Decision-making process six steps. Part I

BLOG-DECISION MAKING 6 STEPS

The decision-making process is one of the most complex human mental processes. Currently it is one of the basic management skills in a business organisation (Omarli, 2017). Making decisions in large corporations and small businesses takes place every single day. The decisions, which will be made, concern all aspects of an enterprise.

At the turn of the 70s and 80s, a new look at management decision-making was formulated. The basis for this was a number of empirical studies (sensory cognition), in which the role of the decision maker and the overall nature of the decision-making process were identified (Kurnal, 1998). One of experienced manager skills is to strive for decisive situations and to constantly search for new ones. Based on many scientific studies, it has become a fact that one of the main management skills is the ability to make decisions and knowledge about the decision-making process.

On the left side is presented an exemplary graphical model, which shows the course of the decision-making process.

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1. Cleary defining problem - The first step is to identify the problem accurately. Collect data from multiple sources. Focus on clarifying the exact problem. Precise identification of the problem is a key throughout the process. The greatest risk is not properly asked questions. One of the interesting techniques is to break down the problem into several smaller ones to identify the problem. Herring (2012) in his book proposes questions to help clarify the problem.

For example:

'' I do not want to work in the industry anymore, I hate this job, I am exhausted and I have a constant headache''.

1. Are there any companies, institutions for which you would like to work?

2. Would it be a good idea to go on vacation to look at the situation from a different perspective? 3. Why do I feel bad in this company, what causes my aggression? By putting such questions in place, we can more accurately pinpoint the problem, i.e. a professional burnout may be the result of another problem. Feeling of a professional burnout can be caused by illness like depression, or working in an environment, which for example is contradictory to your personal values. Often the cause of discomfort is the presence of other people, such as customers or work colleagues (aggressive people, or having features that are difficult to accept, such as slow, too loud, grumpy, etc.).

This simple principle works both in a private life as in a business environment.

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2. Information gathering - According to Solarz (1976), seeking information as a response to decision-making is only a minor part of the decision-making process. The author divides information on the past, the present and the future. That information is then divided on those coming from the inner structures of the company as well as those flowing from the outside. Czermiński (1995) suggests that the source of information can be: statistical data, documents, observations and measurements of a given phenomenon.

I stage (after analysis and selection) -> prediction system with probability of results

II stage in the absence of the ability to obtain information from outside, search for data in the bank information. This makes it possible to obtain detailed data for existing decision conditions.

A well-organized information system (collections of external and internal information) will enable managers to develop the best option.

Option consideration. Analysis of possible alternatives.

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3.Analysis - is the evaluation and proper selection of variants with the adopted criteria.

Ferder (2015) argues that, according to the theory of decision making, there are three key elements of effective decision-making:

1) variable environmental factors,

2) variable decision factors,

3) the results.

Factors influencing the decision.

Variable environmental factors (constraints) are all levels of "space" that are beyond the control of the acting or making decisions (possibilities). Variable decision factors are any plane of "space" under their control, within their range of influence. Results depend on both the influence of changing environmental and decision factors. Under risk conditions, the consequences of each decision are determined by probability distributions, so for the non-deterministic cases we use mostly probability theory and statistical methods. In particular, the following methods are used:

Decison tree

Graphical method, applicable in theory of decision

Criteria for making decisions • Hurwicz criterion (maximal)

• Wal criterion (max)

• Savage criterion (minimax)

• Laplace criterion

Statistical inference

Methods for generalizing results:

Estimation - estimating the value of unknown distribution parameters.

Verification of statistical hypotheses - validation of distribution hypotheses.

References:

Czermińki A., Czapiewski, M.: Organization of decision-making processes, University of Gdansk, 1995.

Feder B.J.: https://mikroporady.pl/zarzadzanie/item/1134-czy-znasz-3-elementy-podejmowania-skutecznej-decyzji?.html, 2015. Gajek L.: Statistical Inference for students. Models and methods. Warsaw, Poland: 1998. Graham J. How do Small Business Managers Make Strategic Marketing Decisions ? A Model od Process Article, European Journal of Marketing, 2004 Herring J. Making decision: what to do when you're not sure what to do? Samo Sedno Warsow, 2012 Kurnal J. Outline of the theory of organization and management, Warsaw, 1975. Lindgren B.W. Elements Of Decision Theory. PNT, Warsaw 1977 Sevinj Omarli: Which Factors have an Impact on Managerial Decision-Making Process? An Integrated Framework University of Budapest, 2017 Solarz J. Decision making in American corporations, PWN, Warsaw.