DECISION MAKING

DECISION MAKING

Decision making is part of everyone’s life and all of us have to make decisions every moment. Right from choosing what to wear to what to eat to where we live and work and extending to whom we marry, decisions are an integral part of our lives. In an organizational context, it is worthwhile to note that decision making needs:

• ·         The right kind of information,
• ·         The complete information and
• ·         The ability to synthesize and make sense of the information.

While the first two attributes depend on external sources, the ability to make informed decisions is a personality trait. Hence, successful administrators are those who can take into account the different viewpoints and divergent perspectives and arrive at the right decision.

The other aspect that relates to decision making in an organizational context is that there must be complete and accurate information made available to the decision maker. In Economics, there is a term called “asymmetries of information” that indicates how incomplete and insufficient information leads to poor decisions and wrong choices. What this concept means is that having partial information or faulty information often leads to “analysis paralysis” which is another term for poor decision making abilities. Finally, even with reliable and accurate information, the decision maker ought to have good problem solving skills and sharp decision making abilities to arrive at sound judgments regarding the everyday problems and issues.

The overriding rule in decision making is that the decision maker ought to have legitimacy and authority over the people who he or she is deciding upon. In other words, decision makers succeed only when their decisions are honored and followed by the people or groups that the decision impacts.

Decision-making is an integral part of modern administration. Essentially, Rational or sound decision making is taken as primary function of administration. Every administrator takes hundreds and hundreds of decisions subconsciously or consciously making it as the key component in the role of an administrator. Decisions play important roles as they determine organizational activities. A decision can be defined as a course of action purposely chosen from a set of alternatives to achieve organizational objectives or goals. Decision making process is continuous and indispensable component of managing any organization or business activities.

Definition of Decision Making

The meaning of decision in Latin is to ‘cut off’. This means that from all the available alternatives you choose one thing and then cut off from all the other alternatives. Due to this, the decision making process sometimes becomes very difficult. Choosing the right option from all the available alternatives is very hard to do.

Decision making process requires thinking process, time, efforts, resources, knowledge and past experiences. Thinking process plays an important role in decision making process because it allows you to judge each and every thing. Timing is also important.

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.

Trewatha & Newport defines decision making process as, “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 saturates all other activities affecting the organization.

Further, decision making process can be regarded as check and balance system that keeps the organization growing both in vertical and linear directions. It means that decision making process seeks a goal. The goals are pre-set objectives, establishment 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.

Theories on Decision Making

There are many theories of decision making but we will discuss the following:

1. Organizational Process Model

2. Rationality in Decision Making

Organizational Process Model

All organization follows rules, procedures & system. Decisions in organizations are made according to the procedures and systems that organizations have for example a centralized organization decisions will come from top done. In organization where authority is dispersed participative decisions will be made. So the processes and standard operating procedure (SOP) will determine the quality of decisions made.

Rationality in Decision Making

It is said that effective decision making must be rational. But what is rationality. When is a thinking person deciding rationally? People deciding rationally are attempting to reach goals in a systematic way.

They collect all:

•                     Relevant information,

•                     Analyze information,

•                     Evaluate and

•                     Make Choice

So these are 4 basic steps in making a rational decision. If we follow these steps we can make "best decision. When deciding about one alternative, administrators can use three basic approaches:

•                     Experience

•                     Experimentation

•                     Research and Analysis

Usually administrators use their experience and judgment to select an alternative. Experience and judgment is really reliance on the past.

The other method by which managers select alternatives is experimentation, i.e., managers would try an alternative and see its results.

The 3rd method is arriving at alternatives through researching and analysis.

Individual vs Administrative Organizational Decision Making

• An individual generally makes prompt decisions. While an organization is dominated by various people, making decision-making very time consuming. Moreover assembling group members consumes lot of time.
• Individuals do not escape responsibilities. They are accountable for their acts and performance. While in an organization it is not easy to hold any one person accountable for a wrong decision.
• Individual decision making saves time, money and energy as individuals make prompt and logical decisions generally. While organizational decision making involves lot of time, money and energy.

• An organization has potential of collecting more and full information compared to an individual while making decisions.
• An individual while making any decision uses his own intuition and views. While organization has many members, so many views and many approaches and hence better decision making.
• An organization discovers hidden talent and core competency of employees.
• An individual will not take into consideration every members interest. While an organization will take into account interest of all members of an organization.