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:
- Defining and identifying the managerial problem
- Analyzing the problem
- Developing alternative solutions
- Selecting the best solution from the alternatives
- Implementing the decision
- 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.