Attaining Sustainable Organizational Growth and Profitability
A decision is a conclusion/determination arrived at after consideration of relevant factors. A decision is the specific commitment to action to resolve a question/issue. Decision-making is a cognitive process resulting in the selection (choice) of a course of action among several possible alternatives (options). It is a deliberative process of making choices by identifying a decision, gathering information, and assessing alternative solutions (courses of action). The decision-making process is carried out through an intuitive or logical process, or a combination of both.
The term decision is used, in a variety of different circumstances, when people have to make up their minds in specific commitment to action to resolve an issue/question. The circumstances in which people have to make a decision may include:
The use of the same word "decision" for these different kinds of deliberations, in a variety of very dissimilar situations, can be a source of confusion for decision makers.
Understanding Decision-Making in Business Organizations
In business organizations, the circumstances or situations in which managers have to make a decision may vary widely in complexity, type and scope, and may include, for example:
These decisions can occur at various levels in the organization. Managers at all levels in the organization must make decisions on behalf of a company. The decision-making is a deliberate process of making choices by recognizing the problem/issue, gathering information about feasible solutions, and finally choosing the best alternative/option.
For example, the management decisions based on positions, roles and responsibilities may be defined as follows:
The difference between decisions at the various levels, typically, lies in the type and scope of the decision or choices made.
From the point of view of management, managerial decisions can be broadly classified into these categories, namely, strategic, tactical, operational and administrative decisions.
All these management decisions can be related directly or indirectly to broader management functions: planning, organizing and staffing, leading, and controlling; with different management levels spending more time on certain functions than on others.
Decision-Making and Decision Rights in Business Organizations
In any business enterprise decisions can be made at varying levels in the organization. Decision making is the means by which management's intentions are realized. Managers face in the course of their daily responsibilities, a range of decisions that are consistent with their positions and roles in the organization. The management decision levels and associated positions, roles and responsibilities may have designated decision rights and decision authority associated to each position. Decision rights are a component of organization design, that help identify and establish "what" business decisions need to be made, both to drive the business and to drive alignment to strategy. And "who" is involved in making them and "how" the decisions will be made through operating processes. Identifying and defining decision rights helps companies to organize their decision making and execution processes by setting clear roles and accountability, and by giving those involved a sense of ownership of decisions.
Decision authority is the, power or obligation to make a decision and accountability - the duty to answer for the success or failure of a decision. There are six (6) common types of Decision Authority, including:
An organization’s ability to execute well rests on its ability to make and implement the decisions that matter most.
The situations in which managers have to make decisions may range over a variety of very different circumstances, each requiring different kind of deliberations; but they have one property in common, that people have to make up their minds. Decision-making can be improved by having a structure (methodology) that can guide deliberations.
An example is viewing decisions as varying along two (2) dimensions; control and performance.
Decisions can be organized into categories based on: the level of control - Control/No Control, and level of performance - absolute/relative to produce the following categories of decision types:
The structure (model) is useful in categorizing decisions into a decision type system that can lead to finding useful approaches to improve decision-making. This type system helps decision makers distinguish between the different types of decisions - routine as well as complex deliberations, to both small-stakes bets and high-stakes commitments, and to exploratory steps as well as irreversible moves. Decision-makers can improve the quality of their decisions substantially, if before making any decisions they make an assessment of the type of decision(s) required for the situation at hand.
and make them aware of the importance of the need to apply the appropriate methods and knowledge in the right situation for the decision taken to be successful.
In a business context, decision-making is a set of steps taken by managers in an organization to determine the planned path for business initiatives and to set specific actions in motion.
I am a computer scientist by education and training. My interests are in modeling complex business and social systems to foster better strategic and operations management processes in delivering value to customers while meeting the expectations of stakeholders.