P.F.Druker has famously said that whatever a manager does he does through making decisions. Decision making is perhaps the most important function of a manager. It is an integral component in all managerial functions. Let us learn more about the decision making process and its principles.
It is widely believed that management at its core is basically making decisions. A manager’s role can be summed up as making decisions to help an organization achieve their objectives and vision. So all managerial functions such as planning, direction, organizing, control etc. are executed by the manager making a decision.
There are three aspects when it comes to the definition of decision making. These are as follows,
- While making decisions the manager expresses his choice. A smart choice follows a certain logic and is made with care and knowledge
- A decision is made when the manager has alternatives to choose from. No decision making is necessary if there is only one alternative.
- And when making a decision, the manager must have a purpose in mind, i.e. to help the company achieve its goals in the most efficient way possible.
Importance of Decision Making Process
- None of the managerial functions of planning, directing, controlling, coordinating etc. can be conducted without the process of decision making. It is a vital part of management.
- Decision making is also a pervasive function. All the staff and employees must make decisions to carry out their jobs.
- Decisions also help us evaluate the management and the managers of a firm. If the decisions taken were correct and yielded positive results, we can attest to the skill and knowledge of a manager. And the opposite is also true.
- The process of decision making evaluated every alternative before selecting the best one. No alternative is unexamined. This ensures that we are taking the best possible step for the firm.
- It also helps with better utilization of resources. The manager has to decide the best way to allocate all available resources and factors of production.
- Decision making process follows rational thought and logic. It is not an unscientific random process. Hence it will also help increase the efficiency of the firm.
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Principles of Decision Making
So ultimately the skill and effectiveness of a manager are judged on the basis of the decision he makes. The entire process of decision making is heavily reliant on judgment, professional observations, and skills.
However, there are a few principles the manager can follow to help him take correct decisions. Let us take a look at the principles of decision making.
Principle of Definition
For the correct decision to be made, the manager must be aware of the exact problem. So the first principle is to exactly pinpoint the exact problem that seems to be the issue.
Once the real problem has been correctly identified and defined, the manager can work towards solving it. Too often time and energy are wasted on solving the wrong problem.
Principle of Evidence
Decisions should depend on some judgement which is backed by evidence. Hastily taken decisions that are not backed by proper evidence often turn out to be inaccurate. Every decision the manager takes must be well thought out and backed by evidence.
Principle of Identity
Every person has a different outlook and viewpoint about the same thing. So the same fact appears different to different people due to their varied thinking.
While taking a decision it is important to accommodate the viewpoints of all the people involved. Every person should be heard and their opinions weighed carefully before arriving at a decision.
Solved Question for You
Q: Decisions regarding routine matters tend to be centralized. True or False?
Ans: This statement is False. In fact, decisions regarding routine matters tend to be decentralized. This will allow the upper level management to focus on important and strategically important decisions.