What is decision making?
According
to the Oxford Advanced Learner’s Dictionary the term decision making means –
the process of deciding about something important, especially in a group of
people or in an organization. Decision-making
involves the selection of a course of action from among two or more possible
alternatives in order to arrive at a solution for a given problem.
to the Oxford Advanced Learner’s Dictionary the term decision making means –
the process of deciding about something important, especially in a group of
people or in an organization. Decision-making
involves the selection of a course of action from among two or more possible
alternatives in order to arrive at a solution for a given problem.
As
evidenced by the foregone definitions, decision making process is a
consultative affair done by a comity of professionals to drive better
functioning of any organization. Thereby, it is a continuous and dynamic
activity that pervades all other activities pertaining to the organization.
Since it is an ongoing activity, decision making process plays vital importance
in the functioning of an organization. Since intellectual minds are involved in
the process of decision making, it requires solid scientific knowledge coupled
with skills and experience in addition to mental maturity.
evidenced by the foregone definitions, decision making process is a
consultative affair done by a comity of professionals to drive better
functioning of any organization. Thereby, it is a continuous and dynamic
activity that pervades all other activities pertaining to the organization.
Since it is an ongoing activity, decision making process plays vital importance
in the functioning of an organization. Since intellectual minds are involved in
the process of decision making, it requires solid scientific knowledge coupled
with skills and experience in addition to mental maturity.
Further, decision making process can be regarded as
check and balance system that keeps the organisation growing both in vertical
and linear directions. It means that decision making process seeks a
goal. The goals are pre-set business objectives, company missions and its
vision. To achieve these goals, company may face lot of obstacles in
administrative, operational, marketing wings and operational domains. Such
problems are sorted out through comprehensive decision making process. No
decision comes as end in itself, since in may evolve new problems to solve.
When one problem is solved another arises and so on, such that decision making
process, as said earlier, is a continuous and dynamic.
check and balance system that keeps the organisation growing both in vertical
and linear directions. It means that decision making process seeks a
goal. The goals are pre-set business objectives, company missions and its
vision. To achieve these goals, company may face lot of obstacles in
administrative, operational, marketing wings and operational domains. Such
problems are sorted out through comprehensive decision making process. No
decision comes as end in itself, since in may evolve new problems to solve.
When one problem is solved another arises and so on, such that decision making
process, as said earlier, is a continuous and dynamic.
Decision making process
Decision
making is the process of making choices by identifying a decision, gathering
information, and assessing alternative resolutions.
making is the process of making choices by identifying a decision, gathering
information, and assessing alternative resolutions.
Using
a step-by-step decision-making process can help you make more deliberate,
thoughtful decisions by organizing relevant information and defining
alternatives. This approach increases the chances that you will choose the most
satisfying alternative possible.
a step-by-step decision-making process can help you make more deliberate,
thoughtful decisions by organizing relevant information and defining
alternatives. This approach increases the chances that you will choose the most
satisfying alternative possible.
Step 1: Identify the decision
You
realize that you need to make a decision. Try to clearly define the nature of
the decision you must make. This first step is very important.
realize that you need to make a decision. Try to clearly define the nature of
the decision you must make. This first step is very important.
Step 2: Gather relevant
information
Collect
some pertinent information before you make your decision: what information is
needed, the best sources of information, and how to get it. This step involves
both internal and external “work.” Some information is internal: you’ll seek it
through a process of self-assessment. Other information is external: you’ll
find it online, in books, from other people, and from other sources.
some pertinent information before you make your decision: what information is
needed, the best sources of information, and how to get it. This step involves
both internal and external “work.” Some information is internal: you’ll seek it
through a process of self-assessment. Other information is external: you’ll
find it online, in books, from other people, and from other sources.
Step 3: Identify the alternatives
As
you collect information, you will probably identify several possible paths of
action, or alternatives. You can also use your imagination and additional
information to construct new alternatives. In this step, you will list all
possible and desirable alternatives.
you collect information, you will probably identify several possible paths of
action, or alternatives. You can also use your imagination and additional
information to construct new alternatives. In this step, you will list all
possible and desirable alternatives.
Step 4: Weigh the evidence
Draw
on your information and emotions to imagine what it would be like if you
carried out each of the alternatives to the end. Evaluate whether the need
identified in Step 1 would be met or resolved through the use of each
alternative. As you go through this difficult internal process, you’ll begin to
favor certain alternatives: those that seem to have a higher potential for
reaching your goal. Finally, place the alternatives in a priority order, based
upon your own value system.
on your information and emotions to imagine what it would be like if you
carried out each of the alternatives to the end. Evaluate whether the need
identified in Step 1 would be met or resolved through the use of each
alternative. As you go through this difficult internal process, you’ll begin to
favor certain alternatives: those that seem to have a higher potential for
reaching your goal. Finally, place the alternatives in a priority order, based
upon your own value system.
Step 5: Choose among alternatives
Once
you have weighed all the evidence, you are ready to select the alternative that
seems to be best one for you. You may even choose a combination of
alternatives. Your choice in Step 5 may very likely be the same or similar to
the alternative you placed at the top of your list at the end of Step 4.
you have weighed all the evidence, you are ready to select the alternative that
seems to be best one for you. You may even choose a combination of
alternatives. Your choice in Step 5 may very likely be the same or similar to
the alternative you placed at the top of your list at the end of Step 4.
Step 6: Take action
You’re
now ready to take some positive action by beginning to implement the
alternative you chose in Step 5.
now ready to take some positive action by beginning to implement the
alternative you chose in Step 5.
Step 7: Review your decision &
its consequences
In
this final step, consider the results of your decision and evaluate whether or
not it has resolved the need you identified in Step 1. If the decision has not
met the identified need, you may want to repeat certain steps of the process to
make a new decision. For example, you might want to gather more detailed or
somewhat different information or explore additional alternatives.
this final step, consider the results of your decision and evaluate whether or
not it has resolved the need you identified in Step 1. If the decision has not
met the identified need, you may want to repeat certain steps of the process to
make a new decision. For example, you might want to gather more detailed or
somewhat different information or explore additional alternatives.
Types of decision in business organisation
The following are the main types of decisions every
organization need to take:
organization need to take:
1. Programmed and non-programmed decisions:
Programmed
decisions are concerned with the problems of repetitive nature or routine type
matters. A standard procedure is followed for tackling such problems. These
decisions are taken generally by lower level managers. Decisions of this type
may pertain to e.g. purchase of raw material, granting leave to an employee and
supply of goods and implements to the employees, etc. Non-programmed decisions
relate to difficult situations for which there is no easy solution. These
matters are very important for the organisation. For example, opening of a new
branch of the organisation or a large number of employees absenting from the
organisation or introducing new product in the market, etc., are the decisions
which are normally taken at the higher level.
decisions are concerned with the problems of repetitive nature or routine type
matters. A standard procedure is followed for tackling such problems. These
decisions are taken generally by lower level managers. Decisions of this type
may pertain to e.g. purchase of raw material, granting leave to an employee and
supply of goods and implements to the employees, etc. Non-programmed decisions
relate to difficult situations for which there is no easy solution. These
matters are very important for the organisation. For example, opening of a new
branch of the organisation or a large number of employees absenting from the
organisation or introducing new product in the market, etc., are the decisions
which are normally taken at the higher level.
2. Routine and strategic decisions:
Routine
decisions are related to the general functioning of the organisation. They do
not require much evaluation and analysis and can be taken quickly. Ample powers
are delegated to lower ranks to take these decisions within the broad policy
structure of the organisation. Strategic decisions are important which affect
objectives, organisational goals and other important policy matters. These
decisions usually involve huge investments or funds. These are non-repetitive
in nature and are taken after careful analysis and evaluation of many
alternatives. These decisions are taken at the higher level of management.
decisions are related to the general functioning of the organisation. They do
not require much evaluation and analysis and can be taken quickly. Ample powers
are delegated to lower ranks to take these decisions within the broad policy
structure of the organisation. Strategic decisions are important which affect
objectives, organisational goals and other important policy matters. These
decisions usually involve huge investments or funds. These are non-repetitive
in nature and are taken after careful analysis and evaluation of many
alternatives. These decisions are taken at the higher level of management.
3. Tactical (Policy) and operational decisions:
Decisions
pertaining to various policy matters of the organisation are policy decisions.
These are taken by the top management and have long term impact on the
functioning of the concern. For example, decisions regarding location of plant,
volume of production and channels of distribution (Tactical) policies, etc. are
policy decisions. Operating decisions relate to day-to-day functioning or
operations of business. Middle and lower level managers take these decisions. An
example may be taken to distinguish these decisions. Decisions concerning
payment of bonus to employees are a policy decision. On the other hand if bonus
is to be given to the employees, calculation of bonus in respect of each
employee is an operating decision.
pertaining to various policy matters of the organisation are policy decisions.
These are taken by the top management and have long term impact on the
functioning of the concern. For example, decisions regarding location of plant,
volume of production and channels of distribution (Tactical) policies, etc. are
policy decisions. Operating decisions relate to day-to-day functioning or
operations of business. Middle and lower level managers take these decisions. An
example may be taken to distinguish these decisions. Decisions concerning
payment of bonus to employees are a policy decision. On the other hand if bonus
is to be given to the employees, calculation of bonus in respect of each
employee is an operating decision.
4. Organisational and personal decisions:
When
an individual takes decision as an executive in the official capacity, it is
known as organisational decision. If decision is taken by the executive in the
personal capacity (thereby affecting his personal life), it is known as
personal decision. Sometimes these decisions may affect functioning of the
organisation also. For example, if an executive leaves the organisation, it may
affect the organisation. The authority of taking organizational decisions may
be delegated, whereas personal decisions cannot be delegated.
an individual takes decision as an executive in the official capacity, it is
known as organisational decision. If decision is taken by the executive in the
personal capacity (thereby affecting his personal life), it is known as
personal decision. Sometimes these decisions may affect functioning of the
organisation also. For example, if an executive leaves the organisation, it may
affect the organisation. The authority of taking organizational decisions may
be delegated, whereas personal decisions cannot be delegated.
5. Major and minor decisions:
Another
classification of decisions is major and minor. Decision pertaining to purchase
of new factory premises is a major decision. Major decisions are taken by top
management. Purchase of office stationery is a minor decision which can be
taken by office superintendent.
classification of decisions is major and minor. Decision pertaining to purchase
of new factory premises is a major decision. Major decisions are taken by top
management. Purchase of office stationery is a minor decision which can be
taken by office superintendent.
6. Individual and group decisions:
When
the decision is taken by a single individual, it is known as individual
decision. Usually routine type decisions are taken by individuals within the
broad policy framework of the organisation.
the decision is taken by a single individual, it is known as individual
decision. Usually routine type decisions are taken by individuals within the
broad policy framework of the organisation.
References
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Daniel; Tversky,
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