The Art of Taking Decision
By Dr. P.K.Khanna
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
1. ‘The Functions of the Executives’ by Chester I. Barnard, Harvard University Press, 1938
2. Indian Penal Code 1860