Sunday, January 1, 2012

Six Step Managerial Decision-Making Process

This figures describes the six step managerial decision-making process:

Six step managerial decision-making process
The six step managerial decision-making process consists of the following six steps:

Step 1: Setting Managerial Objectives
The managerial objectives are the ends for the means of decision making and constitute the foundation for rational decision making. How you attain the objective is the measure of decision success.

Step 2: Searching for Alternatives
Searching alternatives is limited by time and money. You need to balance the rising cost of attaining additional information with the declining value of this piece of information. You need to stop the  search in the zone of cost effectiveness where the cost of additional alternatives is lower than the value of the alternative. The search result are usually three to five alternatives, with one alternative of doing nothing.

Step 3: Comparing and Evaluating Alternatives
The alternatives from step 2 are evaluated using criteria derived from the objective from step 1. The evaluation includes an anticipation of the likely outcome for each alternative and also anticipate obstacles or difficulties during implementation.

Step 4: The Act of Choice
The choice is the culmination of the process, not all of it. This step confronts the decision maker with discernible constraints. The choice is the alternative most likely to result in the achievement of the objective.

Step 5: Implementing Decisions
The decision success is a function of decision quality and decision implementation taking into consideration the operating constraints, the influence of the decision maker and the involvement of decision implementers without a conflict of interest.

Step 6: Follow-Up and Control
The "Follow-up and Control" step is essential to ensure that an implemented decision meets its objective. The performance is measured by observing the implemented decision in relation to its standard derived from the objective. Unacceptable variance from standard performance should elicit timely and appropriate corrective actions. Corrective actions may result in the implementation of another alternative, which, if not successful, may result in a revision of the original objective.

The process is another six step process with mostly action descriptions, the one voiced as a noun is using the noun "act". So this is a real process and it includes feedback loops within the process to improve the decision making, if the straight forward step process is not leading to the right results.

In the high level description, the first step is good, but nowhere the decision is really defined so the searching for alternatives can be looking at the wrong alternatives. The description in the front end of the process is good and gives general guidance on how to perform some of the steps. The step "Act of Choice" is overrated in my opinion, the description for implementing decisions (why, by the way, are there multiple decisions implemented?) is not describing the process but how to measure the success. The feedback and control step is a major step to help check for the quality of decision.


More information about different decision making processes: List of all reviewed decision making processes. See the comparison of the optional decision-making methods for further study.

Here is a link to the book from E. Frank Harrison, which describes this six step process in more detail:

No comments:

Post a Comment