- Consider the decision-making process for risk management and quality management and answer the following questions:
- Which step in the decision-making process do you think is most underutilized or difficult to complete? What would you do to change it or make it easier?
- Which information would you say is most overlooked when making risk- and quality-management decisions? What do you think is the cause of this? How would you remedy it?
The steps in the normal decision-making process with respect to the average business environment and with reference to risk-management and quality control are fairly routine, but all are important. Identifying problems or opportunities, considering the factors that comprise or constitute problems, developing options to resolve those problems or to pursue opportunities and analyzing each option, selecting the optimal option, implementing that decision, and monitoring its progress are all components of a normal decision-making process. Selecting one step in that process that represents the most challenging or difficult to execute, though, is entirely case-dependent. That said, if one step has to be isolated for further consideration, the steps that involve developing options and analyzing them are probably the most problematic. An added variable also common to the average business operation is the number of individuals involved in carrying out this exercise. Whether an individual decision-making process or one involving team-work, each involves its own set of obstacles.
The reason the step that involves developing and analyzing options is so challenging is because of the scale of effort that can be involved and because of the psychological dynamics that can come into play. Identifying problems is the easy part; problems usually present themselves through misfortune, for example, the discovery that faulty products have been shipped or that competing companies are producing and/or distributing similar or identical products in less time and for less money. Developing and analyzing options, on the other hand, is a laborious, time-intensive exercise that involves numerous calculations and careful scrutiny of potential technological, budgetary, and environmental issues. Each option or alternative has to be carefully scrutinized for soundness, and it is often advisable to employ “red team” exercises to test for weaknesses in each proposal. This means assigning a small team of employees to focus on identifying weaknesses in each option – an exercise that can create animosity among employees or between competing teams. Furthermore, there is a natural tendency to seek out short-cuts for reasons of expediency, which usually results in missed opportunities or failures to spot the vulnerabilities in a proposal because of a rushed schedule or, as importantly, because of the psychological need to support a desired outcome. This latter phenomenon refers to a tendency among most people to avoid or minimize the importance of information or data that contradicts the desired outcome.
There is only so much that can be done to simplify this process. To reiterate, the natural tendency to want to accomplish the task sooner rather than later, especially when “want” is replaced with “required” often results in flawed decisions, as employees seek to solidify a decision at the expense of more thorough analysis the results of which could point in a different direction. If budgetary requirements or somebody’s ego dictates a certain direction, then interjecting into the decision-making process information or data that undermines that approach can carry with it risks that most employees won’t want to take, loss of one’s job for instance. The optimal fix for this situation is appointment of an independent arbitrator or analyst whose sole job it is to scrutinize the decision-making process for flaws that could result in a failed outcome. This individual(s) must be insulated from any repercussions that could result from analyses that refute the decision that has been made. Government agencies, by way of illustration, often have within their organizational structure independent offices (e.g., inspectors general, auditors, etc.) whose job it is to monitor and investigate the decision-making processes that occur in other departments. These offices are kept – usually statutorily at the direction of Congress – organizationally separate from the rest of the agency to ensure their independence. Such a framework could work in the business community, although it would entail financial costs that are more easily born by a fiscally irresponsible government than by a privately-owned corporation answerable to stockholders.
The situations involving risk-management and quality-control processes are very similar to the more standardized decision-making process common to most organizations. Risk-management involves the identification and assessment of potential risks. Quality-control involves frequent observation and assessment of each step in a manufacturing process in order to identify problems or potential problems before they can materialize into major – and costly – problems. Checking to make certain that equipment is properly calibrated, for instance, is a routine step in the quality-control process, as manufacturing machinery that is not monitored for the accuracy of its measurements will certainly lead to defective products. Almost all machinery will, over time, begin to degrade or, due to the pressures and frictions involved, require the replacement of or fine-tuning of components. Failure to monitor for such degradations constitutes a fundamental failure of the process. And this is where the human dynamic once again intervenes. Stopping the manufacturing or assembly processes because flaws have been detected can be very costly to a business operation, especially when that stoppage is the result of an unanticipated equipment failure. Additionally, identifying defective parts that are ready to be shipped, and deciding to destroy those flawed parts while manufacturing new ones with the concomitant delay in delivery schedules that involves, is a real serious matter. Customers dependent upon timely delivery of those parts don’t want to hear that defects were discovered necessitating a delay. Delivering defective parts, however, will result in a failure of the end product and civil and, depending upon the nature of the project, criminal liability can follow. The pressures to push the product out the door, however, can be sufficiently strong so as to influence the decision-making process. Again, an independent office or individual responsible for quality-control initiatives and their implementation can help prevent such disasters, albeit at the expense of the popularity of the individual(s) selected for that responsibility.
Decision-making processes are, needless to say, inherently human and, consequently, inherently flawed. Minimizing the prospects of failure, however, necessitates studious and honest approaches to those processes.