Conditions of Decision Making

A manager may have to make decision under following conditions: 

Conditions of Certainty 

Under this condition a decision-maker knows what will happen if he selects a particular alternative. For example, if you have three alternatives for a problem, namely X1, X2, X3, you know that likely outcome of three alternatives will be Y1, Y2, Y3 respectively. This is condition of certainty. Under this conditional errors in decision making are limited. Usually, rules are introduced to ensure certainty in actions of managers. 

Conditions of Risk 

In a rapidly changing environment conditions of certainty are rare. Therefore, managers have to estimate consequences of each alternatives. For example, if you have three alternatives X1, X2, X3 and you feel that chance for success of X1 are 50%, 25% for X2  and 25% for X3 This is a condition of risk. In this case a manager has to miniseries risk by making a suitable decision which is more likely to solve the problem. 

Conditions of Uncertainty 

Whenever a manager does not know probability of each alternative available to him, a condition of uncertainty exists. There are too many variables and unknown facts that can influence the decision. Therefore, a manager is unable to predict the outcome of his decision. This is condition of uncertainty. 

While evaluating alternatives, it should be kept in mind that implementation of decision should be possible in the organisation. If your alternative provides for a rational and good solution to the problem but it cannot be executed in company, such an alternative will not help the manager. Alternatives should be ranked in order of most desirable to least desirable. Next step is selection of best alternative which can solve the problem. In case the selected alternative is not able to solve the problem manager has to start decision making process again. It is necessary that decision should be accepted by people who have to execute it. If a decision is very good but team members are not willing to execute, it is not very effective decision. The last step is review of decision after implementation. Some criteria like problem-solving capacity of decision, time of implementation, errors in execution etc. can be useful for review of decisions.