Introduction to Decision making, Features of decision making and Orientation of decision making

Decision making

“When too much time is taken a correct decision, it has to be remembered that even a correct decision is wrong when it is taken too late"

Decision making is very important for any individual or organization. in fact, an organization comes into existence because of a decision in this regard. till it is decided to close an organization, the management at every level goes on taking many decisions every day. the success or failure of an organization basically depends on the quality and timing of decisions taken by the management. as a human being cannot survive without oxygen, similarly a manager cannot function without decision making.

Decision making is means choosing the best alternative under the given situation for solving a problem. it is a conclusion, finding, judgment, result or ruling.

George R. Terry, “Decision making is the selection based on some criteria from two or more possible alternatives.”

Thus, decision making is a process of identifying and analysing a problem, developing possible alternatives, selecting, and executing the best alternative and getting feedback for solving the existing problem.

Features of Decision Making

                   i.      Decision making is a selective process: - If there is only one solution to the problem, there is no need of decision making.

             ii.   Decision making is an intellectual activity: - An intelligent person alone can take a good decision.

            iii. Decision making is situational: - Thus, different decisions may be taken in different situations by the same individual for solving the same problem.

             iv. Decision making is an individualistic activity: - Thus, different individuals may take different decisions to solve a problem in the same situation.

       v. Decision making is a means and not an end it itself: - Thus, it does not solve a problem rather it helps to solve our problem.

          vi. Decision making always has a purpose: - i.e., the purpose to solve a problem or achieve a goal.

                   vii. Decision making is a universal activity.

          viii.  Decision making is a continuous activity.

                    ix. A decision may affect a situation or get affected by it.

                 x.  A decision may be taken not to take a decision: - for example, the board of directors may postpone the decision on opening or not opening a new branch at a particular place for the time being.

               xi. Decision may be of different types: - e.g., prime, and routine decisions, departmental and institutional decisions, major and minor decisions, regular and emergency decisions, programmed and non-programmed decisions or individual and group decisions etc.

                xii. A decision may be of positive or negative nature depending upon the perception of the concerned parties.

         xiii. Creativity (i.e., conceiving of original and unique alternatives to the solution of a problem) In decision making is an added advantage in the decision-making process.

        xiv. There are various techniques which may be used for rational decision making. For example, brain storming, Delphi, game theory, PERT or CPM etc.

Orientation of decision making

How a person takes decision?

    1. Based on intuition

    2. Based on rationality

    3. Based on bounded rationality

Intuition Based Decision

    ·   Sometimes we make decisions on gut feeling

    ·   These decisions look quite impulsive

    ·  It is important to understand what intuition is

Rationality Based Decisions

    · Decision makers who are quite objective and logical

    ·  They would define a problem quite well

    ·  They would develop alternatives

    ·  Based on alternatives they choose the best alternative

    ·  In real world it is quite difficult to follow rationality

Decision Based on Bounded Rationality

    · Most of the time in the real world it is quite difficult to know all the alternatives

    ·  Although as a manager or as an individual we want to be rational

    ·That's why we take ‘good enough decisions’.