Decision making as the vehicle of managerial work: significance and the rational process

What the statement means

A vehicle is what carries a load from one place to another. The statement says that decisions are what carry a manager's workload: plans, structures, staff, instructions and controls exist only because someone has decided on them, and a manager discharges every responsibility by deciding and then seeing that the decision is carried out. According to Peter Drucker, "Whatever a manager does, he does through decision making". No part of a manager's job escapes it: it is needed in every function, from planning through organising, staffing and directing to controlling, and in every area of the business, such as purchase, marketing and production, and for that reason decision making is often described as the essence of management. Resources start moving towards the organisation's goals only when decisions are taken and then put into effect. The statement is therefore sound.

Meaning and nature of decision making

Two terms need to be kept apart. Decision making is the work of weighing up each of the courses open to management with care and settling on the best of them; a decision is what that work produces, namely the course of action deliberately picked out of the possible ones in order to reach a wanted result. Its nature can be summed up in a few points:

• It depends on the situation. What a manager decides turns on the circumstances of the moment: the same manager may choose one course in one setting and the opposite in another, and sometimes the wise choice is to do nothing at all.
• It needs a real choice. Where only one course exists there is nothing to decide; at least two options are needed.
• It is mental work. Deciding is an act of thinking, in which imagination and creativity count, and so do experience and intuition.
• It serves goals. A decision is judged good when it helps the organisation reach its goals.
• It goes on everywhere and all the time. Managers at lower, middle and top levels, in every functional area, take decisions, and the activity lasts as long as the organisation does.

Decisions may be routine or strategic, programmed or non-programmed, and individual or group. When the same problem keeps coming back, a fixed procedure can settle it, and such a programmed decision is handed to the lower levels of management; a new, unstructured problem has no ready procedure, so the non-programmed decision it calls for is generally taken at the top.

Significance of decision making in management

1. It mirrors the manager's ability. A decision is only as good as the competence, judgement and skill of the manager who makes it, and the business world of today keeps making decisions more complex.
2. It sets the shape of the organisation. What the organisation aims at, how its structure is designed and which techniques it uses to control work are all settled by decisions.
3. It is the core of planning. Planning means choosing among alternative courses, so it cannot happen without decisions, and it in turn helps managers decide rationally.
4. It lets the load be spread. Because programmed decisions go to the lower levels, top managers keep their time for strategic choices. Pushing decisions down through delegation speeds them up when it is effective, and frequently leads to better ones, because subordinates who work closest to the operations are likely to see the facts more clearly.
5. It puts resources on the line. A decision draws on the organisation's time, effort and physical resources, once while it is being planned and again while it is carried out; that is why it has to be both right and timely, or those resources are wasted.
6. It makes or breaks the organisation. In the end, whether a business succeeds or fails depends on the decisions its managers take.

The process of rational decision making

To call a decision rational is to say that it can be defended by reasoning. The manager has studied the problem, gathered the facts and figures that matter and compared the possible courses before choosing, so the outcome does not reflect the decision maker's personal bias; an irrational decision, by contrast, rests purely on hunch and intuition. Each stage builds on the one before, so the order below is fixed:

1. Pinning down the problem. The manager looks at conditions inside and outside the organisation to find what actually needs deciding, and states it precisely, because an answer can be no better than the question it responds to.
2. Diagnosing it. With the important facts collected and studied, the manager works out where the problem came from, what is causing it, how far it extends and how serious it is.
3. Developing alternatives. Good options are often not obvious, so the manager looks for several, by research, analysis and fresh thinking, rather than settling for whichever workable idea turns up first; following the principle of the limiting factor, attention goes to the strategic factors that matter most in solving the problem.
4. Evaluating them. The likely results of each option are forecast and its costs set against its benefits; the manager asks how risky it is, how long it will take, how efficient it is and whether resources allow it, keeping both qualitative and quantitative factors in view.
5. Choosing the best. The winner is the option that yields most under the conditions that actually exist. To pick it, the manager relies on experience, judgement, research and analysis, and gives due weight to the organisation's plans and policies and to the human factors involved.
6. Implementing and following up. A decision achieves nothing until it is acted on. The people responsible must be told of it, and their acceptance, commitment and fullest cooperation won; authority has to be delegated and resources allotted for it. Once it is in force, regular progress reports show how it is working, and if they point to a flaw the decision is changed.

Applying the process to an illustrative case

Suppose a hypothetical textile mill in Surat finds its export orders falling. Defining the problem shows that the issue is not total demand but lost orders for one fabric. Diagnosis, from buyer feedback and cost sheets, finds that delivery times are longer than rivals'. Alternatives are listed: add a shift, buy faster looms, subcontract part of the weaving, or drop the fabric. Evaluation compares their cost, risk and time to take effect: new looms are costly and slow to arrive, while a shift needs trained workers the mill lacks. The managers choose to subcontract part of the weaving for six months while training staff for an extra shift. They then implement by briefing supervisors, contracting two nearby units and tracking delivery times every week, ready to revise the plan if quality slips. Each part of their workload, from planning to control, has been carried by this one decision.

Conclusion

Decision making is the medium through which managers do all their work, and the quality of the organisation's results follows from the quality of its decisions. A rational process, applied with judgement and followed up after the decision, is the manager's best safeguard against costly mistakes.