Decision Making

Meaning and Concept of Decision-making

Decision-making is the process of identifying and selecting a course of action, out of many alternatives, to solve a specific problem. It is a must to run organizational performance smoothly and to gain defined objectives. According to Stones, “Decision-making is the process of identifying and selecting a course of action to solve a specific problem”. Therefore, decision-making is the process of solving problem by choosing a specific course of action from among various alternatives. It removes barriers and interruption in function. The success of an organization depends upon the decision making ability of the manager.

Nature/Features of Decision-making

The main features of decision-making are

1. selective process,
2. human and rational process,
3. dynamic process,
4. goal-oriented process,
5. continuous process,
6. freedom to decision-maker,
7. positive or negative impact

Importance of Decision-making

Decision-making is useful for the successful operation all the activities of the organization. All the managerial functions such as planning, organizing directing and controlling are determined by the decision. Some points of importance of decision-making are

1. pervasive function,
2. indispensable components,
3. evaluation of managerial function,
4. selection of best alternative,
5. establishment of plans and policies,
6. successful operation of business.

Steps of Decision-making

Decision-making process involves a series of inter-related steps. Managers have to follow the steps which include

1. identification of problems,
2. analysis of problems,
3. development of alternatives,
4. evaluation of alternatives,
5. selection of best alternatives,
6. implementation of alternatives and
7. review of implementation.

Types of Decision-making

The following are the main types of decision-making:

1. Programmed and non-programmed decisions: Programmed decision is needed for repetitive or regular nature of problems. It is also known as readymade decision. Non-programmed decision is needed for new or complex type of problems. For such decision it is necessary to make detail study of the problem and its al solutions before coming to a final course of action.
2. Routine and basic decision: Routine decisions are related to the day-to-day operation of the organization. Such decisions are taken by lower-level managers in prompt manner and also implemented in the similar way. Basic decisions are necessary for long run survival and growth of business of the organization. Top level management is responsible for such type of decisions.
3. Organizational and personal decisions: Organizational decision is the formal decision taken by considering the goals of the organization. Personal decision is the informal decision taken by considering personal interest.
4. Individual and group decisions: In individual decisions, a single person is involved in decision-making process like general manager, departmental manager etc. In group decisions, a group of persons are involved in decision-making process like board of directors, partners etc.
5. Policy and operational decisions: Policy decisions are taken by the top-level management by considering long-term impact on organizational performance Operational decisions are taken by lower level managers by considering day to day function of the organization.