Decision-Making Models - Report Example

? Decision Making Models Introduction People from time to time need to make decisions. Decision making processes cover crucial aspects of human lives given restricted time for formulating policies and decisions, and addressing issues. People enjoy certain degrees of discretion in revising, planning and implementing decisions. This means that individuals must engage in decision-making processes. Models proposed by various scholars govern these processes. The decision-making models have the following characteristics of rationality, values, facts, means, and end (Milkman, Chugh, & Bazerman, 2008). The Five Step Model by Harvard Business School and the Analytical Hierarchy Process (A.H.P) by Thomas L. Saaty are two vital decision making models. These models have strengths and weaknesses, and they contrast in their mode of approaching issues and problems. They also differ in their application. According to the five step decision making model, managers make decisions on a daily basis, which impact on the company. Some of the decisions have straightforwardness such as the determination of subordinates to delegate duties. Though such a decision may seem straightforward, it requires the manager to have a satisfactory knowledge of his/her subordinates for effective and efficient delegation (Milkman, Chugh, & Bazerman, 2008). Other decisions such as tendering and employment decisions have complex characteristics. Also, decision making process cannot be described as an easy process because some of the decisions may involve risks, trade off and interplay of other factors, which include cost, and risk of failure or undesirable outcome (Harvard Business School, 2006). Decision-making is a complex process especially when it involves uncertainty and raises interpersonal issues. Uncertainty causes hesitation because individuals may feel that they lack facts that enable them to make desirable decisions. Some individuals may choose not to make decisions than take a leap to uncertainty. According to Harvard Business Essentials, decision-making involves five steps, which include the, establishment of a context for success, framing the issues properly and generating alternatives. It also involves an evaluation of the alternatives and choosing alternatives that work the best (Harvard Business School, 2006). The establishment of a context for success involves the creation of an environment that enables effective decisions to work. This process involves the evaluation of the decision maker’s surrounding to identify antithetical factors that affect sound decision-making. For instance, internal conflicts within an organization may affect the outcome of a decision (Armesh, 2005). This habit eliminates the possibility of rational thinking; hence, the management cannot sustain different levels of diverse opinions (Harvard Business School, 2006). Other organizations do not support open communication, which may, affects decision-making. An all-powerful management affects decision making because decisions are made according to their preference. Decision-making needs a friendly environment that ensures the right individuals participate in the process. The decision makers or those involved in the process should meet in a physical setting that encourages deliberation and careful thinking. Such an environment has ground rules for determining decision-making (Harvard Business School, 2006). In decision-making, successful decisions depend on the clear understanding of issues at hand. It also depends in an understanding of the issue’s impact on the company or business. Therefore, it becomes crucial to determine the character of the issue. Framing the problem offers an opportunity to ask the correct questions to the right people. It is vital for the decision makers to frame the problem in a manner that does not constrain potential solutions to the problem. Framing the issue involves questions on how the issues/situation rose, and how to solve the situation (Harvard Business School, 2006). After, framing the issue properly, the decision makers should determine alternatives because in the absence of alternatives genuine decisions cannot be reached. Generation of an alternative occurs after the causes of the issues have been identified (Harvard Business School, 2006). It is a problem solving techniques that require immense creativity. Alternative can be generated through focus groups or brainstorming, because an individual cannot posses the knowledge required for solving the issue at hand (Lunenburg, 2010). An evaluation of alternatives occurs after the realization of realistic alternatives. The evaluation involves assessing the feasibility, risks and implications of the possible choices. Numerous analytical tools such as software and consultants are available for evaluating the alternatives. Evaluation ensures that the alternatives are applicable to the issue (Harvard Business School, 2006). Choosing the applicable alternative is the final step in the decision making model according to the Harvard Business Essentials. This step occurs after all the other steps have been performed, and the decision making team has agreed on its objective. The right choice should be clear and understandable, and it should target the issue at hand (Harvard Business School, 2006). The strengths of this model lay on its recognition that crisis solving and resolution making should have a group or team approach. This is crucial because an individual cannot posses the knowledge required to solve or address complex issues. Teamwork also minimizes the probabilities of failure of the solutions. The model also understands that decision-making is a process with various stages that need to be addressed, with each stage having solutions to be used in the next stage (Harvard Business School, 2006). This model leaves a logical trail, suggests the next step and has the capabilities to manage complexities. However, this approach has its weakness in personal preferences within the team. These preferences result in ambiguity, and dissention making the final decision difficult. Also mechanically carrying out each of these steps will not lead to the best decision. This is because of the decision traps that arise and allow personal prejudice during thinking. These traps lead smart individuals to make undesirable decisions because of poor judgment and creativity coupled with inadequate technical proficiency. The steps are also time-consuming and expensive because of the support needed for the team members (Harvard Business School, 2006). The other decision making model is known as the Analytical Hierarchy Process (A.H.P). This model has a structured technique for analyzing and organizing complex decisions. It has its basis on psychology and mathematics. It has its application in processes where groups make decisions (Saaty, 2008). Unlike the five step, model this model does not prescribe a correct decision but rather it helps decision makers in identifying a decision that suits their goal and understanding of the problem. This model provides a rational and comprehensive framework for structuring the decision problem, for quantifying and representing the elements of the problems and for relating the elements to the overall goal. The model also evaluates alternative solutions, just like the five step model. The A.H.P model requires that the users decompose their problem hierarchy for an easy comprehension. This results to the formation of sub problems enabling independent analysis (Saaty, 2008). The formation of the hierarchy enables a systematic evaluation of the elements through comparison. This is unlike the five-step model in which problem solving occurs in steps, rather than hierarchically, and the evaluation step occurs as the fourth step. This model compares the elements according to their impact (Saaty, 2008). The decision makers rely on concrete data during comparison. However, they judge the elements relative to their importance and meaning. This model uses human judgment and not only the underlying information during evaluation (Palcic, & Lalic, 2009). The A.H.P then converts the assessment to mathematical values that can be compared and processed over the range of problems. Priority in this case depends on the elements of the hierarchy, allowing comparison of different and incommensurable elements in a consistent and rational way. This capability distinguishes this model (A.H.P) from the five-step model (Dalalah, & Al-Oqla, 2010). The final step of the model involves the calculation of numerical priorities for the alternatives. The obtained figure represents the alternative decisions ability to reach the decision’s goal. This model, therefore, allows a straightforward deliberation of the course of action. This model allows the usage of computing tools throughout the process unlike the five-step model that only uses computer software during evaluation (Dalalah, & Al-Oqla, 2010). The limitations of this approach lie in the time required to form a frame of the problem and evolution through the phases. The model does not support shared vision because of its complex systems. It adds complexity instead of managing complexity, and it does not support viewpoint variations. The model does not provide suggestions for, the next action, and it is highly expensive (Saaty, 2008). Conclusion Decision-making is a complex process with immense consequences in case not followed well. Decision making in business or life involves a series of decisions linked through the implementation of other activities. They set the direction and pace of activities to be conducted. An individual or a company can only compete and succeed through consistently making smart decisions. Bad decisions have negative consequences to the company or to the individual making the decision. The two models provide adequate platforms for making decisions. However, their accessibility depends on the available knowledge and resources. From this analysis, the five-step model appears as an effective decision making tool because it lists alternatives and criteria and requires minimum time for evolution to different stages. It has a robust methodology and supports shared vision. The model also manages complexities and supports varied viewpoints, in the process suggesting the next step of action. References Armesh, H. (2005). Decision Making. Multimedia University. Page 3-7. Dalalah, D. & Al-Oqla, F. (2010). Application of the Analytic Hierarchy Process in Multi- Criteria Analysis of the Selection of Cranes. Journal of Mechanical and Industrial Engineering. Vol. 4, (5). Page 567-578. Harvard Business School. (2006). Harvard Business Essentials. Decision Making: 5 Steps To Better Results. Harvard Business School Press. Boston. Page 2-7. Lunenburg, F. (2010). The Decision Making Process. National Forum of Educational Administration and Supervision Journal. Vol. 27, (4). Page 1-10. Milkman, K. Chugh, D. & Bazerman, M. (2008). How Can Decision Making Be Improved? Page 1-13. Palcic, I. & Lalic, B. (2009). Analytical Hierarchy Process as a Tool for Selecting and Evaluating Projects. International Journal of Simulation Model. Vol. 8, (1). Page 16-26. Saaty, T. (2008). Decision Making With the Analytical Hierarchy Process. International Journal Of Services Science. Vol. 1, (1). Page 83- 99. Read More