Meaning and definition
Decision making is a process where by individuals select a course of action from the available alternatives to produce a desired result or attain a specific. Following are the various definition.
- According to Felix M. Lopes, “a decision represents a judgment, a final resolution of a conflict of needs, means or goals, and a commitment to action made in the face of uncertainty, complexity and even irrationality.”
- Mc Farland observes, a decision is an act of choice-wherein an executive form a conclusion about what must be done in a given situation. A decision represents a course of behaviour chosen from a number of possible alternatives.
- According to Theo Hamann, “a decision is a course of action chosen by the manage as the most effective means at his disposal for achieving goals and solving problems.
- In the words of George R. Torry, “Decision-making is the selection based on some criteria from two or more possible alternatives.”
- In the words of R.S. Dakar, “Decision making may be defined as selection based on some criteria of one behavior alternative from two or more possible alternatives. To decide means “to cut off” or in practical content, to come to a conclusion.”
Characteristics of Decision Making
A selection Process-
It is a choice making activity. Obviously, there cannot be any choice unless there are alternatives. If there are no alternatives, there cannot be any choice and hence there cannot by any decision making. However in real life there is no such problem for which alternatives do not exist. Even if there in one course of action available, the other course of action not to select that is always present. Decision making therefrom, implies existence of various alternatives and selecting the best one therefore.
An Intellectual process-
It is a mental process of conscious choice. It requires reflective thinking search and analysis of alternatives, diagnosis of problems and conscious selections of an alternative in a set of circumstances. Strategic decisions are always subjected to rigorous conceptualization, critical analysis and verification.
Result Oriented Process-
Decision making is a goal oriented or result oriented process. Decisions are always taken to achieve some goal or solve some problem. If goal is single, decision making is relatively a simple task. But when there is multiplicity of goals or there are conflicting goals or the problem is multi-dimensional, decision making becomes a very complex task.
Pervasive and Continuous Process-
Decision making is very pervasive process. It permeates through all management functions (planning) organizing, motivating, directing, controlling or coordinating), exists in every part of an organization (top middle or lower level) and deals with every possible subject. A manager has to make decisions on host of issues and it is difficult to find a managerial position where decision making does not take place. Then, it is an continuous activity. The life of a manager is a perpetual decision making activity.
Rational as well as Intuitive Process-
Although decision making is a rational process of objective analysis, reflective thinking and conscious choice, it leaves ample scope for originality, subjective judgement and imagination. Decision making cannot be completely quantified; nor it can always be rational based on reason. Many decisions have to be based on intuition, emotion of instincts.
Step in Decision-making Process
The step in the process of decision-making are briefly discussed below:
Identifying and defining the problem-
The first step in the decision making process is to identify the problem and defining it. This step involves mainly:
- Scanning stage involving monitoring the work situation for changing circumstances that may signal the emergence of a problem,
- Categorization stage attempting to categories the situation as a problem even though it may be difficult to specify the exact nature of the problem.
- Diagnosis stage involving gathering additional information and specifying both the nature and the causes of the problem. Without appropriate diagnosis, it is difficult to experience success in the decision process.
- The problem once identified must be defined and formulated. A written problem statement should be developed, describing as specifically as possible the nature and extent of the problem, when and where they occurred and what the underlying causes are thought to be; and how urgently the problem should be solved.
Collection of relevant information:
In order to determine the scope and the cause of the problem, some relevant information can be gathered internally or externally, depending on the needs of the situation. After the collection of information, it is stored, sorted out and interpreted so that it is presented to the decision maker in the form of information.
Analysis of the problem:
The collected information is subjected to a systematic in depth study. Depending on the type of problem, being faced, the information can be classified into four categories for further evaluation. These categories are:
- Facts: Facts are considered to be totally accurate information and are highly dependable for decision making purpose.
- Inference: It is a deduction about a situation based on circumstantial evidence. The stronger the supporting evidence, the stronger the inference and hence the closer the inference is the fact.
- Speculation: Speculation is subjective in nature and can only be constructed on the basis of certain clues. The speculative conclusions are not necessarily verifiable.
- Assumptions: These are the least reliable as far as the factual are mostly based upon personal lines of reasoning. A decision maker must sort out the relevant information into these categories. The degree of reliability of information reduces as we move from facts to assumptions.
Development of alternatives :
After the analysis of the problem, the next step in the decision-making process is to develop alternative solutions. The purpose of finding alternative solutions is to make the best decision after a careful consideration of the most desirable courses of action in the circumstances of the case. The practice of developing alternatives usually leads to higher quality solutions, particularly when the situation calls for creative and innovative ones. The development of alternatives can be facilitated though the use of certain principles. It is important to emphasize here the need to generate a number of alternatives for consideration during this phase of the decision making process.
Evaluation and selection of best alternative:
This step involves carefully considering the advantages and disadvantages of each alternative before choosing one of them. Each alternative should be evaluated systematically according to certain general criteria, such as feasibility, quality, acceptability cost and reversibility.
- Feasibility: This criterion refers to the extent to which an alternative can be accomplished within related organizational constraints such as time, budgets technology and policies.
- Quality: The quality criterion refers to the extent to which an alternative effectively solves the problem under consideration.
- Acceptability: This criterion refers to the degree to which the decision makers and other who will be affected by the implementation of the alternative are willing to support it.
- Costs: The costs criterion refers to both the resources levels required and the extent to which the alternative is likely to have undesirable side effects.
- Reversibility: This criterion refers to the extent to which the alternative can be reversed.
Implementation of the decision:
Implementation means putting the selected alternative into action and seeing it through to its completion. The process starts with assigning responsibilities to persons who will be involved in carrying out the decision. The possibility of any resistance to changes should be examined, specially if it effects or conflicts with personal values and personalities or group norms and objectives, if the decision is to be carried out by a group. Considerable thought must be given to implementing and the chosen solution. It is possible to make a Good decision in terms of the steps stated above and still have the process fail because of difficulties at this step. Successful implementation of chosen solution usually depends on two major factors; careful planning and sensitivity to those involved in the implementation and /or affected by it.
- Feedback: Managers need to monitor decision implementation must ensure that things are progressing as planned and that the problem that triggered the decision-making process has been resolved. If possible, a mechanism should be built into the process which would give periodic reports on the success of the implementation.
Significance of Decision-making
- Decision making plays very crucial role in the managerial process. As a matter of fact, a manager discharges all of his responsibilities through taking various decision.
- It is soul of managerial process and the life of a manager is perpetual decision making activity. In every organization, men in the managerial positions must decide on a host of issues: what products to make, what consumers to seek, what prices to charge, what production methods to use, what equipment to install, what persons to hire and what practices to follow. Decision making is the only vehicle for carrying managerial workload and discharging the managerial responsibilities.
- It is a pervasive activity. “Decision making permeates through all management exits in every part of enterprise and deals with every possible subject, “The core of managerial planning is decision making-selection of a course of action.
- The role of decision making in organising, directing and coordinating is likewise important. What ever a manager does, he does through decision making.
- Planning in Management- Importance, Nature, Characteristics etc.
- Planning- Process, Techniques & Limitations
- Goal Displacement & Goal Distortion
- Management by Objectives (M.B.O)- Process, Merits, Demerits etc.
- Mission- Definition, Purpose, Advantages & Disadvantages
- Vision- Definition, Characteristics, Purpose
- Goals- Meaning, Characteristics & Goal Displacement
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