DEFINITION OF DECISION MAKING

Decision-making is an integral part of modern management. Essentially, Rational

or sound decision making is taken as primary function of management. Every
manager takes hundreds and hundreds of decisions subconsciously or consciously
making it as the key component in the role of a manager. Decisions play
important roles as they determine both organizational and managerial activities.
A decision can be defined as a course of action purposely chosen from a set of
alternatives to achieve organizational or managerial objectives or goals. Decision
making process is continuous and indispensable component of managing any
organization or business activities. Decisions are made to sustain the activities of
all business activities and organizational functioning.

Decisions are made at every level of management to ensure organizational or

business goals are achieved. Further, the decisions make up one of core
functional values that every organization adopts and implements to ensure
optimum growth and drivability in terms of services and or products offered.

As such, decision making process can be further exemplified in the backdrop of

the following definitions.

According to the Oxford Advanced Learner’s Dictionary the term decision making
means - the process of deciding about something important, especially in a group
of people or in an organization.

Trewatha & Newport defines decision making process as follows: “Decision-

making involves the selection of a course of action from among two or more
possible alternatives in order to arrive at a solution for a given problem”.

As evidenced by the foregone definitions, decision making process is a

consultative affair done by a comity of professionals to drive better functioning of
any organization. Thereby, it is a continuous and dynamic activity that pervades
all other activities pertaining to the organization. Since it is an ongoing activity,
decision making process plays vital importance in the functioning of an
organization. Since intellectual minds are involved in the process of decision
making, it requires solid scientific knowledge coupled with skills and experience in
addition to mental maturity.
Further, decision making process can be regarded as check and balance system
that keeps the organisation growing both in vertical and linear directions. It
means that decision making process seeks a goal. The goals are pre-set business
objectives, company missions and its vision. To achieve these goals, company may
face lot of obstacles in administrative, operational, marketing wings and
operational domains. Such problems are sorted out through comprehensive
decision making process. No decision comes as end in itself, since in may evolve
new problems to solve. When one problem is solved another arises and so on,
such that decision making process, as said earlier, is a continuous and dynamic.

A lot of time is consumed while decisions are taken. In a management setting,

decision cannot be taken abruptly. It should follow the steps such as

1. Defining the problem

2. Gathering information and collecting data
3. Developing and weighing the options
4. Choosing best possible option
5. Plan and execute
6. Take follow up action

Since decision making process follows the above sequential steps, a lot of time is
spent in this process. This is the case with every decision taken to solve
management and administrative problems in a business setting. Though the
whole process is time consuming, the result of such process in a professional
organization is magnanimous.

TYPES OF DECISIONS
Decision-making is one of the core functions of management. And it is actually a
very scientific function with a well-defined decision-making process. There are
various types of decisions the managers have to take in the day to day functioning
of the firm.
Strategic Decisions and Routine Decisions
As the name suggests, routine decisions are those that the manager makes in the
daily functioning of the organization, i.e. they are routine.
Such decisions do not require a lot of evaluation, analysis or in-depth study. In
fact, high-level managers usually delegate these decisions to their subordinates.
On the other hand, strategic decisions are the important decisions of the firm.
These are usually taken by upper and middle-level management. They usually
relate to the policies of the firm or the strategic plan for the future. Hence such
decisions require analysis and careful study. Because strategic decisions taken at
this level will affect the routine decisions taken daily.

Programmed Decisions and Non-Programmed Decisions

Programmed decisions relate to those functions that are repetitive in nature.
These decisions are dealt with by following a specific standard procedure. These
decisions are usually taken by lower management. For example, granting leave to
employees, purchasing spare parts etc. are programmed decisions where a
specific procedure is followed. Non-programmed decisions arise out of
unstructured problems, i.e. these are not routine or daily occurrences. So there is
no standard procedure or process to deal with such issues. Usually, these
decisions are important to the organization. Such decisions are left to upper
management. For example, opening a new branch office will be a non-
programmed decision.

Policy Decisions and Operating Decisions

Tactical decisions pertaining to the policy and planning of the firm are known as
policy decisions. Such decisions are usually reserved for the firm’s top
management officials. They have a long term impact on the firm and require a
great deal of analysis.
Operating decisions are the decisions necessary to put the policy decisions into
action. These decisions help implement the plans and policies taken by the high-
level managers.
Such decisions are usually taken by middle and lower management. Say the
company announces a bonus issue. This is a policy decision. However, the
calculation and implementation of such bonus issue is an operating decision.
Organizational Decisions and Personal Decisions
When an executive takes a decision in an official capacity, on behalf of the
organization, this is an organizational decision. Such decisions can be delegated to
subordinates.
However, if the executive takes a decision in a personal capacity, that does not
relate to the organization in any way this is a personal decision. Obviously, these
decisions cannot be delegated.

Individual Decisions and Group Decisions

When talking about types of decisions, let us see individual and group decisions.
Any decision taken by an individual in an official capacity it is an individual
decision. Organizations that are smaller and have an autocratic style of
management rely on such decisions.
Group decisions are taken by a group or a collective of the firm’s employees and
management. For example, decisions taken by the board of directors are a group
decision.
STEPS IN LOGICAL DECISION MAKING
Step 1: Identify the decision
You realize that you need to make a decision. Try to clearly dene the nature of
the decision you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what
information is needed, the best sources of information, and how to get it. This
step involves both internal and external “work.” Some information is internal:
you’ll seek it through a process of self-assessment. Other information is external:
you will find it online, in books, from other people, and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of
action, or alternatives. You can also use your imagination and additional
information to construct new alternatives. In this step, you will list all possible and
desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you
carried out each of the alternatives to the end. Evaluate whether the need identi-
fied in Step 1 would be met or resolved through the use of each alternative. As
you go through this di-cult internal process, you’ll begin to favor certain
alternatives: those that seem to have a higher potential for reaching your goal.
Finally, place the alternatives in a priority order, based upon your own value
system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative
that seems to be the best one for you. You may even choose a combination of
alternatives. Your choice in Step 5 may very likely be the same or similar to the
alternative you placed at the top of your list at the end of Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the
alternative you chose in Step 5.

Step 7: Review your decision & its consequences.

In this final step, consider the results of your decision and evaluate whether or
not it has resolved the need you identified in Step 1. If the decision has not met
the identified need, you may want to repeat certain steps of the process to make
a new decision. For example, you might want to gather more detailed or
somewhat different information or explore additional alternatives.

FACTORS INFLUENCING DECISION MAKING

Some of the factors and personal characteristics that have an impact on

the decision-makers are described below. Some factors are more important at
higher levels of management and others are more important at lower levels.

Information Inputs
It is very important to have adequate and accurate information about the
situation for decision making, otherwise the quality of the decision will suffer. It
must be recognized, however, that on the individual has certain mental
constraints, which limit the amount of information that he can adequately handle.

Less information is as dangerous as too much information. Some highly

authoritative individuals do make decisions on the basis of comparatively less
information when compared to more conservative decision-makers.

Prejudice

Prejudice and bias are introduced in our decisions by our perceptual processes
and may cause us to make ineffective decisions. First, perception is highly
selective, which means that we only accept what we want to accept, and hence
only such type of information filters down to our senses.

Second, perception is highly subjective, meaning that information gets distorted

in order to be consistent with our pre-established beliefs, attitudes, and values.

For example, a preconceived idea that a given person or an organization is an

honest or deceptive, good or poor source of information, late or prompt on
delivery, and so on, can have a considerable effect on the objective ability of the
decision-maker and the quality of the decision.

Cognitive Constraints

A human brain, which is the source of thinking, creativity, and decision making, is
limited in capacity in a number of ways. For example, except for some unique
circumstances, our memory is short term, having the capacity of only a few ideas,
words, and symbols.

Also, we cannot perform more than a limited number of calculations in our heads
and it is tough to compare all the possible alternatives and make a choice.

Finally, psychologically, we are always uncomfortable with making decisions. We

are never really sure if our choice of the alternative was correct and optimal until
the impact of the implication of the decision has been felt. This makes us feel
insecure.

Attitudes about Risk and Uncertainty

These attitudes are developed in a person, partly due to certain personal

characteristics and partly due to organizational characteristics. If the
organizational policy is such that it penalizes losses more than it rewards gains,
then the decision-maker would tend to avoid the alternatives that have some
chances of failure.

Thus a manager may avoid a potentially good opportunity if there is a slight

chance of a loss. The personal characteristics of a decision-maker regarding his
attitudes towards risk-taking affect the success of the decision. The risk-taking
attitude is influenced by the following variables:

A. The intelligence of the decision-maker: Higher intelligence generally results in

highly conservative attitudes and highly conservative decision-makers take low
risks. There are others who are more willing to take calculated risks if the
potential rewards are larger and there is some chance of success.

B. The expectation of the decision-maker: People with high expectations are

generally highly optimistic in nature and are willing to make decisions even with
less information. The decision-makers with low expectations of success will
require more and more information to decide upon a course of action.

C. Time constraints: As the complexity of the personal habits of the decision-

maker and the complexity of the decision variables increase, so does the time
required to make a rational decision.

Even though there are certain individuals who work best under time pressures
and may outperform others under severe time constraints, most people, require
lime to gather all the available information for evaluation purposes.

However, most people under time pressure rely on the ‘heuristic approach’,
which relies on satisfactory rather than optimal decisions, thus limiting the search
for additional information, considering few alternatives and few characteristics of
alternatives, and focusing on reasons to reject some alternatives.

This approach may also be in use when the cost of gathering information and
evaluating all such information is too high.

Personal Habits

Personal habits of the decision-maker, formed through social environmental

influences and personal perceptual processes must be studied in order to predict
his decision-making style. Some people stick to their decisions even when these
decisions are not optimal.

For example, Hitler found himself bound by his own decisions. Once he decided to
attack Russia, there was no going back even when he realized that the decision
was not the right one.

Some people cannot admit that they were wrong and they continue with their
decisions even ignoring evidence that indicates that a change is necessary.

Some decision-makers shift the blame for failure on outside factors rather than
their own mistakes. These personal habits have a great impact on organizational
operations and effectiveness.

Social and Cultural Influences

The social and group norms exert considerable influence on the style of the
decision-maker. Ebert and Mitchell define a social norm to be an evaluating scale
designating on acceptable latitude and an objectionable latitude for behavior
activity, events, beliefs, or any object of concern to members of a social unit.

In other words, the social norm is the standard and accepted way of making
judgments.’

Similarly, cultural upbringing and various cultural dimensions have a profound

impact on the decision-making style of an individual. For example, in the Japanese
organizational system, a decision-maker arrives at a decision in consensus with
others.

This style is culturally oriented and makes the implementation of the decision
much easier since everybody participates in the decision-making process. In
America, on the contrary, the decision-making style is generally individualistic
with the help of decision models and quantitative techniques.

IMPLICATIONS FOR NURSING MANAGERS

Health care is extremely complex and continuously changing. Decision making is

the essence of leadership and not a new concept for nurse managers. Managers
and leaders are expected to make decisions, which are the visible outcome of
their leadership and management process. Decision making is also a behavior
exhibited in making a selection and implementing a course of action from
alternative courses of action to address a situation or problem. Complexity and
rapid change in the health care environment require nurse managers to keep
pace with the changes if they are to be effective decision makers. There are many
formalized decision-making models: decision tree, cost-benefit analysis, cause-
and-effect charts, DECIDE, and evidence-based decision-making (EBD) model.
Decision making by nurse managers is a key aspect of their leadership and
involves implementing a course of action after considering alternatives.

Front-line nurse managers, who comprise the largest number of operational

managers in hospitals are being asked to take on many more responsibilities to
meet a growing number of organizational priorities. Generally, nurse managers
are at the center of the action and are the “go-to” people when organizational
leaders want something implemented. They are expected to identify problems
and design and implement innovations that will help their units achieve targeted
patient care outcomes while increasing efficiency and holding down costs.

DECISION MAKING TOOLS

Various generic tools have been proposed to help nurse managers make effective
decisions (e.g., brainstorming, root cause analysis, fishbone diagrams, decision
trees, mathematical models, and consequences tables. Some decision support
tools also have been developed, for example, a retrospective decision support
tool that helped nurse managers understand staffing metrics over time. Each of
these tools has some utility. However, none of these tools let managers test
prospectively the likelihood of success of various innovations in a virtual
environment before implementing them on their actual units.

Decision making is an inherent, complex and vital component of the work of

managers. Its importance and role in operationalizing the activities of an
organization are well-evidenced in management.

A ‘dependency model’ is proposed, which illustrates the factors affecting the art
of decision making. Structured interviews were conducted to identify types of
decisions made by nurse managers in different health-care settings and the
factors underpinning these decisions. The research focused on an intensive study
of a small group of nurse managers working in rural and regional health
institutions in South Australia. The sample included nurse unit managers, after-
hours coordinators and directors of nursing. Hermeneutic principles and
interpretive research were used to conduct interviews with nurse managers who
make numerous and varied types of decisions, though often without following a
step-by-step approach. The study identified dependency factors that influence
how decisions are made, and developed a model based on eight key variables: (1)
the situation to be addressed; (2) the time period in which the decision has to be
made; (3) required inputs from colleagues; (4) complexity of the task and the
environment, (5) the duration and time it takes to make a decision, (6) availability
of resources, (7) the decision-making environment, and (8) personal
characteristics. These eight variables are interrelated and have both direct and
indirect impacts on how decisions are made.

Nurse managers make pragmatic decisions reflecting the complexity of their roles
and responsibilities. Awareness of the factors on which decisions depend helps
understanding of how they navigate through decision-making processes. The
findings are presented as a model that can be used to support decision making by
nurse managers in various health settings.

Clinical decision support systems are quickly becoming essential tools for
healthcare providers as the volume of available data increases alongside their
responsibility to deliver value-based care.
Reducing clinical variation and duplicative testing, ensuring patient safety, and
avoiding complications that may result in expensive hospital readmissions are top
priorities for providers in the modern regulatory and reimbursement environment
– and harnessing the hidden insights of big data is essential for achieving these
goals.

Clinical decision support (CDS) tools are designed to help sift through enormous
amounts of digital data to suggest next steps for treatments, alert providers to
available information they may not have seen, or catch potential problems, such
as dangerous medication interactions.

CDS tools are often integrated into the electronic health record (EHR) to
streamline workflows and take advantage of existing data sets, although many
organizations are still facing significant challenges when it comes to creating
intuitive, user-friendly, and effective protocols for alarms, alerts, and decision-
making pathways.

Alert fatigue and clinical burnout are common byproducts of poorly implemented

clinical decision support features that overwhelm users with unimportant
information or frustrating workflow freezes that require extra clicks to
circumvent.

Clinical decision support is any tool that provides clinicians, administrative staff,
patients, caregivers, or other members of the care team with information that is
filtered or targeted to a specific person or situation. 

CDS is intended to improve care quality, avoid errors or adverse events, and allow
care team members to be more efficient.
Clinical guidelines and diagnostic support frameworks do not have to be digital,
but the modern definition of CDS tends to focus on health IT applications,
modules, or analytics that leverage an organization’s big data assets.

BARRIERS TO EFFECTIVE DECISION MAKING

There are a number of barriers to effective decision-making. Effective managers

are aware of these potential barriers and try to overcome them as much as
possible.

Bounded rationality
 The concept that when we make decisions, we cannot be fully rational
because we don’t have all the possible information or the cognitive
processing ability to make fully informed, completely rational decisions.

Confirmation bias
The tendency to pay attention to information that confirms our existing
beliefs and to ignore or discount information that conflicts with our existing
beliefs.

Escalation of commitment
The tendency of decision makers to remain committed to poor decision,
even when doing so leads to increasingly negative outcomes.

Process conflict
Conflict about the best way to do something; conflict that is task-oriented
and constructive, and not focused on the individuals involved.

Relationship conflict
Conflict between individuals that is based on personal (or personality)
differences; this type of conflict tends to be destructive rather than
constructive.