Every organization and its members take several decisions regularly. No business can function without decisions and plans. Decision making is the most fundamental aspect of management. Since all decisions of a business have financial implications, one must make them cautiously. Every good decision adds on to an organization’s overall success.
Decision making basically involves choosing a course action after carefully considering it. It requires decision makers to evaluate all alternatives at their disposal and select one.
Each step of the management process includes decision making. Firstly, planners have to choose one plan from an array of alternatives after evaluating them individually.
Secondly, managers have to constantly take small decisions to implement these plans. Next, they have to take more decisions while evaluating the success of these plans. Other processes like budgeting also require decisions.
Involvement of Groups
It is always relatively simple to take decisions when only one person has to do it. This is because this person does not need to consult with others for his decisions. This way he can take decisions quickly.
This also enables fixation of accountability on the decision maker. One single person is responsible for decisions this way. A sole proprietorship form of business is a great example of this.
Since partners of a firm are jointly and severally liable for their activities, they often take decisions together. Similarly, decisions of the board of directors of companies also involve many people.
Even managers and employees of companies often make decisions collectively. Departmental activities are also good examples of this.
Decision Making by Groups
The way in which groups of people make decisions is different from individuals doing the same. Whenever a group of people makes decisions, accountability rests on all of them collectively. Furthermore, the involvement of many people also makes the process more comprehensive.
It is always up to the senior level managers (like directors) to decide when groups will make decisions. All organizations generally have a policy in place for such matters.
For example, a company may have a policy stating that only the board of directors can unanimously take decisions regarding the hiring of senior managers instead of allowing a single director to do so.
This policy should lay down the exact scope of the group’s authority to make decisions. Unfettered and unbridled powers can lead to exploitation. Decisions made this way may be arbitrary and impractical.
Furthermore, the policy must clearly define which exact persons will make decisions collectively. People without authority must never make decisions.
Advantages of Group Decisions
Decision making by groups can offer many advantages and benefits.
- Firstly, the involvement of more people ensures that the decision is evaluated thoroughly. This is because many people offer their viewpoints and opinions. This further ensures that the decisions will be good and practical.
- Secondly, it becomes easier to implement decisions made this way. Departments and managers can coordinate with each other fluently and achieve their targets.
- Finally, group decisions create a sense of unity of purpose amongst members of an organization. Since they make decisions collectively, they feel motivated to see them through together.
Disadvantages of Group Decisions
- One drawback of group decisions is that they require a lot of time. More than one person has to be consulted in such cases.
- Sometimes, formalities like meetings and voting may also become necessary in group decisions. Hence, prompt decisions may not be possible under groups.
- Indecision is also a big problem under groups. Each person may have her own point of view and unanimity may become difficult to achieve. Members may even evade accountability and blame others if their decisions lead to failure.
Solved Examples on Decision Making
Question: State the missing word in the following sentences.
(1) Decision making by individuals helps in fixing __________.
(2) An organization’s __________ control a group’s power to make decisions.
(3) Group decisions inculcate a sense of __________ amongst members.