This article discusses decision-making in a business environment. While leaders are ultimately responsible for business decisions, problem-solving is a shared responsibility among top managers who make strategic decisions, middle managers who make tactical decisions and lower level managers who make operational decisions. By having accurate information, decisions are more likely to be based on facts, sound reasoning and intelligence. This article will provide an overview of decision making and includes a discussion of factors that lead to good business decisions.
Keywords Business Intelligence; Conflict; Core Values; Decision Making; Decision Tree; Emotional Intelligence; Information; Inquiry Process; Operational Decisions; Strategic Decisions; System Dynamics; Tactical Decisions
Management: Decision Making
One of the earmarks of an effective leader is someone who makes decisions while motivating people to implement them. He or she must learn to communicate and deal with high and low-performing workers and bring out the best in both employees and managers while demonstrating authority and creativity. While leaders have different decision-making styles, a leader needs to choose the right people to participate in the decision-making process and there are some basics steps they must follow.
Leaders need to spot and solve problems while seeking opportunities to move the company forward. In order to do so, accurate information needs to be obtained, and a number of alternatives need to be developed and evaluated for strengths and weaknesses. Decisions are made after developing a number of ideas, debating a variety of options and encouraging an exchange of opinions in order to find the best course of action (Garvin, 2001).
While leaders are ultimately responsible for making business decisions, problem-solving is a shared responsibility among people at different levels in a company. Further, there are different types of decision-making responsibilities and these include strategic decisions, tactical decisions and operational decisions.
Top managers are often responsible for making strategic decisions or decisions that concern the long-term goals of the company. For example, a company might decide to develop new products or focus its efforts on increasing the volume of an existing product. Strategic decisions establish company policy and these decisions are often complicated because the future is uncertain and accurate information is often limited. In these cases, managers must rely on their past experiences as well as their instincts (Janczak, 2005).
There are four techniques available to senior managers. They must be able to generate conflict that needs to be resolved; employees should be encouraged to question existing assumptions; the work environment should be one that encourages learning, and finally, managers need to be able to distinguish between available resources and services and customer needs (Young, 2005).
Once a company's goals and policies are established by senior management, tactical decisions aimed at achieving a company's goals and implementing company policy need to be made. Such decisions are usually made by middle managers and require managers to focus on specific actions that will bring about the company's objectives. For example, a mid-level manager might devise a plan to provide employees with incentives in order to increase production. This requires mangers to have accurate information so that their decisions are based on facts (Abukari, 2003).
Lastly, decisions regarding the day-to-day functions of a business also need to be made. These decisions are considered operational decisions and they are subordinate to strategic and tactical decisions. While these decisions are the responsibility of low-level managers, good decision making is crucial here since such decisions focus on productivity, quality control and employee performance. Moreover, operational decisions can be broken down into:
- Short term planning needs like ordering supplies, establishing work priorities and enlisting temporary help.
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