Effective Decision Making is Critical to Organisational Success in the 21st Century

Effective Decision Making is Critical to Organisational Success in the 21st Century

Introduction

This paper is discussing the role of effective decision making in the success of organisations, in the 21st century. Decision making on the part of managers or leaders is undoubtedly the most important aspect of an organisation's success in the modern era.

Often, top management tries to analyse and identify which areas of opportunity are important to develop and improve business, maximise efficiency and increase sales, and hence our profit margins. They look for the details, analyse and define the macro behaviour of action plans to correct the faults. The most common factors relating to operational aspects are quality, efficiency, productivity, human resources' performance, efficiency, effectiveness, flexibility, teams' capacity, obsolescence, maintenance costs, administrative, customer service, sales, marketing and logistics and others.

To analyse the role of decision making in the success of organisations, we first have to understand what decision making is. If we assess the whole context, we note that, in all, there is a common factor and that are the "decision making". It is the process whereby, under certain circumstances, the employee must decide what course of action to take for the company to continue operating. The decision making is an activity of the top management. Depending on the hierarchical level within the company, and the degree of complexity, risk or responsibility, decisions are taken. In 85% of cases, companies fail because of wrong decisions of both, the administration (managers and supervisors) and employees in the plant (operators). In decision making, there are following factors to consider:

1.Scope of the decision (who is affected?)

2.Timing of the decision

3.Level of urgency of the decision (how fast should the decision is taken? Who makes the decision?)

4.Economic impact for the company: (Does the decision represent an investment, an expense or an opportunity cost (lost if you do not decide)? What is gained or lost if not taken the decision? In sales, as well as operational areas mentioned, there are critical decisions that impact the profitability of the company).

How to take decisions?

We refer to taking decisions at every moment of our business life. Decision making is the cognitive process of selecting between available alternatives or choices and takes the steps that would prove to be the best in the particular circumstances. Decision making involves four factors namely Process, Options, Choices and Actions.

The very first factor involved in the decision making is Process. Needless to say, decision making encompasses multiple processes such as thinking, memory, evaluation and making your mind up to take action. The definition may also involve intuitive feelings or rational thought processes, both of which aid in making wise decisions. The second important criterion in the definition is Options, and taking decisions without adequate options at bay may not prove to be very fruitful and apt. Hence, before jumping on to take any decision, organisations should consider their present position and where they want to be and then look at the multitudes of ...