Posted by / Tuesday 28 November 2017 / No comments

The definition and importance of decision making

Board, Arrows, Decision, Right, Next
Definition of decision-making
Decision making represents a process of choosing the best alternative from among many possible options available to the manager of a business unit. A manager at any given moment of making a decision concerning the business would first of all assess all the different alternative decisions which the business can take. Each of these alternative decisions will be looked at in terms of their advantages and disadvantages which are known to the managers of the business. From this evaluation, a final decision may be arrived at. Weighing the merits and demerits of each choice or option helps the managers of the company to make the best decisions.

One must bear in mind that decision making is an important function of management. Without this managerial function of decision making, other functions of management such as planning, directing, organizing and staffing cannot be performed because each of these functions involve making decisions. In the words of Stephen Robins, “decision making is the selection of a preferred course of action from two or more alternatives.”

Decision making Helps in the Implementation of managerial function
As explained in the meaning of decision making, it would be impossible for management to perform the various managerial functions without taking one decision or the other. Decision making is therefore very important in arriving at how many people and what kinds of them to employ, what steps the business should take to achieve its corporate objectives, who should be responsible for which activities and who should report to who during the business’ operation. The functions stated above sum up the managerial functions of planning, organizing, directing, controlling, and staffing; all of which cannot be implemented without decision making.  

Decision making helps the firm to function properly
Aside from being made at all managerial level activities and in all the functioning of the business organization, every other employee of the firm must take a decision or another in their daily work within the organization. It would be safe to conclude that no business can function without decisions being made in its operation.

Decision making helps in Evaluating the performance of management or managers
Decisions made in the course of managing the firm by managers can help to know if the managers are competent or not. When their decisions turn out to be correct, it is often an indication that the manager is competent, qualified and efficient at managing the business. On the other hand, when the managers’ decision proves to be wrong, it is understood that the manager is not competent. This way the decisions that managers make help other business stakeholders evaluate their performance.  

Decision making is helpful in planning and making policies 
Organization’s policies which are conceived and plans made in the process of managing the firm are established through the process of decision making. Without making decisions, these plans and major policies which could move the business forward cannot be made. Further, it takes decision to implement policies and change plans in response to changes in the business environment.  

Decision Making is important in ensuring the Successful operation of a business
In a competitive business world, every business organization or department within a firm is expected to make series of decisions. The success of an organization or firm is dependent on the kinds of decisions they make. Where the right decisions are made the firm may experience growth and or survive a business down turn. On the contrary where bad decisions are made the company is likely to experience great losses which could sometimes lead to the business folding up. 

Steps in making a business decision

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