Decision-making in organisations

Fundamentals of decision theory and multi-criteria methods

The importance of taking the decision as an object of study can be seen daily, as we are constantly deciding, choosing and classifying. When we find our decisions are wrong, or are not taking into account some important elements that have been overlooked or forgotten, we realise the importance of studying formal processes to assist in decision-making.

Decision-making is the process that takes - directly or indirectly - a choice from at least one among different alternatives, all these being solutions to address a certain problem.

Some aspects related to decision-making comprise:

• the dimensions that influence the decision: importance, speed and degree of individuality (if the decision is made by a decision-maker or a group).
• the steps of a decision (structuring of the problem, analysis and synthesis).
• the participants of the decision (the decision-maker - who has the 'last word', the agent - who performs calculations and generates estimates, and the analyst - who uses the produced information, assesses the possibilities and suggests the decision-maker).

In order to stimulate reflection through answers to open questions, the steps proposed by Gomes (2007) were adapted questions grouped by stage: structuring of the problem, analysis and synthesis.

Questions to be performed by problem structuring in stages:

1. The decision we seek to solve the real problem.
2. Have we thought enough and rationally (unemotionally) about the problem?
3. Have we obtained all the relevant information?
4. Has the core issue for the decision already been identified?
5. Are we explicitly considering the moral and ethical commitments?
6. Was the set of feasible alternatives generated as widely as possible?
7. Have the quantitative and qualitative objectives of the decision been considered clearly?
8. For each objective, were the sets of decision-making criteria explained?
9. Are the consequences for each alternative using each criteria explicit? Is the probability of each outcome clear?
10. Problem Analysis: Are we using some analytical method with a multi-criteria approach?
11. After analysing the above, was a critique prepared considering both the decision-maker and the people who will suffer the consequences - direct and indirect – from the decision?
12. Synthesis: Were the critical recommendations objectively produced?