Understanding Decision Making

The Oxford Dictionary defines Decision making “as the action of carrying out or carrying into effect". A decision may be defined as "a course of action which is consciously chosen from among a set of alternatives to achieve the desired objective. Decision making pervades all management action. Management effectiveness will reflect in the quality of decision making.

Characteristics of Decision making:

Decision making implies choice: For any business problem alternatives are available. These alternatives have to be considered and the best one selected for execution.

Continuous activity / process: Decision making is a continuous and dynamic process. It pervades all aspects
of an organization as persons running the business have to take decisions on various matters and it is a continuous process.

Mental and intellectual activity: Decision making requires knowledge, skills, experience and maturity.

Reliable information / feedback: Reliable information is critical for taking an effective decision. An efficient Management Information System (MIS) can assist in good decision-making.

Time consuming activity: As various aspects have to be carefully considered before taking a decision it can be a time-consuming activity.

Pervasive process: All managers across the organization have to take decisions on various matters under their jurisdiction.

Effective communication: Decisions taken have to be communicated to all concerned persons for suitable follow-up action.


Steps involved in Decision-making process:

Peter Drucker recommended a scientific method of decision making which involves the following six steps:

  1. Defining and identifying the managerial problem
  2. Analyzing the problem
  3. Developing alternative solutions
  4. Selecting the best solution from the alternatives
  5. Implementing the decision
  6. Getting feedback for follow up.

Management activities are just not possible without decision-making as it is an integral aspect of management process itself. However, the quality of decision-making should be always superior as faulty/irrational decisions are always dangerous.

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