Effective decision-making

Author: Wang Hongchun
Publisher:
Publish Date: 2006-07-01
Features:
1. Clearly defining the decision-making process is one of the prerequisites for scientific decision-making. First, let it be stated that not all decisions require going through these five steps to resolve them. Decision-makers can make decisions quickly based on experience or intuition. For example, if you discover that an employee is unable to work today due to illness, you can quickly find someone else to cover their essential tasks for the day. We will conduct a detailed study of such issues in the following chapters. However, many problems still require decision-makers to follow a strict decision-making process step by step, as they cannot be resolved immediately or by relying on specific methods, such as consulting experts to help solve certain problems. The division of the decision-making process is based on the "rational person" assumption of neoclassical economics regarding decision-makers. According to this assumption, the general decision-making process typically includes the following steps or procedures:
① Examine the internal and external environments of the organization, diagnose the problem, and determine the decision-making objectives;
② Collect as complete data and information as possible to provide sufficient informational support for decision-making;
③ List all possible alternative action plans that can achieve the desired objectives;
④ Evaluate the feasibility and non-feasibility of each alternative plan, and examine the consequences of each possible alternative action plan;
⑤ Under a certain value system, evaluate the value of each consequence and rank each action plan in order of priority, selecting the optimal action plan based on this priority.
The above decision-making process is a completely rational decision-making process under complete information conditions. However, in reality, management scholar Simon has already told us that such a decision-making process does not exist. In fact, influenced by asymmetric information and the cognitive structure limitations of decision-makers, decision-making is "bounded rational." The assumption of "bounded rationality" itself implies that the decision-making process is an efficiency issue, meaning there are differences in costs or benefits in the allocation of various resources and incentive methods within the organization. This is first reflected in the differences in decision-making capabilities based on the cognitive structure of decision-makers; the decision-making capability of decision-makers itself is a scarce resource for the organization. Second, the collection of decision-making information incurs costs, and search costs are an increasing function of the amount of information. Third, under incomplete information conditions, decision-making is uncertain, involving risk costs. Finally, under asymmetric information conditions, the decision-making behavior of organizational members has externalities, and there is a tendency toward opportunism.
Under "bounded rationality," the efficiency realization of enterprise organizations faces many challenges. However, regardless of the situation, making complex decisions according to the decision-making process still holds strong practical significance. It has at least brought two clear changes to our decision-making:
First, it makes decision-making behavior possible to shift from an individual act to a collaborative decision-making process involving a team or group. At each stage of the process, someone analyzes and reviews it from technical, economic, or other perspectives, and by the final decision, it is essentially the selection of the optimal plan from several options. This decision-making approach, to some extent, avoids the potential drawbacks of traditional decision-making methods where one person holds the final say, ensuring that decisions are based on science and facts.
Second, it is possible to form a relatively scientific decision-making method, which exerts strong constraints on every decision. This decision-making method is very comprehensive and mainly includes the following aspects: major decisions are composed of several interconnected procedures; each procedure is assigned to a specific person; at each stage of the process, someone analyzes and evaluates it from technical and economic perspectives. P18-19