Page 90 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes various factors that could influence the outcome. It is important to generate a wide range of
options and creative solutions in order to be able to move on to the next step. Therefore,
managers should encourage people to develop different solutions for the same problem. The
ability to develop alternatives is as important as making a right decision among alternatives.
The development of alternatives is a creative, innovative activity. It calls for divergent thinking;
it calls for "systems thinking". In other words, managers should try to seek solutions outside the
present realm of their knowledge; they are forced to look into all the relevant factors before
coming up with a novel solution.

Figure 5.1: Decision-making Process

Recognize the problem and the need for a decision

Identify the objective of the decision

Gather and evaluate data and diagnose the situation

List and evaluate alternatives

Select the best course of action

Implement the decision

Gather feedback

Follow-up

Source: Debra L Nelson, James C Quick "Organisational Behavior – Foundations, Realities, and Challenges"
(Second Edition), West Publishing Company Minneapolis, Page 283.
Fourth Step: Next, the manager selects the alternative that best meets the decision objective.
If the problem has been diagnosed correctly and sufficient alternatives have been identified, this
step is much easier. Peter Drucker has offered the following four criteria for making the right
choice among available alternatives:

1. The manager has to weigh the risks of each course of action against the expected gains.
2. The alternative that will give the greatest output for the least inputs in terms of material
and human resources is obviously the best one to be selected.

3. If the situation has great urgency, the best alternative is one that dramatizes the decision
and serves notice on the organisation that something important is happening. On the
other hand, if consistent effort is needed, a slow start that gathers momentum may be
preferable.
4. Physical, financial and human resources impose a limitation on the choice of selection. Of
these, the most important resources whose limitations have to be considered are the
human beings who will carry out the decision.

Example: A company wants to strengthen its research and development. It has two
options, outsource it to a well known company or develop an in-house panel of experts.

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