Importance of Decision Making

Importance of Decision Making

Management is essentially a bundle of decision-making process. Decision making is a process of selecting the best course of action from among many alternatives. The managers of an enterprise are responsible for making decisions and ascertaining that the decisions made are carried out in accordance with defined objectives or goals. It is useful for the successful operation of organizational activities. All the managerial functions such as planning, organizing, directing and controlling are determined by the decision. The following points describes the significance of decision making in the organization.

Pervasive Function

Decision making is essential in each level of management. Top level management makes strategic decisions such as planning, organizing, directing and controlling. Middle level management makes tactical decisions such as division of works, fixation of authority and responsibility, integration of efforts etc. Operating level management makes regular operating decisions such s preparation of schedule of daily works, divisions of works, delegation of authority etc. Thus, decision making function is performed in all the levels of management according to needs. This is necessary to bring uniformity and smoothness in the organizational performance.

Motivates Employees

Rational decision results in motivation for the employees. This is because the employees are motivated to implement rational decisions. When the rational decisions are implemented the organization makes high profits. Therefore, it can give financial and non-financial benefits to the employees.

Indispensable Component

Decision making is known as an inseparable part of management functions. It is one of the essential processes for successful operation of business. It determines all management functions and covers every part of the organizational structure. Every manager from top level to the first line is involved in the decision making process according to the nature of works.

Facilitate Innovation

Rational decisions facilitate innovation. This is because it helps to develop new ideas, new products, new process, etc. This results in innovation. Innovation gives a competitive advantage to the organization.

Evaluation of Managerial Function

Decision making is a time consuming process and decision makers spend more time to select the alternative. The quality of decision serves as the yardstick for evaluating managerial performance. It provides a clear line of guidance to the management for the achievement of defined objectives. The achievement of managerial performance is evaluatedĀ  and measured with planned performance.

Quick Decisions

Some decisions should be made quickly. Unfortunately, those are the ones that some business owners may agonize over for days or weeks. If a decision can be changed or undone without great cost, then it can be made quickly. The company can go broke while top management oscillates between using one office supply company over another.

Selection of Best Alternatives

Decision making is the process of selecting a best course of action from among many alternatives. A problem might be solved in different ways on the basis of time and situation. The decision maker evaluates all the possible alternatives on the basis of organizational process and suitability. The selection of the best course of action is significant to bring smoothness in operation and achieve organizational goals.

Establishment of Plans and Policies

The establishment of plans and policies is the initial part of decision making. Every organization is established for a definite objective and for this, formation of plans and policies is necessary. Thus, at the initial stage, the management decides the clear line of action and the procedures to gain defined objectives. The practical implementation of defined line of actions and procedures is an efficient way in bringing smoothness and uniformity in organizational performance. Finally, it is helpful in achieving organizational goals.

Successful Operation of Business

Decision making is one of the important tools for the successful operation of the business. In course of operation, many problems may arise at different situations and times. The management solves those problems in time by using decision making tools.


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