What is Decision making in management?
Types of decision making
- Programmed and non-programmed decision.
- Major and minor decision.
- Routine and strategic decision.
- Organizational and personal decision.
- Individual and group decision.
- Policy and operational decision.
- Long-term, departmental, and non-economic decision.
1. Programmed and non-programmed decision
- How to allocate an organization’s resources.
- What to do about failing product line.
- How community relations should be improved will usually require non-programmed decisions.
2. Major and minor decision
3. Routine and strategic decisions
4. Organizational and Personal decision
5. Individual and group decision
6. policy and operative decisions
7. Long term, departmental and non-economic decision
Importance of decision making
- It is required to supply financial, technical, and other information as input to help decision making at a higher management level for achieving maximum profit.
- Decisions are generally made to fulfil the objectives of the organization.
- In business, whatever the business is small or big, changes in condition take place, shifts in personal occur, unforeseen contingencies arise. Moreover just to get started, and keep them moving, decisions must be made.
- Every aspect of the management (planning, organizing, control, etc) determines by decision making.
- Decision making is important for all management activities. It helps to set objectives, prepare plans of action, determine the organizational structure, motivate employees to be more productive, and introduce innovations.
|Type of decision making||Traditional Technique||Modern Technique|
| 1. Programmed:
Routine, repetitive decisions, an organization develops a specific process for handling them.
| (i) Based on habit
(ii) critical routine standard operating procedure.
(iii) organization structure.
|(i) Operation research, mathematical analysis, models, computer simulation.
(ii) Data processing.
| 2. Non-programmed:
Non-routine, one-shot, ill-structured, novel policy decisions handled by the general problem-solving process.
| (i) Judgment, intuition, and creativity.
(ii) Rule of thumb.
(iii) selection and training of executives.
| (i) Training human decision-makers.
(ii) Constructing heuristic computer Programs.
Decision Making Process
Using a step by step process for any decision making within an organization can help to make a more deliberate and effective decision. So steps of effective decision making are discussed below.
Step 1: Identify the Decision
When you realize that you have to make a decision try to identify and clearly define the nature of decision you are going to make. It will help you to make effective decision.
Step 2: Gather relevant information
Before decision making, it is important to gather all information relevant to your decision making. The source of information can be two types, First one is the internal source- you seek internal information through self-assessment. Another source is external, where you get information from books, the internet, word of mouth, etc.
Step 3: Identify the alternatives
During collecting the information, you will probably find some alternative way, or you can use your imagination to construct new alternatives. You have to list all possible alternatives in order to make a correct and effective decision.
Step 4: Weigh the evidence
In this step use your knowledge and emotion to imagine what it would be like if you carried out each of the alternatives to the end. As you go through this process you will begin to favour certain alternatives, those you think have higher potential to achieve your goal.
After weighing the alternatives you can choose one or combination of alternative, you think best for you.
Step 5: Take action
In this step you are ready to take some positive action. You will perform the alternative you have choosen in step 4.
Step 6: Review your decision
After the decision making, consider the result of your decision and evaluate whether they meet your desired goal or not. If it has not met your target, you need to repeat those of the decision-making process.
Skills needed for Decision-making
Decision-making is such an important skill since it requires many other vital skills in order to be a good decision-maker. Let’s take a look on those skills-
Decision making is a type of problem where you have to decide which option is best for your goal, a good problem-solving ability will be an asset in decision making. you have to approach a decision from a logical mindset, as if it is a problem to solve, odds are that the solutions you come up with and your final decision will be stronger.
Decisions can’t always be made perfectly by one person. You need to have a good collaboration and compromise skills to make the best decision when it involves a group decision. Even when you’re making a decision on your own, getting extra input from friends or co-workers can help you to get the best outcome.
Emotional intelligence is the ability to observe and understand your own emotions and the emotions of your collaboration partner. Being able to take emotional intelligence into account will make you a better decision-maker.
This skill is key for the middle steps of the decision-making process when you have to analyze and evaluate all information and available option by logic. This skill is closely related to reasoning, the side of decision-making that relies on facts and figures instead of using emotions.
Make your decisions in a timely manner is not just about making a quick, hasty decision. Managing your time to properly work through the six steps is a skill, and that will put you above everyone else.
When collaborating or making a group decision, someone needs to take charge of that outcome and make sure the decision is implemented, where a good leadership skill is required.
During the decision making make sure your decision should not have a bad effect to any one or on the envaironment. Making ethical decisions is a necessary skill to have.
Research and analysis
Through better research, you can gather more information about the decision. Having strong analytical skills will help you ensure that your decisions are logical and reasonable for your desired goals.
Flexibility is a important skill to have to be a better decision maker, because sometime you have to compromise or adjust your decision whenever a better decision pop up.
Decision Making Examples
Below are some real world examples of decision making.
- Choosing which manufacturer to supply the product you sell. In this case, you have to analyze all manufacturer’s offers and choose which one is meeting your expectations.
- Choosing a name for a new product. You need to discuss with your team and decide a name most suited for the product.
- Comparing different candidates for a job opening or promotion. Evaluation and analytical skills will help you to find out the best candidate depending on the job description and the qualifications of the candidate.
- Deciding the best way to boost sales. You’ll need good evaluation, analysis, and creative skills, to think of the best marketing strategy to drive sales.
- Deciding how much bonuses will be given for the year. Strong analytical, financial, and reasoning skills are necessary to make a decision like this.