Decision Processes: A Core Business Activity Supported by Information Systems
Decision-making is required in organizations on a daily basis. The decisions that are made can deal with sales, operations, finances, products, competition, employees and a whole host of other topics. Decisions can be short term, long term or emergency in nature. Organizational decisions can model or simulate the future while analyzing past or present performance. Technological advances in information systems provide large amounts of data to support decision-making as well as tools to analyze data in the context of specific problems and 'what-if' scenarios. Every organization has decision processes and protocols. Decisions are impacted by the quality of the decision-making process. The flexibility and inclusiveness of decision processes contribute to the effectiveness and usability of decisions as does the availability of high performance decision support systems. Organizations can use information systems to analyze and predict. Other critical factors include balancing objective and subjective data and collaboration among decision-makers. Decision-makers may use intuition and internal know-how along with performance data to arrive at a decision. There are many ways to use information and decision-making tools. Addressing the need for high quality decisions may cause organizations to make significant investments in information technology that can guide, support and improve internal decision-making processes.
Keywords Clinical Decision Support Systems; Collaboration; Creativity; Decision-Making; Decision Processes; Decision Support Systems; Group Decision Support Systems
It is important that organizations make good decisions. Decisions guide the organization to failure or success. Therefore, the organization needs to have a process in place that increases its chances of making good decisions. Decision activity in organizations can be complex and involved; answers to problems may not be simple or straightforward and may involve many different decision-makers. The organizational decision process is more complex than an individual decision because many types of data must be gathered from different sources and given to multiple decision makers.
Organizations can make good decisions by:
- Recognizing when routine, traditional practices of decision making need to be replaced with creative decision processes
- Encouraging collaboration rather than competitiveness in decision making
- Being adaptable in decision-making to better react to an ever-changing world
- Understanding how certain types of information systems (called decision support systems) can synthesize expertise in the field to assist decision makers. Decision support systems can guide, support and improve decision making.
Decision processes are the steps organizations go through to arrive at decisions. These processes vary by size and type of organization. Good decision making means working together with others for creative solutions. Roszkiewicz (2007, p. 13) says collaboration "refers to a rich and interactive relationship similar to the type we experience when brainstorming." An orderly decision process requires that decision makers work together or collaborate on ideas about what information to consider, how solutions to problems look and the decision process itself.
But how do we get rich, interactive relationships? Individual decision-makers may lack strong skills in collaboration and may view decision-making with others as competitive instead of collaborative. One answer may be decision support systems (DSS). Information systems that support decision making are called decision support systems. According to French and Turoff (2007, p.39) decision support systems (DSS) can be used with individuals or groups to assist decision-makers by "organizing and communicating results" so each collaborative team member can come to a "shared understanding." The shared understanding can be of the problem, strategy, solution or in retrospect when viewing a project that is completed.
Organizations need to make numerous decisions to survive. Decisions can be daily shifts directing operational activity, responses to problems or far-reaching and extensive charting of strategic directions. One by-product of having to make so many decisions is that decisions may be made based upon a certain history of success in creating solutions or because of habits and perceptions held by decision-makers. The process of making decisions this way results in a routine or traditional organizational practice which may not lead to a correct result. This means that the decision-making process becomes a traditional organizational practice, instead of a creative one. Once the decision process is set in an organization, it may be used over and over again even if it doesn't fit the current problem type. Frederickson (2006) notes that organizations can be more attached to traditional practices for decision processes and internal data than to industry best practices. He suggests that organizations work to incorporate industry best practices into decision processes for the greatest value and optimal decision-making results.
Organizations need to be adaptable in how they make decisions. Brown, Steyvers, & Hemmer (2007) found that decision-makers need to adjust the methods used to make decisions because the environment in which decisions are made in organizations is constantly changing. Therefore, a decision process that worked for a particular problem at a particular time may not be as effective under other conditions. Similarly, circumstances and conditions may change so rapidly and dramatically that any former decision processes are outdated.
Obviously, an organization's goal is to be profitable and productive. We have already discussed that organizations must sometimes break from the mode of traditional set decision-making for the sake of creativity, but creativity in decision-making must also be managed. The greater the innovation and creativity, the greater value that can be added to products and services that organizations produce. On the other hand, unmanaged creativity and innovation may interfere with decision-making processes and process management because both can interrupt the logical and orderly flow that would occur with traditional, rational decision-making. Elbanna and Child (2007) suggest a connection in research of strategic decision processes between the size of the organization and the likelihood of using traditional, rational processes instead of creative ones. Such research indicates that the larger the organization, the more likely that traditional decision-making will be a set practice.
Organizations also need to closely watch whether their decision makers use logic to make decisions or whether politics plays more of a role. Rajagopalan, Rasheed, & Datta (1993, p. 351) stated that decision processes in organizations can model two types. The first is a rational type where strategic decisions are based on logic. The second is a political or behavioral type that is based on "bargaining and negotiations among individuals and organizational subunits with conflicting perceptions, personal stakes and unequal power." Faulty decisions can occur simply because an individual or group has an unequal percentage yet persuasive amount of power. The organization needs to minimize the role of politics.
The Role of Decision Makers
Decision-makers assume several roles in the decision making process including analyzing information, making assumptions about the validity of information and setting the parameters in 'what-if' scenarios. Decision-making may put the decision-maker in the role of change agent and require management of expectations from those not involved in decision-making. The decision-maker must be cognizant of the need to include others while balancing external input. In addition, they must also perform the role of expert communicator with other decision-makers and to those outside of the decision-making team. Decision-makers must put results of decisions into context so that the information can be effectively used as input for other decisions and to re-evaluate and modify organizational decision processes.
Today's decision makers must have a global view when it comes to decision making. Stolarczyk (2007) notes the importance of decision-makers having a global view of the world, especially in manufacturing where organizations are likely to deal with suppliers from around the globe. The ability to use information technology related to global supply chains helps companies make "crucial and timely financial decisions" (Stolarczyk, 2007, p. 52).
The decision-maker may be placed in the unenviable role of determining whether a company has a future or not. Crucial decision-making can be supported by effective DSS. Stolarczyk quotes a supply chain and logistics report on Fortune 500 companies as stating that many companies feel the supply chain technology being used doesn't adequately support decision-making in "budgeting and cash flow planning." Some barriers to acquiring adequate systems have been the lack of focus on the global supply chain and the investment cost, according to Stolarczyk.
Kelly, Hutchins, & Morrison, (n.d., abstract) et al conducted an experiment to determine the value of DSS in tactical decision-making. They found that throughout the decision making process, DSS helped guide, support and improve decision making. The experiment used experienced decision-makers engaged in real-life scenarios and found that those using DSS had less communication about simple situational information because of the ability to get the same view of the situation from the DSS. DSS were able to get to the central issues faster and formulate what action was needed. Problems noted by Kelly et al. (p.1) were human issues related to the decision-makers' ability to remember information, difficulty in getting the group centered on the same information at the right time and biases among the decision-makers.
DSS was found to assist decision makers regarding decision bias problems. Decision bias problems include decision-makers continuing to hold to a specific opinion about risk or threat even when presented with new information that contradicted the decision-makers initial opinion (Kelly et al., p. 2). Decision-makers were also found to hold on to information that was not related to the situation in making judgments. The study showed that early in the scenario and through the middle of the scenario, decision-makers supported by DSS outperformed their counterparts without DSS in identifying critical issues of "greatest tactical interest." However, late in the scenario, decision-makers without the benefit of a DSS outperformed their counterparts in identifying critical issues (Kelly et al., p. 3). The authors postulated that these results indicate that the benefits of using a DSS wear off late in a scenario because critical issues are somewhat obvious by that time even without using a DSS. Early identification of the critical factors by the DSS group could also be due to the human tendency to stick to initial information as correct.
The study by Kelly et al. showed that the group using the DSS was less likely to react and suggest tactical action against threats based on ambiguous information. The authors felt that this was due to the ability of the DSS to help the group filter and interpret ambiguous information to a higher degree than the group without the DSS. When analyzing specific performance against tactical threats, the study found that the group using the DSS was better able to defend against these tactical threats than the group not using the DSS. This could be the result of team communication, in that the group using the DSS had a greater shared understanding of the initial threat information.
DSS was also found to be helpful in terms of communication. Kelly et al. (p.4), wanted to determine whether or not using a DSS affected how decisions are made about what action to take and when. The experiment analyzed the amount of verbal communication among the decision-making teams and found that fewer communications were initiated by the DSS team among themselves but slightly more when encountering external information. Kelly et al. examined the content of verbal communications to determine whether or not it was affected by a...
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