Decision Making
Meaning of decision making
Decision-making is the process of selecting the
best of the various alternatives. It is the act of making a choice. There are so many alternatives in the organization and the
departments. Decision-making is defined as the selection of the choice of a better alternative. Before making any decisions, all alternatives with known advantages and disadvantages should be evaluated. Help to make the best decisions. It is also one of the important functions of management.
Without other management functions such as planning, organizing, directing, controlling, personnel cannot be directed because, in this management function, the decision is very important. According to Stephen P. Robbins, "decision making is defined as selecting a preferred course of action from two or more alternatives."
Importance of decision making
1.
Implementation
of managerial function:
Without decision making, it is not possible to perform various management functions such as planning, organizing, directing, controlling, hiring
staff. In other words, when an employee does this,
they get the job done through the decision-making function. We can therefore say that the decision is an important element in implementing the managerial function.
2.
Pervasiveness
of decision making:
the decision is made in all
managerial activities and in all functions of the organization. It must be
taken by all staff. Without decision making any kind of function is not
possible. So it is pervasive.
3.
Evaluation of managerial performance:
Decisions can assess managerial performance. When the decision is correct, it means the manager is skilled, capable, and efficient. When the decision is wrong, it means the manager is disqualified. Thus, the decision-making process evaluates managerial performance.
4.
Helpful in planning and policies:
Any policy or plan is established by decision-making. Without decision-making, no plan or policy is executed. In the process of developing plans, appropriate decisions have to be made from many alternatives. Therefore, decision-making is an important process that is useful in planning.
5.
Selecting
the best alternatives:
Decision-making is the process of selecting the best alternatives. It is
necessary for every organization because there are many alternatives. So
decision-makers evaluate various advantages and disadvantages of every
alternative and select the best alternative.
6.
Successful;
operation of the business:
Every individual, department, and
organization make the decisions. In this competitive world; the organization can
exist when the correct and appropriate decisions are made. Therefore correct
decisions help in the successful operation of the business.
Steps in decision making
1.
Identification
of problems:
the first step of decision-making
is the identification of problems. First of all, managers must identify the
problem. The problem has to be found and defined. Symptoms are identified and
problems should be judged, symptoms are not problems. They are warning signs of
problems. So, managers should search for symptoms for the identification of
problems. Such symptoms can be falling in sales, profit, etc. It is said that
problem identified is half solved is the identification of the problem should be
effective.
2.
Analysis
of the problem:
after the identification of problems, the problem should be analyzed by the
decision-maker. It is the assembly of fact and clarifying it. Relevant
information must be collected and analyzed according to the complexity and
nature of the problems.
3.
Developing
the alternative solution:
after identification and analysis
of problems, different probable solutions have to be developed which is known as
developing the alternative solutions. there may be many alternative past experiences,
expert opinions, discussions, etc which may be helpful to develop the alternative
4.
Evaluation
of best alternative:
after developing the
alternative solution evaluation of the best alternative is done. It is determined
that which alternative has how many advantages and disadvantages. in other
words, alternatives are evaluated in so many factors like cost factors,
risk, benefits, facilities, etc., therefore, it is very important
5.
Selection
of best alternative:
after evaluating the alternative, the
best alternative is to be selected from the various alternatives. After developing
alternatives, the managers should taste each of them by imagining things that he
has already put in effect. He should try to foresee the desirable consequences
of adopting each alternative. It is done for the best selection. therefore it is
very important
6.
Implementation
of best alternative:
after selection of the finest
alternative, it must be used in the organization effectively. The effectiveness of
decisions in achieving the desired goals depends upon its implementation. It
they are not implemented effectively then the best results can’t be obtained.
Therefore the proper implementation of the best alternative is necessary.
7.
Review
of implementation: it is the
last step of the decision-making process. When the implementation of the best
alternative is reviewed, the process of decision-making is finished. The result
of implementation should be monitored and evaluated through which effectiveness
can be measured.
Types of decision making
1.
Programmed
and nonprogrammed decisions:
Programmed decisions are those
which are normally repetitive in nature and are taken as routine jobs and
responsibilities. These types of decisions are made by middle-level management
in accordance with some policies, rules, and procedures. They have a short-term
impact. For example: – granting leave to an employee, purchasing office
materials, etc. nonprogrammed decisions are non-repetitively taken by top
executives. They need to collect data and analyze then and forecast the
strategic plans
2.
Major
and minor decisions:
among different decisions, some decisions are considerably more important than others and are prioritized.
They are called major decisions. For example, replacement of man by machine,
diversification of product, etc. contrary to that, some of the remaining
decisions are considerably less important than others and are not so
prioritized. They are minor decisions. For example, store of raw materials, etc.
3.
Routine
and strategic decisions:
Routine decisions are those decisions
that are considered tactical decisions. They are taken frequently to
achieve a high degree of efficiency in organizational activities. For
example, parking facilities, lighting, and canteen, etc. strategic decisions are
those which are related to lowering the prices of products, changing the
product, etc. they take more funds and degrees of partials.
4.
Organizational and
personal decision:
The organizational decision is taken by top executives. For official
purposes. They affect the organizational activities directly. Authority is also
delegated. Personal decisions are a concern to an employee. The executives
whenever takes the decisions personally that is known as personal decisions
5.
Individual
and group decisions:
When a single employee is involved in
decision making it is called individual decision. They are taken by ole
proprietor when the problem is of routine nature. On the other hand, when the
decision is of the group taken in a large organization where important and
strategic decisions are taken it is a group decision
6.
Policy
and operating decisions:
Policy decisions are taken by top-level
management to change the rules, procedures, organizational structure, etc and
they have a long-term effect. Operational decisions are taken by low-level
management which have short-term effects and which affect the day-to-day
operation of the organization.
