The Art of Taking Decision
By Dr. P.K.Khanna
Introduction:
I
was under two minds whether to write or not to write an article on decision
making. This uncertainty made me
realise that I have an option between these two alternatives. I had to think
about the choice to be opted. ‘Decision begins when we need to do something
but we do not know what to do’. Decision
making is an intellectual process of developing and analyzing two or more
alternatives for making the best choice. Identifying and choosing
alternatives depends on the values and preferences of the decision maker.
Decision
is a choice from amongst the available alternatives and several possibilities. Every
day we
make decisions and judgment about many things in life, as every thought and
every action requires some sort of decision. Judgment and decision are quite different.
A judgment is an opinion; it is an evaluation and
assessment of a situation or an event. It is an individual’s belief based on
certain proof.
Whereas
some choices are simple, others are complex. Complex choices require multiple
approaches. People make personal decisions, career decisions, financial
decisions and so on so forth. Politicians make political decisions.
Why to take decision?
As mentioned earlier the question of
taking decision arises only when one has more than one option of a problem and out
of which the one most suitable has to be chosen. For determining the best
alternative it is advisable to have wide varieties of options. While taking
decision, one has to evaluate advantages, disadvantages, pros and cons from various
angles, as every choice is associated with a value or preference
unique to the decision maker. Those who repeatedly make similar decisions adopt causal approach to the problem and generally do not
look for other alternatives. Sometimes this casual approach creates problem for
the person for whom decision is being taken and for the institution. Autocrats who
do not care for the views and suggestions of others create problems for their organisations.
There
are many persons who face problem when faced with multiple choices, as multiple
choices confuse them. In that event they choose those options which give them the
most benefit. Those who have problem in setting priorities also find it
difficult to take decision. Therefore they leave things to the fate until
something is decided one or the other way.
Taking Decision:
Basically decision-making is a common
sense process, which, while performing a task we take either consciously or
subconsciously. Decision can either be an action or an opinion. When we get up
in the morning our brain takes a decision (action) ‘from which side to get
up’, this is a subconscious decision. The brain has accordingly been tuned
and we get up from a particular side with our motor skill, which is a
psychological construct.
Taking decision is an art of
interpreting the issue from different angles on scientific lines. Decision
involves both logical and non logical thinking. Logical thinking requires logical
understanding and reasoning process. It is a conscious thinking that involves
lots of thought processes while selecting alternatives. Whereas simple decision
requires a simple decision-making process, complex decision requires logical
and systematic process. Systematic decision-making process results in to better
decisions. In the event of uncertainties, decision becomes complex.
In organizational set up there are
no private decisions sooner or later the details pertaining to any decision is known
to every one. Though we cannot “see” a decision, but from observable behaviours
we can infer that a decision has been taken.
Why organizations need to
take Decision:
Every organisation has some goals
to fulfill and to achieve them it lays down certain general or
specific guidelines (i.e. standard operating procedures), which helps in taking appropriate
decision. In fact guidelines are the most essential part of any management. Well-structured,
properly delegated, well-coordinated decision-making process is a sine qua non
for effectiveness of an organization. Effectiveness is also associated with the
knowledge, ability, experience of executives, their leadership style and decision
making techniques.
One of the jobs of executives is
to take decisions. Every executive has a unique style of taking decision. Their
performance is judged from the outcome of the decision as their decisions have
significant impact on the bottom line of the institution. Authority to take
decision varies as per the position held by a person in the organization.
Present decision influences the capabilities of future decision.Too many layers
in decision-making process affect the speed of decision-making.
Before taking a decision the person
has to enquire from his consciousness, whether he is really taking decision
after understanding the issue or whether his decision is based on emotions or
on prejudices or is influenced by the dictates of higher authorities. Emotion is a complex psychological state that
distorts feeling and ultimately results in to wrong judgment. Many a times our
decisions are based on our mood (psychological state) whether we are happy,
angry, sad, bored, or frustrated.
Risks in decision:
Decision and risks are
interrelated. Many decisions have multiple possible outcomes. Before taking
decision one
has to first decide whether the risk is necessary or desirable? It is advisable
to take
risk for right cause. Taking risks enables a person in learning to take better
decision; however, it has its own pitfalls.
Non-evaluation of alternatives, selecting
a bad or poor option, absence of right information leads to bad decisions. A
bad or faulty decision can have long-term impact on an organization. It also affects
the career and future prospects of the decision maker. Bad
decision generates regret, disappointment, dissatisfaction, humiliation and ultimately
influences future decisions. It is easier to avoid decision rather than taking
decision.
It is said that a bad decision is
better than not taking decision. Indecision can have negative impact on
organisation. Chester I. Barnard in his book ‘The Functions of the Executives’
in which he has dealt the "theory of cooperation and organization"
and "a study of the functions and of the methods of operation of
executives in formal organizations”, points out that executives are really
making the decision ‘not to decide’, and the decision not to decide may be as
risky as decision to act-for if a problem is ignored; it may become more
serious than it was at first.”
People in banks take decision as
per the discretionary powers vested with them. Subordinates take decisions
within the pre-decided areas and jurisdiction. Subordinates decisions are
supported if taken within their defined areas. Decisions of urgent nature
beyond the discretionary powers are taken in consultation with higher
authorities and action of the decision maker is subsequently confirmed or
ratified by that authority. This is also done to avoid bottlenecks in smooth
operations of the institution. Decisions, which are beyond the power and are
not of urgent nature, are recommended to higher authorities for their consideration.
Generally decisions involving policy matter or having far-reaching consequences
are taken by those who are at the helm of organisation or by the board. In
banks strategic decisions are mostly taken by the Board or by the Chief
Executive Officer or by the committee of executives constituted for the
purpose.
Taking Right Decision:
A person cannot take correct
and appropriate decision unless he is
clear about the purpose and the objectives for which he has to take decision or
has been asked to take decision. He has therefore to understand:
a) The
exact nature of the problem
b) Why the
problem requires solution
c) What
would be the consequences if decision is not taken for resolving the problem?
d) What
would be the likely impact of the decision?
Systematic and analytical thinking
of a problem is must for taking right decision. Decisions based on logic and
factual information are said to be the best. Decision
involves two aspects truth finding and truth making. Therefore, a decision
maker has to collect all relevant information, evaluate the entire facts and figures
and then examine it with cool and analytical
mind. He should not take decisions off hand but has to unearth hidden
information if any. He has to thoroughly examine every assertion and cross
examine it before deciding an important issue. He should possess sound judgment
ability and courage to take bold decisions and should be aware of the fact that
each alternative has some potential outcome.
Past experiences, reasoning
abilities, socio-economic status, belief of the decision maker, individual
differences affect decision making process. Over confidence of knowledge, believe,
opinions, attachment to people, interpersonal
problems, tendency to jump in to conclusions also result in
wrong decision. Most of the people are overconfident about their ability to
make decisions.
Decision maker has to realize that
once a decision is made variety of reactions are bound to occur. If the
decision is unpalatable to the majority, there
are all probabilities of conflict and dissatisfaction. He has therefore, to
visualize in advance the opportunities as well as opposition so that
appropriate measures could be taken in advance. Visualization helps in
generating alternatives Anticipating consequences, repercussions arising out of
a decision help in avoiding wrong decision. Decision maker has therefore to gather in advance sufficient information about every
plausible course of action. Decision is also influenced by
the prevailing circumstances in which the decision is taken. A decision is no
decision unless it is implemented. John
F. Kennedy said “Let us never fear to negotiate, but “Let us never negotiate
out of fear.” Similarly let us never fear to take decision and never
take decision out of fear.
Process
of Decision Making:
While
taking decision, the decision maker has to find out:
·
The exact problem?
·
Why
problem requires solution
·
What
information,
data, facts and figures are required for arriving at a decision?
·
Collect,
relevant information, facts, data and analyze them
·
Involving right people help in identifying alternatives
·
Evaluate
advantages, disadvantages, pros/cons
of alternative
·
Explore
variety of options and generate ideas for
solution
·
Foresee
obstacles, oppositions, consequences and rethink option
·
Determine
the best alternative, then select the right choices and
·
Take
decision
·
Implement
decision without pressure and fear
Qualities
of a decision maker:
A decision maker has to first understand the
need of a decision and what would be the impact (both direct and indirect) if no
decision is taken. Since decisions are made by integrating information;
decision maker has to have complete information,
data, facts, and figures about the issue. The data, information should neither
be biased, distorted, nor unreliable as it
would be difficult in taking decision
with biased or distorted facts. After analyzing the facts he should take
decision? Since decision involves logical thinking, the decision maker should
have the ability of logical thinking, as sound judgment depends on the ability
to judge logically and ability to understand people. Quality and effectiveness
of decision depends on the knowledge, ability, skill, experience, expertise, exposure
of the decision maker and on his position, power and authority. It also depends
on his sincerity, reputation, ability of take impartial decision and trust and faith
of people in him.
Understanding
of the decision masker should be clear. He should be friendly to all but
familiar to none and should not be influenced by emotions or psychological
biases as this may distort his thinking process. Psychological biases are
the tendency to take decisions in an irrational way which arises due to
subconscious thinking. Decision maker should not be biased by perception,
anger, discriminating mind or hearsay as it would influence decision. He should
have the capability of making the best decision and should not make decision at the gut instinct as it results
in to a higher level of risk. He cannot postpone decision on one or the other
pretext as delay is not only resented but attributes motives behind the delay.
Decision
should not only be fair but should appear to be fair. He should have proper
balance of head and heart and should analyse the problem with cool mind with
professional approach. There has to be transparency in his decision. The
quality of a decision depends upon the courage of the decision maker. He should be bold and matured enough for taking sound
judgment. Discussions and brainstorming help in generating more ideas in
solving the problem.
Types of decision:
Decisions depend on a particular situation or circumstances. It can be
rational or irrational. Herbert A Simon in his book ‘Administrative Behavior: a
Study of Decision-Making Processes in Administrative Organization’ mentions
that "decision-making’’ is the
heart of administration. According to him decisions are
of two types:
·
Programmed
(repetitive and routine) and
·
Non-programmed
(unique and novel)
(a) Programmed Decisions: Programmed decisions are short
term decision and are generally of
routine nature.
Such decisions are taken at the operating level on the basis of laid down
norms.
(a.1)Operational Decisions:
Operational Decisions are
programmed decisions. These are structured decision and are often made with
little thought. These decisions are of routine and repetitive nature and are
related to day today functioning. These decisions do not require much knowledge
and intelligence. Their impact is immediate and short. There is a set manual,
regulations, procedure, rules, which facilitate in taking decisions.
Regulations are based on established policies and experience. Subordinates are
authorized to take decisions within a defined area. For example in case of a
bank employee, decision to pass or not to pass a cheque is governed by the laid
down rules, procedures and on technical knowledge of the subject.
(a.2)Administrative Decisions:
Administrative decisions are short-term which are taken on daily basis. They
are based on the predetermined rules, procedures, agreements and are taken on
the predetermined dotted lines. These decisions are easy to take as rules and
guidelines support them. There is no deviation; it is just like applying
mathematical formulas. These are related
to working of employees in an organization
(b)Non-programmed decisions:
Non-programmed decisions are unstructured, complex, and non-repetitive and cannot be laid down in advance. Such
decisions are strategic, innovative, have long range impact on organization.
Such decisions do not have a 'custom made'
solution. There cannot be a set procedure to deal with them. These decisions
depend on particular situation or circumstances. It may be difficult to predict
how people would react as the impact of the decision may have a
long-term impact.
Decision-making
involves both Logical and Non Logical processes. Whereas logical process involves conscious thinking and logical
reasoning, non-logical involves reasoning and thinking which is not conscious. Therefore, the best way is to have a logical
and systematic decision-making process which would help in addressing the
critical elements and would result in a good decision.
Once
a decision has been made it is advisable to explain to those affected by it. Tell
them why you chose this particular alternative. Providing more information
improves the chances of people supporting the decision. Non programmed decisions require more intuition and judgment of decision
makers.
(b.1)Strategic
Decisions:
Strategic decisions are complex
decisions. Such decisions are taken in accordance with the mission of organization.
These decisions are the framework, guidelines for smooth management. They have
long-term goals, philosophies and are based on estimation of future needs.
Since decisions are of non repetitive nature and are least structured hence they
are most risky. Such decisions have long-range impact and repercussions on the organization.
These decisions are concerned with the whole environment of the organization
and are mainly concerned with resources including people. Such decisions are
different from administrative and operational decisions. While taking long term
decision hurdles/ eventualities need to be kept in mind.
Administrative decisions are of routine nature
which helps in facilitating strategic decisions or operational decisions.
Operational decisions are technical decisions which help execution of strategic
decisions. Generally the authority to take decision on policy matters/issues is vested at the top most level, such as Board or
Chief Executive Officer or committee of executives constituted for the purpose.
(b.2)Shared Decisions:
Shared decisions are consensus decision
based on team culture. Such decisions bring out expertise and resources of
every member. Shared decision helps in using ideas, suggestions, options,
dimensions, angles, emerging from group discussion. This results in to
improvement in the quality and effectiveness of decision. It involves those who
are going to implement the decision or are affected by them. The skills
required in shared are the ability of solving problems.
(b.3)Committee Decisions:
One of the potential advantages of a group
decision is that "several heads are better than one”. Decisions
taken by committee are joint decisions and no individual responsibility lies in
case the decision turns out to be wrong in future. Organizations appoint committees
of experts for evaluating a proposal / projects from various angles viz.
technical, financial, administrative, marketing etc., and decisions taken by
committee, are implemented. The only drawback in committee decision is that
creativity is lost.
(b.4)Spot Decision:
On many occasions in real life
decisions are made on the spot. There is no logical exercise involved in such
situation as these decisions are taken at the spur of the moment. These
decisions are instinctive, non-programmed, non-repetitive and are of novel nature.
When an authority, looking at the emergent circumstances of the event takes a
decision such decisions are termed as on the spot decision. These decisions
indicate presence of mind of the decision maker and his ability to judge the
situation without loss of time. Quality and effectiveness of decision depends
on the knowledge, skill, experience, exposure of the decision maker and his
position in the organizational hierarchy, authority and power vested in him. Spot Decisions are situational
decisions e.g. decision to suspend an employee in the event of commitment of
fraud or providing ex-gratia payment in case of an accident.
(b.5)Heuristic approach:
Heuristics is instinctive way of solving a problem. It is an
experience-based mental shortcut technique which helps in making quick and
efficient judgment with little information. People retrieve information which
is readily available in making a decision. Those who rely on heuristics fail to
understand that what had worked in the past may not work again. They do not see
alternative solutions or explore new ideas. While heuristics are helpful in
many situations, they can also lead to biases. People rely on a host of
heuristics for convenience and speed in decision making.
(c)Other types of decision:
(c.1)Decision under Duress or
Coercion:
Duress is the practice of
persuading someone to do something by using force or threats. It is an unlawful
act an undue influence which induces a person to act in a manner which
otherwise he would not like to do. As
per Section 94 of Indian Penal Code, 1860 ‘acts which a person is compelled by
threats are not a valid act. The basis of the principle under section 94 is the
famous maxim ‘acts ne invito factus est mens actus’ which means an act which is
done by me against my will is not my act. Coercion is the practice of
compelling a person or manipulating him to behave in an involuntary way by use
of threats, intimidation or some sort of pressure or force. It is an unlawful
activity. Undue influence is moral coercion. Competence
of human judgment decreases under duress and coercion. A person under coercion
or undue influence may not be able to take appropriate decision.
Though this affects a person’s
ability to make decisions, it does not remove his rights to make decisions,nor
does it provide any authority to over-ride the person’s wishes.
(c.2)Decisions under stress:
We make decisions all the time and
many of those decisions are made under stressful conditions. If a situation
involves risk, person taking decision becomes more cautious and adopts
risk-avoiding behavior. There is a general feeling that the best decisions are
made under stress. Whereas for some individuals, heightened stress elevates
their performance and for others, stress has negative impacts which results in
to deterioration of performance. Ability to cope with stress depends upon an
individual's perception or interpretation of an event. Generally big decisions
are the sources of stress which make the situation worse. People making
difficult decision under stress pay more attention to the upsides of the
alternatives they are considering and less to the downsides. The need to better
understand judgment and decision-making under stress stems from high-risk
occasions and emergency situations.
(c.3)Peaceful decisions.
Peaceful decisions automatically flows come
from the heart and spirit. There is no anxiety. According to Warren Buffet, if one chooses to make decision, better sleep
over it for a day or two. It’s ok. The world can wait.
(c.4)Contingent
decisions.
Contingent decisions are based on
happening of an event and are kept on hold until some conditions are met. Generally
while taking policy decision contingency plan is decided/prepared to meet
exigencies.
(c.5)Political decisions:
There are two important categories
of democratic decision viz politicians, government
officials and ordinary citizens. Politicians are experts in politics
and in the art of maneuvering. They approach problems from an overall
perspective and take in to account the commitments mentioned in their election
manifesto. They are aware of the issues which are
generally asked by masses. They have their own agendas and time schedule
and know the art of motivating without commitment.
Due to their role in allocation of
resources and policy formulation they are the key drivers of policy change. Their
concerns are an integral part of decision process.
By addressing voters on a
particular agenda such as bringing back black money, giving free lap tops to
students, free TV sets, taking care of a particular cast or group or by giving
special status and package to a particular state sway election results.
Once a politician is selected by voters he joins
cabinet. If he is from the ruling party decisions are made by his government. Decision
can either be taken by cabinet or by executives. Generally cabinet decisions are
made after discussion by majority.
Summary:
Decision making is an important area. There are several factors viz.
past experience, belief, biases, past notions, individual differences,
commitment, attachment to an individual, mental short cuts age personality
flaws that influence decision making. Behavior of decision-makers is influenced
by the prevailing environment in organization. He has to keep in mind that
situation continuously goes on changing therefore, he cannot delay decision.
Taking tough and bold decision make people stressed and anxious.
References:
2.
Indian Penal Code 1860
