Decision making is an essential necessity of any organization with hundreds of decisions to consider every day and at various levels of complexities and consequences.
Because of the expansive scope of consequences and time lengths, organizational decisions should be assessed specifically and organized. The first step to assist this is to use a decision-making process with clearly defined prerequisites. Research is imminent at the first stage by gathering and processing of all sources of information and then further applying accurate judgment on the perceived information at hand.
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An organization is then steered into the right decision-making process identifying the proper cause of a problem. Failure to identify the real cause of a problem may have tremendous consequences, especially if an effort gets directed towards perceived causes, but not the actual cause of which would often lead to further obstacles in future. Other common pitfalls organisations include defining the problem either too broadly by or too narrowly and focusing on symptoms instead of main causes. Lack of a clearly defined problem and objectives set the groundwork for faulty alternatives to be considered.In the second step phase, all information and resources are analyzed and evaluated with the objective of generating alternative solutions. After factoring in the benefits, costs, timeliness, acceptability and ethical soundness, an evaluation then considers the various operational, economic, technological and socio-political risks pertaining to the functions within the organization. One systematic approach is the cost-benefit analysis that is used to determine the best approach to achieving benefits while preserving savings at the same time. For example, an organisation would use these to determine if an investment or decision is soundly based on its justification and feasibility by verifying whether its benefits outweigh the costs and by how much.
Another example of this would provide a basis for comparing projects – which involves comparing the total expected cost of each option against its total expected benefits. The second approach would be stakeholder analysis that refers to the technique of identifying and assessing the importance of key people, groups, or institutions in the evaluation. This systematic technique establishes the interest of stakeholder and generates information that is vital to planning and implementing the evaluation.