In business contexts, many decisions are made by a group instead of an individual. The same is true for other types of organization as well, such as nonprofits, educational institutions, and legislative bodies. Group decision-making has its advantages and its disadvantages. There are several other considerations also relevant to group decision-making, such as selecting members, defining decision rules, and choosing or developing a process to follow.
Successful group decision-making relies on a disciplined approach that proactively addresses common pitfalls. If an organization establishes a standard that defines how it will form groups and conduct its decision-making activities, it can reap the rewards of faster, higher-quality decisions, clearer expectations, less conflict, and greater cooperation.
While the Rational Model provides a straightforward decision-making aid that is easy to understand and implement, it is not well-suited, on its own, to highly complex decisions. A large number of decision criteria may create numerous tradeoff opportunities that are not easily comparable. Likewise, disparate performance expectations of alternatives may make the “best” choice elusive. In these situations, an additional evaluation tool is needed to ensure a rational decision.
The scenario described above requires Multi-criteria Analysis (MCA). One form of MCA is Analytic Hierarchy Process (AHP). In this installment of “Making Decisions,” application of AHP is explained and demonstrated via a common example – a purchasing decision to source a new production machine.
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