FUNCTIONS OF
MANAGEMENT
DECISION MAKING
• Decisions are made by everyone in this world and people involved in the
business world, but managers typically face the most decisions on a daily
basis. Many of these decisions are relatively simple and routine, such as
ordering production suppliers, choosing the discount rate for an order etc.
• A major part of decision making involves the analysis of a finite set of
alternatives described in terms of some evaluative criteria. A decision is a
choice and decision making is choice making.
INTRODUCTION
• For People and organizations including institutions of learning
(schools and colleges) to attain their goals and organizational
objectives, it is important that the best administrative practices must be
functional. One of such practices is democratic governance with
participatory decision making. This means that all stakeholders
(teachers inclusive) must be given the opportunity to play their defined
and legitimate roles.
WHAT IS DECISION MAKING?
• Decision
Making refers to identifying and choosing
alternatives based on the values and preferences of the
decision maker.
• Making a decision implies that, there are alternative choices
to be considered, and assembled and the one with the highest
probability of success or effectiveness is selected.
• Decision making can be defined as the process of sufficiently
reducing uncertainty and doubt about alternatives to allow a
reasonable choice to be made from among them.
• This definition stresses the information gathering function of
decision making. It should be noted that, uncertainty reduces
rather but not eliminated.
STEPS IN DECISION MAKING/ DECISION MAKING
PROCESS
• Decision making can be effective if the following steps are followed:
1. Identify or Define the Problem:
The first stage in the decision making process is to recognize that a
problem exists and must be solved. The ‘problem’ may be actually be an
opportunity that needs to be exploited; a gap between what the
organization is doing now and what it can do to create a more positive
future.
• The decision maker must be sure he or she has an accurate
grasp of the situation. It is important to pinpoint the actual
cause of the situation, which may not always be obviously
apparent. A critical analysis should be made about the
problem and to come out with an objective.
2. Gather information on the problem
• The decision maker gathers as much information
possible because having all the facts gives the decision
maker a much better chance of making the appropriate
decision.
3. Develop Possible Alternative Solution
• This stage links problem diagnosis to the development of
alternative courses of action aimed at solving the problem. The
decision maker attempts to come up with a many alternatives as
possible. A technique known as brainstorming is often used.
Brainstorming is the process whereby group members offer any
and all ideas even if they sound totally ridiculous.
4. Evaluate Alternatives to decide which is Best
• The process of evaluating the alternatives usually starts by narrowing
the choices down to two or three and then choosing the best one. This
step is usually the most difficult because, there are often many
variables to consider. The decision maker must attempt to select the
alternative that will be the most effective, given the available amount
of information, the legal obstacles, the public relation issues, the
financial implications and the time constraints on making the decision.
5. Selection of Alternative/ Making a Choice
• This stage requires the decision maker to finally make
a selection of the most effective and efficient
alternative. This can be effectively done when decision
maker considers critically the pros and cons of each
alternatives.
6. Implement the Selected Solution
• Implementation often requires some additional planning time as well
as the understanding and cooperation of the people involved.
• Communication is very important in the implementation stage,
because most people are resistant to change simply because, they do
not understand why it is necessary. In other to make smooth
implementation of the decision, the reasons behind the decision of the
people involved.
7. Follow up, Control and make Revisions
• The decision maker must follow – up on the decision to
ensure if it is working successfully. If the decision that was
implemented has corrected the differences between the actual
and the desired outcome, the decision is considered
successful.
• However, if the implemented decision has not produced the
desired results, once again the decision must be made. The
decision maker can decide to give the decision more time to
work, choose another generated alternative or start the whole
process over from the beginning.
PROGRAMMED DECISIONS/ STRUCTURED
DECISIONS
• These are decisions that are routine and repetitive that organizations have
encountered and made before.
• They have objectively correct answers and can be solved by using simple
rules, policies or numerical computations. If you face a programmed
decision, a clear procedure or structure exists for arriving at the right
decision.
• An example is a clear procedure for recruiting employees
NON - PROGRAMMED DECISION/ UNSTRUCTURED
DECISIONS
• Exceptional problems are dealt with by non – programmed
decisions. They have a variety of possible solutions, all of
which have merits and drawbacks. The decision maker must
create or impose method for making the decision. There is no
predetermined structure on which to rely. The decision is
determined by prevailing circumstances.
DECISIONS BY LEVELS OF MANAGEMENT
• OPERATIONAL DECISION
The focus is on day-to-day activities within the company and it is typically made by
lower –level managers. Decisions made at this level help to ensure that daily
activities proceed smoothly and therefore help to move the company forward
towards reaching the strategic goal.
Decisions are made by departmental heads and general manager about the quality of
a particular good to be manufactured, price levels, promotional strategies and
distribution channels to be adopted.
Tactical Decisions
• These are decisions which focuses on more intermediate- term issues
and are typically made by middle managers. The purpose of decisions
made at this level is to help move the company closer to reaching the
strategic goal. Example includes; picking an advertising agency to
promote a new product or provide incentive plan to employees to
encourage increased production, budget preparation and purchasing
contracts.
Strategic Decision
• These are decisions which affects the long-term decision of the entire
company, and typically made by top managers. Examples might focus on
efforts in a new product or to increase production output. These type of
decisions are often complex and the outcomes are uncertain because
available information is often limited. Managers at this level often depend
on past experiences, information and their instincts when making such
decisions. Eg; mergers, acquisition, new product planning and capital
investments.
IMPORTANCE OF DECISION MAKING
• Allocating of resources: Decision making helps organizations to allocate its
limited resources efficiently and effectively in order to achieve its organizational
goals and objectives.
• It aids the business to respond to changes in the business environment.
• It helps in fixing prices for the business’ products.
• In planning decision making is useful
• It helps managers to put their plans into action. Their ideas and suggestions are
implemented by way of making decision.
PARTIES OR GROUPS INVOLVE IN DECISION
MAKING
• Decision making involves a number of people in an organization. These
include;
• Board of Directors (strategic managers) are noted for policy making
• Internal Specialists and outside consultants for technical decisions
• Committees: This is made up of representatives from different
division of the business. They make decisions concerning their
division.
END OF LESSON
DANKE SCHONON