Decision Making-Meaning-Definition-Features-Steps-Types

DECISION-MAKING- MEANING

A decision is an act of selection or choice of one action from several alternatives.

DEFINITIONS

George Terry defines decision-making “as the selection of one behavior alternative
from two or more possible alternatives.”

According to P. F. Drucker – “Whatever a manager does he does through making

decisions.”

According to D. E. Mcfarland: “A decision is an act of choice wherein an executive

forms a conclusion about what must be done in a given situation. A decision
represents behavior chosen from a number of alternatives.”

FEATURES OR CHARACTERISTICS OF DECISION-MAKING

From definitions and elements we can draw the following important features of
managerial decisions:

1. Rational Thinking:
It is invariably based on rational thinking. Since the human brain with its ability
to learn, remember and relate many complex factors, makes the rationality possible.

2. Process:
It is the process followed by deliberations and reasoning.

3. Selective:
It is selective, i.e. it is the choice of the best course among alternatives. In other
words, decision involves selection of the best course from among the available
alternative courses that are identified by the decision-maker.

4. Purposive:
It is usually purposive i.e. it relates to the end. The solution to a problem
provides an effective means to the desired goal or end.
 Decision Making-Meaning-Definition-Features-Steps-Types

5. Commitment:
Every decision is based on the concept of commitment. In other words, the
Management is committed to every decision it takes for two reasons- viz., (/) it
promotes the stability of the concern and (ii) every decision taken becomes a part of
the expectations of the people involved in the organization.
Decisions are usually so much inter-related to the organizational life of an enterprise
that any change in one area of activity may change the other areas too. As such, the
Manager is committed to decisions not only from the time that they are taken but up
to their successfully implementation.
6. Evaluation:
Decision-making involves evaluation in two ways, viz., (i) the executive must evaluate
the alternatives, and (ii) he should evaluate the results of the decisions taken by him.

STEPS IN DECISION MAKING

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of
the decision you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information is
needed, the best sources of information, and how to get it. This step involves both
internal and external “work.” Some information is internal: you’ll seek it through a
 Decision Making-Meaning-Definition-Features-Steps-Types

process of self-assessment. Other information is external: you’ll find it online, in

books, from other people, and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of
action, or alternatives. You can also use your imagination and additional information
to construct new alternatives. In this step, you will list all possible and desirable
alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you
carried out each of the alternatives to the end. Evaluate whether the need identified in
Step 1 would be met or resolved through the use of each alternative. As you go
through this difficult internal process, you’ll begin to favor certain alternatives: those
that seem to have a higher potential for reaching your goal. Finally, place the
alternatives in a priority order, based upon your own value system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative
that seems to be best one for you. You may even choose a combination of alternatives.
Your choice in Step 5 may very likely be the same or similar to the alternative you
placed at the top of your list at the end of Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the
alternative you chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether or
not it has resolved the need you identified in Step 1. If the decision has not met the
identified need, you may want to repeat certain steps of the process to make a new
 Decision Making-Meaning-Definition-Features-Steps-Types

decision. For example, you might want to gather more detailed or somewhat different
information or explore additional alternatives.

Types of Decision Making

On the basis of different views, decision making is of various following types:

1. Routine and Basic Decision Making

Routine decision making means such decisions, which are taken in respect of the day to day
activities of the organization and which require less thinking and advice. These are of a
repetitive nature.

Basic decision making means such decisions that are essential for the existence of
the organization and for which complete study, analysis, power, and critical thinking
are essential.

2. Personal and Organizational Decision Making

The decisions which are taken by any person in his personal capacity and not as a
member of the organization are known as a personal decision, for example, decisions
for leave, dress, resigning the organization and accepting or rejecting promotions, etc.

The organizational or institutional decisions are which are taken by the executives
or officers in their formal capacity and which may be delegated to other persons.

3. Individual and Group Decision Making

When the size of the business unit is small and the decisions to be taken do not
require high, specific and technical knowledge, then the decisions for various problems
are normally taken by the managers himself. Such decisions are known as
individual decision-making techniques.

Group decision-making techniques mean such decisions which are not taken by
a single individual, but by a group. This is known as participating decisions that are
known as individual decision making.
 Decision Making-Meaning-Definition-Features-Steps-Types

4. Policy and Operating Decision Making

Policy decisions are those which relate to the basic policies of the organization and
these are taken by the top management or board of directors. Such decisions are also
known as management decisions or basic decisions.

Operating decision making is in respect of decisions relating to the general affairs

of the institution or enterprise and is of mechanical nature. Such decisions making is
also known as executive or current decision making because they are helpful in the
execution of policy decisions.

5. Programmed and Non-Programmed Decision Making

Programmed decision making is of repetitive and routine nature and which is taken
through some well decided and well-organized system, so that when the problem
arises, it may be solved by using that method.

Non Programmed decision making is not a routine or repetitive nature. These are
unique and new and they have a long-lasting effect on the organization. This decision
making is based on traditional methods, and not on the predefined procedure.

6. Planned and Unplanned Decision Making

Decisions for which Advance preparation is done are based on the collection of facts,
analysis and scientific methods are known as planned decision making.

Unplanned decision-making technique means .Such decisions for which no plan is

made. But are necessary, according to the circumstances, problems and opportunities
prevailed.

7. Tactical and Strategic Decision Making

Tactical decision making is of routine nature, related to the normal day to day
activities and is of relatively lesser significance. For these decisions, the options are
limited and do not require much analysis and evolution.
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A strategic decision-making technique is those decisions, which are very difficult to

be taken. This affects the future of the business and is related to the whole
Organization.

In other words, these are the decisions, which are taken presently, but their primary
effect is observed after some time.

8. Organizational, Departmental and Interdepartmental Decisions Making

Organizational decision making means such decisions which are taken by the higher
authorities of the Institution and affect the whole organization or enterprise. Such
decision making is also known as enterprise decision making.

Departmental decision making is for those decisions which affect the operation of
the whole department of an enterprise and its employees. Such decisions are taken by
department managers, chairman, or management.

Inter-departmental decision making is for those decisions which are taken by the
higher authorities/chairpersons/representatives of two or more departments of the
organizations, after mutual deliberations.