Businesses around the world are faced with different problems and these problems need solutions. To get the best solution, certain decisions need to be taken and the quality of the decision taken is determined by the different factors which include the following:
a) The information available to the decision-makers.
b)The competence of the decision makers in decision making.
Most times, experienced managers have almost all if not all the information they need to make certain decisions but going through the rigorous process of analyzing alternatives to come up with valid points to make a decision is where the real work is. This process is an important process in decision making to prevent making decisions that does not hold water.
Human beings generally make decisions based on LOGIC and EMOTION. Using logic means using a well-thought-out, factual and logical process is used to make a decision. Such decisions are usually based on data, information, assumptions, biases and the competence of the decision maker. Emotion on the other hand is when feeling or guts are used to make decisions. When a decision has to do with others, sympathy and empathy can play a big role. It should be noted that in decision making when logic goes up, Emotions comes down and vise versa. Using logic or Emotion is not bad, the context it is being used is what really matters. For example no one expects an aeronautic engineer to make certain decisions about building a plane on emotions; such decisions are made with almost one hundred percent logic. A Human Resource Manager on the other hand will have to use emotions and emotional intelligence a lot of times to make decisions.
Decision making are also guided by:
1. The objective of the decision: In real estate, there are different reasons why people buy properties. 2 out of these reasons are investment and prestige. A real estate investor might consider a house that is to be sold for one hundred million a bad buy because he will not be able to recoup his investment in fifteen years but a rich dude that loves the environment that the house is located might be willing to cough out such an amount because he considers staying in that location prestigious. The point is what seems like a bad deal for one person might be a perfect deal for another person, what makes it good or bad depends on the objective of the party involved.
2. The decision criteria: Decision criteria are principles, guidelines, or requirements that are used in the decision-making process. Decision criteria can be in the quantitative form or qualitative form. When it is in a qualitative form, the weighted scoring model of the decision matrix can be applied.
3. The risk apatite of the entity or person that benefits from the decision: The higher the risk the higher the return is the higher the risk the higher your chances of losing money. Cryptocurrency and treasury bills are two different ways of investment. The crypto to market is highly volatile while, some people consider it a form of investment that you should put in only the amount of money that you can afford to lose. The reward from cryptocurrency sometimes can be astronomical but so are your chances of losing money as well. Treasury bills on the other hand are considered safe havens for people whose appetite for risk is very low. A young guy with some money to spare can afford to invest his money in cryptocurrency, but the retired man cannot afford to put his gratuity money in the crypto market. Maybe a little of it but a wise choice will be to put the bulk of it in safe investment (T-Bills) then he can decide to put the proceeds in crypto.
…TO be continued.
ACT OF DISHONESTY