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The classic decision-making model sets out the steps of managerial decision-making.

These are:

· Defining the problem.

· Identifying the stakeholders.

· Identifying alternative solutions.

· Evaluating alternative solutions.

· Making and implementing a decision.

Defining the Problem

The first step in decision-making is to clearly define the problem. Usually, there is a situation that requires a decision. Isn't this situation the problem? Not always. The apparent problem may be merely a partial and not entirely accurate view of the situation. You will have to find the real problem. Quite often, a problem will not show up as a problem in the early stages. It will grow silently and then show up in quite another place.

For example, if you receive a report that an employee is acting strangely, you are actually hearing about a symptom of a problem, not the problem itself. The employee may be stating that he or she is unhappy about his or her benefits package. Does this mean that there is a problem with the company's benefits package? Not necessarily. It is possible that the benefits plan is good but has not been effectively communicated to the employee. Or, it may be instead that the employee has a personal problem that is affecting his or her behavior at work. The solution must address the root cause or the problem behind the symptom.

As you define the problem, questions will come up. You may find that you need more information to understand all aspects of the problem. Determine what additional information you need and where you will get it to help clearly define the problem. This may entail questioning people for different perspectives of the problem, looking at a related problem to see how it came about and was resolved, or doing some specific research into codes or other guidelines that pertain to the problem, and more, until the root problem has been identified.

Identifying the Stakeholders

Any problem affects a certain number of people. The solution, too, affects these and possibly some other people. Before you can begin to work on the solution, you need to identify all the people who are affected by the problem and its solution. When you select a solution to the problem, you will need to take into account its effect on the various stakeholders.

Should stakeholders be involved in decision-making? Which ones should be involved and to what extent? Many stakeholders can contribute important insights and skills to the decision-making process. Also, some of them have a right-legal or not-to have a say in a decision that will affect their interests. Another reason to involve stakeholders in decision-making is that they are more likely to accept the decision they helped make. On the other hand, there may be so many diverse points of view that a consensual decision becomes impossible. Also, in time of emergency or crisis there may not be sufficient time to involve the relevant stakeholders.

You will need to find the golden mean between including too many and including too few. Judge, which stakeholders should participate in the decision-making process and to what extent. Some may only help define the problem or identify solutions and may not have anything to do with selecting the solution. Others may help implement the decision that has already been made. The most important contribution is from those who help choose a solution from among many, and even those who eliminate a solution. For example, selecting key staff to assist with solutions must include essential communication in two forms. First, a clearly written communication must be sent outlining the problem and the directed solution(s). This must be followed up with an in person meeting to further review and seek any questions or to clarify any outstanding issues not fully understood.

As you decide who should participate, you will also decide how they participate. You will want to speak with some individually, especially those who contribute technical or other specialist knowledge. Others may be involved best through their participation in a group or committee.

Identifying Alternative Solutions

A problem, whether simple or complex, rarely has one right solution. Most problems have two or more solutions. How many solutions you come up with may depend as much on your creativity as on the nature of the problem.

You need to generate a number of alternative solutions. You may quickly grab onto a solution that looks good. Don't stop there.

Generate alternatives by looking at the problem from the perspectives of different stakeholders. Take both micro and macro views of the problem. That is, look at the problem at the smallest level of detail, and then at the level of the organization, the industry, the community, and so on. Each point of view may suggest a different solution. Sometimes, just leaving things as they are is better than the available alternatives. For example, it may be preferable to not do anything and alienate one individual rather than implement a decision that alienates a group.

The decision-making model sets out five steps, but when applying the model you are likely to notice some overlap. For example, your solution must be tested verbally among key staff. Present a scenario verbally and then use your staff to participate as they were actually facing the problem while you apply the solution, which has been devised. This step is essential to present a real life opportunity for the effectiveness of the potential solution.

The solution you finally choose must be practical. Yet while brainstorming, you need to remain open to all suggestions. Make a practice of jotting down every idea that occurs to you. Even when an alternative seems unrealistic, even bizarre, at first glance, a workable solution may emerge from such an idea as you develop it.

Evaluating Alternative Solutions

Develop a set of criteria for evaluating the alternative solutions and choosing among them. Some criteria will come from the definition of the problem. Others may be implicit criteria for any decision, such as the decision being consistent with organizational strategy, or having the approval of all major stakeholders. Yet other criteria may have to do with practical considerations such as cost, time, or ease of implementation.

Once you select the criteria for evaluation, assign a score to each solution for each criterion. For example, some standard criteria are:

1 The quality of the result

2 The cost

3 The time taken to complete the job

In assigning numbers to the criteria, follow these simple but critical rules: the higher the quality, the higher the number; the higher the cost or time, the lower the number. The reason for this difference is due to the fact that we are developing a process where the highest numbers are best. So in this case, higher quality gets a higher number and lower cost gets a higher number.

So far, we have treated the three criteria as equally important. As a further refinement, you might want to rank the criteria in order of importance. When you compare alternatives, you will need to keep in mind the relative importance of different criteria, so to make the comparison more precise, assign a weight to each criterion, expressed either as a percentage or on a simple scale of 1 to 10.

Determine how each alternative score on each criterion. Multiply the scores by the weight you assigned to each criterion. When you add these numbers, you have a weighted sum that shows the value of each alternative. At the end of this exercise, one solution will emerge as the winner.

Notice that the two solutions seem equally good when you take simple ratings for the criteria. It is the weighted rating that shows one solution as better than another. If cost were more important than quality, would the choice of solution be different? Do the calculation and find the answer.

Does all this elaborate reasoning stand up to commonsense? You have gone deep into the problem and analyzed it in minute detail. It's time to step back and take a broad view. Test the best solution for feasibility. If the solution does not seem right, there may be a flaw in your evaluation criteria, and you may want to go back to the beginning and reconsider the initial ordering and weighting of criteria. The mathematical calculations are to help you in the process, not serve as a substitute for your managerial judgment. If things go south, you will not be able to blame your mathematical calculations for your poor decision.

Making and Implementing a Decision

You have identified the best solution to the problem. Now it's time to implement it. Finding the right solution does not automatically guarantee success. It has to be implemented effectively. Implementing the solution will usually involve more people than have taken part in the decision-making process. Effectively communicating the decision to all these people is critical to its success. You need to think about how they will perceive the decision. One tip is that a group decision often carries more weight than an individual decision, jokes about the functioning of committees notwithstanding.

No matter how long and hard you worked on the problem, someone looking at it for the first time may suggest a better solution or point out a flaw in your solution. Don't become so loyal to your own solution that you cannot accept a better one. President Abraham Lincoln was quoted as saying, "The sign of an intelligent man is the willingness to change his mind." However, when you are sure that your decision is right, stick to your guns. After all, you are the health care manager and the buck stops with you.