Decision Making in Management

Good decision making is a vital part of good management because decisions determine how the organization solves problems, allocates resources, and accomplishes its goals. A decision is a choice made from available alternatives.Decision making is the process of identifying problems and opportunities and then resolving them. Management decisions typically fall into one of two categories: programmed and nonprogrammed.

Programmed decisions made in response to a situation that has occurred often enough to enable managers to develop decision rules that can be applied in the future. Programmed decisions are made in response to recurring organizational problems. Nonprogrammed decisions are a choice made in response to a situation that is unique, is poorly defined and largely unstructured, and has important consequences for the organization. Many nonprogrammed decisions, are related to strategic planning because uncertainty is great and decisions are complex.

Every decision situation can be organized on a scale according to the availability of information and the possibility of failure. The four positions on the scale are certainty, risk, uncertainty, and ambiguity. Good decision making is a vital part of good management, but decision making is not easy.

A problem occurs when organizational accomplishment is less than established goals. Some aspect of performance is unsatisfactory. An opportunity exists when managers see potential accomplishment that exceeds specified current goals. Managers see the possibility of enhancing performance beyond current levels.

The decision-making process typically involves six steps: recognizing the need for a decision, diagnosing causes, developing alternatives, selecting an alternative, implementing the alternative, and evaluating decision effectiveness.

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