Decision-making process was designed by Herbert Simon. The model comprises three distinct elements which are as follows:
Intelligence: This refers to the raw data which is gathered and probed. This data helps in identifying the problem which requires decision making. It helps in knowing the problem is about.
Design: This element focuses on developing, designing, inventing and examining various alternatives which can result in decision making. Once, these alternatives are identified, they are testified for feasibility and implementation. Probing is done to calculate the value of the outcome of the decision.
Choice: After the manager has developed various substitutes. The final element is to select the best alternative. This selection is done on the basis of predetermined criteria.
Following steps are involved in decision-making:
Identify the Decision: This deals with the identification of the decision to be made. It also defines what outcomes are desired to be achieved. Whether it is a strategic decision or routine decisions and what will be the impact of this decision on the organisation. It encompasses identifying the nature of a decision to be made, which can be short-term or long term, or reversible or irreversible.
Gather information: This step deals with the collection of information from various sources. The various decision is to be and with regard to what type of information is required and from where the data will be collected. After identifying the sources of input, the manager has to identify how he can reach to the sources. In this step, the manager has to deal with the external and internal environment to collect the data.
Identify Alternatives: The third step is to identify various alternatives for decision making. on the basis of the data collected, the manager lays down all the possible course of action. Sometimes he uses past knowledge or information to build new alternatives. Hence, all desirable and feasible alternatives are identified here.
Weight the evidence: As the manager is equipped with all the possible action plans, manager weighs each of them. Keeping the requirement of step 1 in mind, he judges whether the stated plan will give the desired results. The decision makes uses his emotions and intelligence while evaluating the course of actions. He will rank the alternatives on the basis of priority and desirability.
Select among alternatives: In this step, the manager will choose among the ranked action plans. This choice is based on the cost-benefit analysis. Various pros and cons are looked upon before selecting the said alternative. The decision-maker can choose a blend of one or two alternatives.
Take action: Here, the decision-maker actually takes action and implements the chosen alternative in the organisation.
Review decision: After the decision is made, the manager must review the decision and see whether the desired consequences have been achieved or not. If the decision lacks certain consequences then the decision-maker should repeat step 1.