Interpersonal SkillsLeadership Skills

Decision Making

Making decisions is an essential part of modern-day management. In essence, rational or sound decision making is regarded as one of the primary functions of management. Every manager makes hundreds of decisions in the subconscious or conscious thought, making it an essential element in the management role. The importance of decisions is that they affect both managerial and organizational actions. A decision can be described as a set of actions deliberately chosen from various options to meet the organizational or managerial goals or goals. Making decisions is ongoing and crucial in controlling any business or organizational operations. The decisions are taken to support the operations and ensure that the organization functions.

Estimated reading time: 12 minutes

Decision Making: Key Components

The process of making decisions in management includes three parts,
Alternatives: You have two or even more possibilities. The process of making a decision is to choose the most effective option.
Choice: The process of making a decision involves making the right choice. It is the process of choosing the most efficient solution to the issue.
Objectives or Problems: The process of making decisions is objective-based. It is used to accomplish a goal or to resolve a problem.

The decisions are taken at every management level to ensure that business or organizational objectives are reached. Furthermore, these decisions make the core of fundamental values that every business implements to ensure optimal development and adaptability of offered products and services.

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Therefore, the decision-making process is further illustrated within the context of these definitions.

What is Decision Making?

In the Oxford Advanced Learner’s Dictionary, “decision-making” means deciding something important, particularly within a group of individuals or within an organization.

Trewartha & Newport defines the it as follows ” Decision-making involves choosing a decision from two or more possibilities to find the best solution to a particular issue.”

Based on the above definitions, it is a process of consultation carried out by a group of professionals to ensure the smooth performance of any company. It is, therefore, an ongoing and dynamic process that is a part of all other activities that are related to the business. Since it is a continuous process, the decision-making process is essential to the operation of an organization. Because intellectuals’ brains are involved in decision-making, it demands an understanding of science and expertise, experience, and mental maturity.

Furthermore, the decision-making process is an equilibrium system that allows the company to continue expanding in both horizontal and linear directions. It is a way of saying that the decision-making process aims to achieve a final goal. The objectives are set goals for business, the company’s mission statements, and the company’s vision. The company will face many difficulties in operational, administrative wings, marketing, and operational areas to accomplish these goals. A thorough process resolves these issues. It is not a final one because there are always new challenges to address. Once one issue is resolved, another comes up, and so on, meaning that making decisions, as we said earlier, is constantly changing and evolving.

6 Steps of the Making Decisions

Involves many steps that need to be carried out rationally. This is considered a logical or scientific decision-making procedure’ that is lengthy and time-consuming. A lengthy process needs to be followed to make rational/scientific/result-oriented decisions. The process lays out rules and guidelines on how a decision can be taken or taken. This requires several steps to be that are logically organized. Peter Drucker first strongly advocated the science-based method of making decisions in his well-known book, ‘The Practice and Management, in the year 1955. Drucker advocated the method of scientific decision-making, which, in his view, is comprised of the following steps:

  1. Finding the management issue,
  2. Analyzing the issue/problem in detail,
  3. Finding alternative solutions,
  4. The best option from the available alternatives,
  5. Making the decision actionable 
  6. Ensuring feedback for follow-up.
Decision Making

Let’s deep dive into each:

  1. Identifying the root cause: A well-defined problem is indeed a problem that is not solved. Data relevant to the issue must be collected to make a critical analysis of the issue possible. It is essential to distinguish between the cause and symptoms that could obscure the problem. In short, the manager must search for the “critical element in the workplace. It is the place where the decision is made. When identifying the root of the issue, the supervisor must consider the causes and figure out if they can be controlled or in control.
  2. Analyzing the problem delineating the issue: The next step in making a decision is to study the issue in detail. This is essential to categorize the issue to determine who should make the final decision and who should be informed. The four elements that are listed below should be taken into consideration:
    1. Future-proof decision
    2. The extent of its effects,
    3. Quantity of qualitative factors that are involved, as well as
    4. The uniqueness of choice.
  3. Finding alternative solutions: Once you have identified the issue and analyzed its characteristics, the following step will gather the pertinent information or details on the problem. There is a flood of information in the world of business because of advances in technology and information. All available data must be utilized to the fullest extent for the investigation of the issue. This will help to clarify every aspect of the issue. After the issue has been identified and determined based on relevant data, the leader is required to identify alternative strategies that could be utilized to solve the problem. Only feasible alternatives should be thought of. It is equally crucial to think about the constraints of time and money and psychological obstacles that can limit the possibilities. If needed, methods of group participation can be utilized when creating alternative solutions since relying on one solution isn’t a good idea.
  4. Finding the Most Effective Solution: After looking at alternatives, the next step in deciding is to choose the one that appears to be the most rational in solving the issue. The solution chosen should be shared with those likely to be affected by the decision. Acceptance of the choice by the group members is desired and beneficial for the effective implementation of the decision.
  5. Converting Decisions into Action: Once you have made the most appropriate option following the selection, it is time to turn the decision into action. Without this action, the decision would be merely a statement with good intentions. In this instance, the manager needs to translate decisions into ‘they by directing his staff. To do this, subordinates must be treated with confidence and confident about the accuracy of choice. The manager must then follow up to ensure the decision is made.
  6. Ensuring Feedback: Feedback is the final stage in making a decision. In this case, the manager needs to make arrangements to provide feedback, constantly evaluating the actual progress against expectations. This is similar to monitoring the efficacy of follow-up actions. Feedback can take the form of organized data or reports and personal observations. Feedback is required to decide if the choice is previously taken and must be carried out or modified in changing circumstances.

Each step of making decisions is crucial and requires proper consideration by the managers. This helps in making accurate decisions. The importance of decision-making is that it aids in managing the entire process. Management tasks are not feasible without the ability to make decisions because it is an essential component of the management process. However, the quality of decisions must always be superior because faulty/insane decision-making is always risky.

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Many advantages of making decision (already described) are easily accessible if the entire decision-making process is carried out properly. The need for decisions is often a part of an organization’s management processes. But, these decisions must be timely, appropriate, and logical. Decisions that are rushed or faulty are dangerous. This is a clear indication that the benefits of making decision can be accessed only when scientifically-based decision-making is made by taking the decision-making process correctly.

To make rational, accurate decisions, consideration should be given to these factors:

  1. Identification of a broad range of possible actions, i.e., choices. This gives a broad range of options for the best option for follow-up actions.
  2. Careful analysis of the cost and potential risks of positive and negative effects that may result from every change.
  3. It is important to find relevant information that will aid in analyzing the options. This is essential since the decision’s quality is contingent on the quality of the information used to make the decision.
  4. Review both the negative and positive impacts of every possible option before making a decision on the best option.
  5. Plans should be developed to implement the plan of action. This would include contingency plans if various known risks were to occur.
  6. It is important to bring creativity and reason when making the final decision.
Making Decision: Is about handling 6 Ms

Decision-making is a way to use the resources available to achieve the company’s goals. The resources available include the six Ms, i.e., Material, Money, Men, Methods, Machines, and Markets. Managers must make the right decisions for all six Ms.

This will lead to more efficient use of the resources.

Specifics of Decision Making – 11 Characteristics of Decision Making

  1. The process of making a decision involves a choice: Making a choice is choosing between two or more possible ways of doing things. It is also the process of selecting one option from the numerous options. In the event of any business challenge, there are alternative solutions accessible. Managers must look at these options and choose the most effective one for implementation. Planners and decision-makers should consider the context and decide on the most feasible alternative strategy to tackle the business issue efficiently. It is true that “making decision is essentially deciding between alternatives.” In making decisions, many options must be evaluated critically, and the most suitable one to be decided. In this case, the business environment requires careful analysis. The choice made could be accurate, or it may not be the correct choice. The decision will be made soon, based on the results of the previous decision. The process is the act of deciding between alternatives (two or greater) that are offered. Furthermore, while making a decision, data is gathered, and alternative solutions are considered and evaluated to determine the best option alternatives. Each issue can be addressed using different approaches. There are various options, and the decision-maker must choose the option that is the most suitable for his needs. This suggests that decision-making is basically/fundamentally choosing between the alternatives. There are a variety of alternatives available, including multiple. The best one should be chosen from these alternatives to be used in actual usage. The manager must have the capacity to choose the most suitable option. The advantages of well-informed decision-making can only be realized when the most effective option is chosen for use.
  2. Continuous process: Making decision is a continuous and ever-changing process. It runs through all activities of the organization. Managers must make decisions regarding various administrative and policy matters, considering it’s a continuous task in business management.
  3. Decision-making is both a mental and intellectual process that requires knowledge, abilities, expertise, experience, and maturity on the leader/manager. It is fundamentally an individual activity.
  4. Based on reliable information/feedback: Good decisions are always based on reliable information. Quality of decisions at every level of the Organization can be enhanced with the help of an effective and efficient Management Information System (MIS).
  5. Goal-oriented decision-making seeks to provide an answer to a specific issue or difficulty for the business unit. It is a goal-oriented process and offers solutions to issues that a business entity faces.
  6. It’s a means, not the final destination: The purpose of decision-making is to resolve an issue or to achieve a goal/objective and not the goal by itself.
  7. Specific problem to be solved: Making decisions is not the same as problem-solving, but it is rooted in an issue in and of itself.
  8. It can be a long-lasting process since numerous aspects require careful consideration before taking a final decision. Decision-makers must take a variety of actions. Making a decision is an extremely time-consuming task.
  9. Effective communication is required: All parties concerned should communicate the decision for appropriate follow-up actions. If they’re not shared with the relevant parties, the decision will remain in writing. Actions that follow will not be feasible in the absence of efficient communication.
  10. Decision-making process that is all-encompassing: It is everywhere. That means that managers at all levels need to make decisions regarding matters that fall relevant to their area of expertise.
  11. A responsible job: Making decisions is a job that requires responsibility since mistakes can be expensive for the Organization. Decision-makers should be mature, well-informed, skilled, and well-informed with their decision-making approach. Making decisions shouldn’t be seen as a routine or haphazard activity. It’s a delicate and important job.
Relationship between Planning and Decision-making

There is a close connection between decision-making and planning, and it is the basis of all management processes. Decision-making is a specific kind of planning. A decision is a form of plan that involves the commitment of resources to achieve an objective.

In the words of Peter Drucker, it is the top management who is accountable for the strategic decisions, including the goals of the business, capital expenditures and operational decisions like training of employees. Nothing could be achieved without managerial decision-making, and the resources would be inactive and useless. The management decisions need to be made to the most accurate degree possible. To achieve this, scientific decisions are essential.

Benefits of Making Decisions

  1. The decision-making process is the main task of management. The duties of management are only fulfilled when top management makes strategic decisions. Without decisions, actions are impossible, and the resources won’t be utilized. Therefore, it is the main job of management.
  2. Decision-making is a key element in the management process that provides an ideal foundation for the primary management task known as planning. Planning provides a concrete basis for broad business decisions made by top management. Additionally, it is essential when performing other managerial tasks like organizing, staffing, coordination, and coordinating.
  3. Decision-making is a continual management function. Managers at all levels have to make decisions concerning their responsibilities. Following-up actions are not feasible until decisions are made.
  4. It is vital to make decisions to tackle new challenges and problems. Decisions must be made regularly when new issues, challenges, and obstacles arise before the business begins. This could be because of shifts in an external setting. The company could introduce new products, new competitors could enter the market, and government policies might alter. All of this can result in changes in the surrounding environment of the business unit. Changes in the environment can cause new challenges, and choices are required.
  5. Making decisions is a difficult and important job. Managers must make fast and precise decisions when performing their responsibilities. They are paid based on their expertise, maturity, and capability to make decisions. Management functions are only possible when appropriate decisions are taken. Properly made decisions can lead to growth, while incorrect decisions can cause the loss of the business unit.

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Carlena McCandless

📍 Crafton, PA Corporate Coach, Specializing in Corporate Training Exercises and Games 🖋️ Head Writer and Editor with an MBA… More »

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