprogrammed decisions – applied to the resolution of problems that are new or unusual, and for which information is incomplete. Such nonprogrammed decisions are described to be unique, nonrecurring and need custom-made decisions. 

For example, a hotel manager is asked to make a decision regarding the building of a new hotel branch in another city to meet the demands of businessmen there. This is an unstructured problem and, therefore, needs unstructured or nonprogrammed decisions to resolve it.

Types of Decision-making Conditions

Conditions, under which decisions are made, also vary. These are:

Certainty conditions – ideal conditions in deciding problems; these are situations in which a manager can make precise decisions because the results of all alternatives are known.

For example, bank interests are made known to clients so it is easier for business managers to decide on the problem of where to deposit their company’s funds. The bank which offers the highest interest rate, therefore, is the obvious choice of the manager when asked to make a decision.

Risk or uncertainty conditions – a more common condition in deciding problems. 

Risk or uncertainty conditions compel the decision maker to do estimates regarding the possible occurrence of certain outcomes that may affect his or her chosen solution to a problem. Historical data from his or her own experiences and other secondary information may be used as bases for decisions to be made by the decision maker under such risk conditions. 

For example, a manager is asked to invest some of their company funds in the money market offered by a financial institution. Risk factors must be considered, because of the uncertainty conditions involved, before making a decision—whether to invest or not in the said money market.

The 8 Steps of the Decision-Making Process (Robbins & Coulter):

1. Identify the Problem – What’s the issue?

2. Identify Decision Criteria – What matters in solving it?

3. Allocate Weights to Criteria – Which ones are most important?

4. Develop Alternatives – List possible solutions

5. Analyze Alternatives – Compare using your criteria

6. Select an Alternative – Choose the best one

7. Implement the Chosen Alternative – Put it into action

8. Evaluate Decision Effectiveness – Did it solve the problem?

Scenario:

You are the project leader for your school’s Business Planning Contest. Your group must decide what type of business to present and how to execute your plan with limited time and resources.

Step 1: Identify the Problem What is the issue that needs to be solved?
Example: Your group is confused about what business idea to propose. The deadline is coming up, and you have no clear direction.

Step 2: Identify the Decision Criteria What factors are important in making this decision?
Example: You list what matters most for your project:

• Innovation

• Profitability

• Feasibility within your time and resources

• Presentation impact

Step 3: Allocate Weights to the Criteria Which criteria are more important than others?

Example: You assign importance on a scale of 1–10:

• Feasibility – 10

• Profitability – 9

• Innovation – 8

• Presentation impact – 7

This helps you prioritize what really matters.

Step 4: Develop Alternatives What are the possible options?

Example: Your group brainstorms 3 business ideas:

• A budget-friendly milk tea stand

• A mobile phone repair service

• A sustainable school supply package

Step 5: Analyze the Alternatives Evaluate each option using your criteria.

Example: You rate each business idea based on feasibility, profit, etc., and calculate their total scores based on your weighted criteria.

Step 6: Select an Alternative Choose the best option.

Example: After evaluation, the school supply package scores the highest. It is cost-effective, supports sustainability, and is easy to launch.

Step 7: Implement the Chosen Alternative Put your decision into action.

Example: Your team starts preparing the proposal and production plan for the sustainable school supply kit. You divide the tasks and begin printing your marketing materials.

Step 8: Evaluate the Decision Effectiveness Did the decision work? What were the results?

Example: After the presentation, your team wins 2nd place. You reflect on what worked well and what could be improved (e.g., time management and more visual aids). If the outcome wasn’t good, you’d revisit the steps to improve future decisions.