Decision making is the process of choosing a course of action

from among alternatives to achieve a desired goal.

According to Haynes and Massie, “Decision making is a
process of selection from a set of alternative courses of action
which is thought to fulfill the objective of the decision problem
more satisfactorily than others.”
There is a close relationship between planning and decision
making. First, both are mental processes including reasoning
and judgment. Secondly, both are goal oriented designed to
achieve the desired aims. Thirdly, decision making like
planning is an ongoing or continuous process. Fourthly,
planning & decision making both involve choice among
alternative courses of action. Lastly ,planners & decision
makers both need information about the internal and external
environment of the organization.
1. Decision making is a goal oriented process. Decisions are made to achieve certain
goals i.e. to bridge the gap between the present position and the desired position.
2. Decision making involves choice or selection of the most appropriate course of
action out of various alternatives.
3. Decision making is an ongoing or continuous process.
4. Decision making is an intellectual process. Decisions are the outcome of
deliberations, reasoning, judgment and evaluation.
5. Decision making is a dynamic process. It involves a time dimension and a time lag.
6. Decision making involves commitment of time, efforts and resources. Once a
decision is taken the organization commits itself in a particular manner.
7. Decision making is situational.
8. Decision making is pervasive. Managers at all levels take decisions through the
nature & significance of decisions taken vary from one level to another.
Other significant issues related to decision making are:
Decision making is the vehicle for carrying managerial workload and discharging
managerial responsibilities. It is through decision making that managers strive to achieve
organization goals. They attempt to bridge the gap between the existing situation and the
desired situation by taking and executing decisions.
The life of a manager is a perpetual decision making activity. The factors that determine
the importance of a decision are the size of the commitment, the flexibility or
inflexibility of plans, the certainty or uncertainty of goals and premises, the degree to
which variables can be measured, and the impact on the people .
 Decision making can be rational or irrational. Rational decision making means taking
decisions on the basis of facts and logical reasoning. A decision maker is said to be
rational when he identifies and analyses the problem systematically, identifies
alternatives and selects the most appropriate alternative on the basis of relevant data. On
the other hand decision making becomes irrational when the decision maker depends
purely on hunch and intuition without using the relevant facts and figures.
Thus, in this context, the process leading to making a decision might be thought of as :
1.Premising,
2.Identifying alternatives,
3.Evaluating alternatives in terms of the goal sought, and
4.Choosing an alternative, that is, making a decision.
Rational decision making is the systematic process consisting of the following steps:

• Identify the problem: The decision making process begins with the recognition of
a problem that requires a decision. The problem may arise due to gap between
present and desired state of affairs. The threats and opportunities created by
environmental changes may also create decision problems. At this stage, a manager
should identify and define the real problem. A problem well defined is half solved.
Imagination, experience and judgment are required for detection of problems that
requires managerial decisions.
• Diagnose the problem: Diagnosing the real problem implies analyzing it in terms
of its elements, its magnitude, its urgency, its causes, and its relation with other
problems. In order to diagnose the problem correctly, a manager must obtain all
pertinent facts and analyze them carefully. The problem may be analyzed in terms
of the following : a) Nature of the decision , b) Impact of the decision , c)Futurity
of the decision, d) Periodicity of the decision, and e)Limiting or strategic factor
relevant to the decision.
• Discover alternatives: The next step is to search for the various possible
alternatives. An executive should not jump on the first feasible alternative to solve
the problem quickly. A reasonably wide range of alternatives increases the
managers freedom of choice. Relevant information must be collected and analyzed
for this purpose.
4. Evaluate alternatives: Once the alternatives are discovered, the next state is to
evaluate or screen each feasible alternative. Evaluation is the process of measuring the
positive and negative consequences of each alternative. Management must balance the
costs against possible benefits. Considerable knowledge and judgment are required to
measure the plus and minus points and to find out the net benefit of each alternative.
Peter Drucker has suggested the following criteria to weigh the alternative courses of
action: Risk, Economy of effort, timing and limitation of resources.
5.Select the best alternative: After evaluation, the optimum alternative is selected.
Optimum alternative is the alternative that will maximize the results under given
conditions. Choice of the best alternative is the most critical point in decision making.
The ability to select the best course of action from several possible alternatives
separates the successful managers from the unsuccessful ones.
6. Implementation and follow-up: Once a decision is made it needs to be
implemented. Implementation involves several steps . First, the decision should be
communicated to those responsible for its implementation. Secondly, acceptance of the
decision should be obtained. Thirdly, procedures and time sequence should be
established for implementation. Necessary resources should be allocated and
responsibility for specific tasks should be assigned to individuals.
Herbert Simon has identified three phases in the decision making
process:
• Intelligence activity involves a search for the conditions
underlying the decision. It includes identification and diagnosis
of the problem, definitions of objectives and collection of
information.
• Decision activity is concerned with the generation and
evaluation of alternative courses of action.
• Choice activity implies selection of the best course of action.
Post choice activity involves implementation of the decision.
 Discover
Identify the Diagnose the Evaluate the
Alternative
Problem Problem Alternatives
Courses of action

Implement and Choose the best

Follow-up Alternative