“Decision Making is a conscious & Human
Process involving both individual & social
phenomenon based upon factual & value
premises which concludes with a choice of one
behavioural activity among one or more
alternatives with the intention of moving towards
some desired state of affairs.”
- Shull, Delberg & Cumming
“Decision- making is a process of identifying &
choosing alternative courses of action in a manner
appropriate to the demand of the situation. The
act of choosing implies that alternative courses of
action must be weighted & weeded out.”
Six ‘s of Decision Making
Construct a clear picture of precisely what
must be decided.
Compile a list of requirements that must be
Collect information on alternatives that meet
Compare alternatives that meet the
Consider the "what might go wrong" factor with
3.Programmed & Non-
4.Policy & Operative
1.Organisational and Personal
Organisational decisions are those which
managers undertake under certain conditions
relating to organisation. Sometimes taken
independently and sometimes delegated to
Personal decisions are to be taken by the
managers on their own. Others need not to be
2. Tactical(Routine) &
Tactical (Routine) Decisions
Concerned with routine & repetitive problems
neither require collection of new data nor conferring with the
people. Thus can be taken without much deliberation.
Has short term implications
May be complicated but are always one dimensional.
More experience & judgement is needed.
made on the problems which are important.
Require thorough fact finding analysis of the possible
Finding the correct problem in such decisions assume more
Has long term implications
3. Programmed & Non-Programmed
Professor Herbert Simon has given this
classification. He has utilised computer terminology
in classifying decisions.
Programmed decision may also be called as Routine
Decision and Non programmed as Strategic
4. Policy & Operative
Policy decisions determine the the basic policies of the
organisations & are taken at top level management. The
policies are decided at the top become the basis for
operative decisions can go beyond the policy framework
of the organisation. These are important in nature & have
long term impact.
Operative decisions on other hand, are less important &
related with day-today operations of the business. Middle
and lower management take these decisions since these
involve actual execution and supervision.
Whether to allow bonus to employees or not is a policy
decision. Once it is decided to pay bonus then making
calculation of payments to be made to different employees
is an operative decision.
5. Individual & Group
It is based on the number of persons involved in
Generally individual decision are less important &
Group decisions are taken by a group of persons.
These are generally important decisions & relate
to policy matters. The decisions are taken after a
thorough discussion among persons who are
assigned this work. The problem of delay in taking
group decisions may create difficulties but
otherwise these are well discussed decisions.
FACTORS AFFECTING DECISION MAKING
(IN AN ORGANISATION)
Whenever we are involved in making decisions a number of factors can affect
the process we follow and ultimately the decision we make.
They can be organised into three major groups:
Perception can be influenced by the following:
The types of personal characteristics that can affect an individual's
Background and experience
The situation: Time, location and other situational factors can influence our
perception of an object. E.g., For example, a Team Leader may notice
team members who work late on the same evenings as the Team
Leader. However, team members who work late on other evenings may
not be noticed by the Team Leader.
The object, which refers to any person, item or event can
have an impact on the way it is perceived.
For example, when a manager receives a number of reports to read he may
be more inclined to read the one with the most colourful cover as this one stands
The relation an object has to other objects can also affect
the perception of the perceiver.
For example, an individual team member may be judged on the actions of
the whole team even when it is more appropriate for them to be judged on their
ISSUES WITHIN THE ORGANISATION:
A number of organisational issues can impact on the
decision making process. These issues include:
Policies and procedures
POLICIES AND PROCEDURES
Many organisations have formalised policies and
procedures which have been developed to resolve
common problems and to guide managers when
e.g., many organisations have documented
disciplinary procedures which guide managers
through a process of resolving issues with staff
Organisational hierarchy refers to the management
structure of the organisation. Most organisations
have different levels of management which carry
with them different degrees of authority. The degree
of authority directly impacts on the nature of the
decisions an individual can make.
E.g., a Customer Contact Centre Team Leader
cannot make decisions about the overall goals of
the organisation. However, the Team Leader can
make decisions about how their team contributes to
the achievement of the organisation's goals.
Organisational politics refers to behaviour displayed by
individuals and groups which is designed to influence others.
Individuals and teams will often use politics to:
Advance their careers
Advance their interests and ideas
Increase their rewards
Organisations are made up of individuals with different
beliefs, values and interests. These differences are often the
driving forces behind organisational politics.
For example, two teams believe they require an extra team
member. Unfortunately the organisation can only afford one
new employee. The two teams may well use politics in an
attempt to influence their manager to allocate the new
employee to their team.
ISSUES WITHIN THE ENVIRONMENT:
Environmental issues are the external factors that
affect the organisation. The types of external factors
that can have an effect on decision making include:
The market in which the organisation
Customers' reaction to the organisation's
products and services
Personal Demographics: age, gender, stages
in life cycle, education, occupation, economic
Personal psychographics: includes lifestyle,
attitudes, self-concept, concern about status,
value systems, beliefs etc.
Culture: combined resulted of factors like religion,
traditions, taboos, language, education, upbringing,
established pattern of social behaviour, values (core &
Sub culture: caste
Social class: it is determined by the education level,
wealth, occupation, profession & designation, location
of residence, values, and behaviour of its members.
Influence of reference group:
Intimate groups: e.g. family, friends, peer
groups, close colleagues & close-knit
Face-to-face & frequent interactions are characteristic
feature of the group.
Secondary groups(including Opinion leaders):
based on occupation, profession place of
residence, etc., of the members.
O.L has the high credibility & influence.
information, should be
authentic, reliable, adequate
and must be available at time.
So enough time must be there
to analyse the problem.
It reduces the uncertainty.
Too much information or
information over-load creates
confusion & delay in decision
Motivation: it all begins with needs.
Perception: According to consistency theory one
mostly listen to things that support one’s existing
Learning Process: people do change their beliefs,
faiths, likes & dislike which happens through learning
Memory Process: include past experiences even
the hearsay experiences.
In psychology, heuristics are simple, efficient
rules, learned or hard-coded by evolutionary
processes, that have been proposed to explain
how people make decisions, come to judgments,
and solve problems typically when facing complex
problems or incomplete information. These rules
work well under most circumstances, but in
certain cases lead to systematic errors or
Examples of this method include using a rule of
thumb, an educated guess, an intuitive judgment,
stereotyping, or common sense.
• Anchoring and adjustment – Describes the common human tendency to rely too heavily
on the first piece of information offered (the "anchor") when making decisions.
• Availability heuristic – A mental shortcut that occurs when people make judgments about
the probability of events by the ease with which examples come to mind. For example, in
a 1973 Tversky & Kahneman experiment, the majority of participants reported that there
were more words in the English language that start with the letter K than for which K was
the third letter. There are actually twice as many words in the English Language that have
K as the third letter than start with K, but words that start with K are much easier to recall
and bring to mind.
• Escalation of commitment – Describes the phenomenon where people justify increased
investment in a decision, based on the cumulative prior investment, despite new evidence
suggesting that the cost, starting today, of continuing the decision outweighs the expected
• Familiarity heuristic – A mental shortcut applied to various situations in which individuals
assume that the circumstances underlying the past behaviour still hold true for the
present situation and that the past behaviour thus can be correctly applied to the new
Inherent Personal Traps
ã Trying too hard to play it safe.
ã Letting fears and biases tilt your
thinking and analysis.
ã Getting lost in the minutia can cause
ã Craving for unanimous approval.
ã Trying to make decisions which are
outside your realm of authority.
Inherent System Traps
+ Willing to begin with too little,
inaccurate, or wrong information.
+ Overlook viable alternatives or waste
time considering alternatives which
have no realistic prospects.
+ Not following the six C's.
+ Failure to clearly define the results
you expect to achieve.
+ Worst of all, failure to reach a
“Doing what's right isn't hard --
Knowing what's right is.”
Lyndon B. Johnson.