The Skill of Decision Making

In its simplest sense, decision-making is the act of choosing between two or more courses of action. Decision making is a key skill in the workplace and is particularly important if you want to be an effective leader. When decisions have to be made, there are several stages that you should go through to reach a practical solution. Understand the meaning and importance of decision making and how to look at it as a process.

Decision-making is an activity that all of us involved in almost day in and day out. You will possibly agree that decision making is a part of everyday life. Similarly, making decisions by both individuals and groups is a fundamental aspect of life in organizations.

It is the most common and crucial work role of executives. The ability to make timely decisions, to exercise independent judgment, and to gain positive results is the basic nature of effective decision making. Whether you are at a board meeting or in the playground, you are almost constantly making decisions, sometimes working on several at the same time.

These may be major or minor, but some of these might have proved to be effective decisions, viz. appropriate, timely, and acceptable. Some of your decisions might have been wrong, but you knew that there was something worse than a few wrong decisions and that was indecision!

Definitions of Decision Making

Decision making is the process of making choices from among several alternatives.
Decision making is the process of choosing actions that are directed towards the resolution.
Decision making is the selection from among alternatives of a course of action: it is at the core of planning.
Decision making is a process of selection from a set of alternative courses of action which is thought to fulfill the objectives of the decision problem more satisfactorily than others.
Decision making is an essential part of every function of management.
In the words of Peter F. Drucker, "Whatever a manager does, he does through decision making."
Decision making involves thinking and deciding before doing and so is inherent in every activity. That is the reason decision making is often called the "essence" of managing.

Importance of Decision Making

Making decisions has been identified as one of the primary responsibilities of any manager. Decisions may involve allocating resources, appointing people, investing capital, or introducing new products. If resources like men, money, machines, materials, time, and. space was abundant, clearly, any planning would be unnecessary. But, typically, resources are scarce and so there is a need for planning.

Decision making is at the core of all planned activities
The determination of objectives, policies, programs, strategies, etc. involves decision making.
No one can survive without effective decision making
Scarce resources may get waste or underutilized due to wrong decisions or by remaining indecisive
Decision making is important for organizational effectiveness because of its central role in the overall process of directing and controlling the behavior of organizational members
Decisions making also involves the setting of goals, strategic planning, organizational design, personnel actions, and individual and group actions.
It is very important to understand the dynamics of decision making which may help to avoid urgency and emergency situations
The quality of a decision has a bearing on one’s professional success and a sense of satisfaction

States of Decision Making

Some of the decisions may be of a routine type and repetitive in nature and some may be strategic in nature which may require a lot of systematic and scientific analysis. In some cases the decision-maker may not have complete knowledge about decision alternatives (i.e., High Problem Complexity) or about the outcome of a chosen alternative (i.e. High Outcome Uncertainty). These conditions of knowledge are often referred to as states of nature and have been labelled as:

Decisions under Certainty
Decisions under Risk
Decisions under Uncertainty

The Process of Decision Making

The decision-making process can be carried out either by individuals acting alone or by groups. The quality of our decisions is often much poorer than we realize. Selective perception tends to bias the information we use in making decisions and our attitudes and values influence how we interpret that information. Many factors create bias and degrade our decisions and limit our understanding of the decision making problem,

Sometimes making a decision is facilitated by the background information and circumstances but there are occasions when one is left into blank and the manager is forced to make a decision. Such decisions may not lead to the target and may also create undesirable situations and regulations which ultimately may mar the whole process.

To overcome this problem there are several models and theories which are developed to explain decision making and how effectively you can make a decision. Though there is no magic formula for analyzing data, considering option,s and making a winning determination, there is a multistep process to arrive at decision. Using the process approach for decision making will enable us to make better quality decisions than we do presently. In order to increase our effectiveness in decision making, we must first understand the decision-making process. Following a process offers the greatest chance of resolving many problems.

Decision making and planning are deeply interlinked.
How do you typically assess the success of a business decision you have implemented? What will you do differently in the future?
The decision-making process involves three stages planning the implementation, managing the implementation, and evaluating the decision.
It reviews how to use grassroots analysis to strengthen the plan.
It focuses on involving stakeholders, adjusting the plan once it is in process, and managing resistance.
Finally, it looks at how to assess the quality of a decision outcome as well as address decision failures.