Decision Making in an Organizational Context
Decision making is part of everyone’s life and all of us have to make decisions every
moment. Right from choosing what to wear to what to eat to where we live and work
and extending to whom we marry, decisions are an integral part of our lives. In an
organizational context, it is worthwhile to note that decision making needs the
right kind of information, the complete information and the ability to synthesize
and make sense of the information. While the first two attributes depend on external
sources, the ability to make informed decisions is a personality trait. Hence,
successful CEO’s are those who can take into account the different viewpoints and
divergent perspectives and arrive at the right decision.
The business landscape of the current times is littered with examples of companies
that have made strategic errors and these are mostly to do with lack of proper
decisions taken by the CEO’s and managers in these firms. For instance, the failure of
Chrysler and Ford (the automobile majors in the United States) to meet the challenge
of competition from Japanese auto majors like Toyota was mostly due to the lack of
imaginative decisions that would have responded to the threat in a coherent manner.
Of course, it is another matter that these companies (Chrysler in particular) under the
stewardship of Lee Iacocca were able to successfully meet the competition by the
Japanese because of firm decisions taken by him.
The other aspect that relates to decision making in an organizational context is that
there must be complete and accurate information made available to the decision
maker. In Economics, there is a term called “asymmetries of information” that
indicates how incomplete and insufficient information leads to poor decisions and
wrong choices. What this concept means is that having partial information or faulty
information often leads to “analysis paralysis” which is another term for poor decision
making abilities. Finally, even with reliable and accurate information, the decision
maker ought to have good problem solving skills and astute decision making abilities
to arrive at sound judgments regarding the everyday problems and issues.
The overriding rule in decision making is that the decision maker ought to have
legitimacy and authority over the people who he or she is deciding upon. In other
words, decision makers succeed only when their decisions are honored and followed
by the people or groups that the decision impacts. The reason for mentioning this
towards the end is that in many cases, the fragmented nature of the organizations with
different interests represented by factions often undermines the decision making
capabilities of the decision maker. Hence, it is worth mentioning that such authority
must be vested with the decision maker.
Hence, it is clear that the topic of decision making encompasses several elements
(some of which have been briefly discussed in this article). We hope to cover more of
these elements in detail in the subsequent articles and this article is thought of as
setting the tone for the rest of the module on decision making.
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