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Managerial decision making: methods and models

Managerial decision making: methods and models

Every manager must make a decision at least once a day. In their professional practice, managers make decisions related to projects, people, or the development of the organization.

Decision-making is the most important activity any manager does

Decision-making is the most important activity any manager does. The ability to make decisions is a skill that develops and improves with experience and age.

That is why professional managers have many years of experience and have gone through many professional problems.

Proper management decision always involves choosing an alternative for the organization, which affects all employees in it, as well as affects the organizational environment. Reference: “Participating in decisions, Decision Making Process In Management”, https://bvop.org/learn/participating-decisions/

Managerial decisions are not just about choosing to do something or not.

Rational managers anticipate risks and are aware of what resources are needed. And most importantly, the manager is aware of what will be the negative and positive consequences after the decision and actions and tasks.

Making a managerial decision is an important action in the management process

Management decision-making is one of the most important elements of the management process.

Since the subjects of management perform many functions, it can be said that there is a two-way or two-way relationship between the management decision and the management functions. “The decision-making process in management”, https://www.kievpress.info/decision-making-process-management/

It consists of the following: the solution is contained in the functions, and the functions are contained in the solution. The main thing in decision-making is to gather as many opinions or information as possible and to reach a decision on this basis.

When making important decisions, the manager must be based not only on the facts or the information base but also on the opinions, because in many cases one or another fact can be misleading if it is not taken in the right general sense (in context) or to lack basic, essential facts.

Solutions can be classified on various grounds:
  • Depending on the nature of the problems and the level at which they are taken, they are strategic, tactical, and operational;
  • According to the duration of their action, they are one-time and permanent/permanent/;
  • According to their nature or field of application, they are economic, technological, organizational, administrative, social;
  • Depending on the scale of action, they are global and local;
  • According to the time needed for their implementation – long-term, medium-term, short-term;
  • According to the bearer of the impact, they are oral-administrative, documentary-fixed;
  • In the direction of impact – internal and external;
  • By the way, they are taken – they are individual and group
  • Depending on whether the decisions are clear or vague, they are programmed and unprogrammed. For example, programmed solutions are unambiguous, clear solutions, they concern well-clarified problems that are usually every day and often recurring. Non-programmed solutions are indeterminate and not in the form of direct implementation. They are unique and cannot be approached in a standard way.

Individual management decisions

Individual management decisions are made individually by the manager of the enterprise.

Many factors influence the process of individual decision-making: first, it is subjectivism. Subjectivism is inevitable in individual decision-making.

Everyone has a value system that influences their evaluation and behavior. Reference: “A systematic approach in management”, https://securityinformationeventmanagement.com/systematic-approach-in-management/

The personality of the manager, who makes the final decision, has the greatest influence, but the information collectors, the selection and assessment, the criteria and their ranking, the feedback, etc. also have an impact.

For the modern company, however, group solutions are very typical. Their advantages are that there is a pool of resources (different points of view, information, abilities), division of labor, commitment to decisions.

The disadvantages of this type of solution can be listed in the following: more time is wasted; there is pressure for conformism; domination of the leader or other small part of the group; distribution of responsibility. Group decisions can lead to conflict.

Strategic management decisions

Strategic management decisions are associated with the strategic management of companies.

Strategic management helps the organization to see on time the changes taking place in the environment, and to adapt the manufactured products and goods to these changes. Reference: “What is Organizational Strategic Planning”, https://ossalumni.org/what-is-organizational-strategic-planning/

Within its capabilities to choose the optimal strategy for development and its successful implementation. The strategic decision is related to the long-term development of the organization.

Strategic decisions can be – Target is related to the policy of the organization; Coordination coordinates goals, objectives, and resources over time; Structural refers to the building, change, improvement of the organization. Reference: “Goal-based management”, https://mpmu.org/goal-based-management/

Operational management decisions

Operational management decisions, in turn, are associated with the daily activities of the organization, with the usual management of staff, resources, etc., are taken on each current problem, they are ancillary decisions, additional decisions, current, term, long-term decisions, etc.

Individual authors also indicate decisions related to the global or local activities of the organization, decisions related to personnel, administration, strategy, tactics, operational activities, etc. elements related to organizational life.

Some of the decisions may be oral. Another part must be documented by the manager. An example of such a decision is, for example, a decision to conduct an inventory in the organization, various decisions regarding the rules of internal order, etc.

It can be summarized: the modern management of the units is based on decision-making, regarding their future activity, taking into account the requirements of the environment.

Models and methods of decision making

The model can be a system, an object, an idea. It provides an opportunity to see and assess options for the future and to determine the potential consequences of alternative solutions.
Types of models:

Analog model – presents the studied object as an analog, which looks like the object itself

Physical model – also called portrait model

Mathematical model – uses a set of symbols or a specific technical language to describe the characteristics and properties of the object.

The most commonly used decision models are:

Game theory – a model in which an attempt is made to predict the effect of decision-making on competitors

Optimal service model – used to determine adequate service channels concerning the need for them.

Imitation modeling – is the creation of a model that is applied experimentally to identify changes that would occur in a real situation. Reference: “Situational management approach”, https://www.yahowto.com/situational-management-approach/

Linear modeling – used for optimal distribution of scarce resources in the presence of competing needs

Popular methods of managerial decision making

Decision tree – allows for comparison of decision options by individual criteria. It is popular for problems that require several consecutive solutions. In its final phase, it is a schematic representation of the problems

Payment matrix method – a statistical method that is used to provide management with a possible objective assessment of the probability of an event occurring, as well as the results of this probability

Creative (heuristic) decision-making methods – in them the decision-making approach is often non-standard, the problem is solved in non-traditional ways

Brainstorm – in this model of decision-making in the first stage all proposals are accepted without discussion and criticism, aiming at maximum participation of all ideas. At the next stage, the best are analyzed and selected.

Delphi technique – it uses the comparison of anonymous assessments on a particular topic by using a set of related and sequential questionnaires. The main thing is to collect anonymous opinions with the help of a questionnaire sent by mail.

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