Decision making is a process of selecting the best course of action from among many alternatives. It is useful for the successful operation of organizational activities.All the managerial functions such as planning, organizing, directing and controlling are determined by the decision. The following points describes the significance of decision making in the organization.
1. Pervasive Function
Decision making is essential in each level of management. Top level management makes strategic decisions such as planning, organizing, directing and controlling. Middle level management makes tactical decisions such as division of works, fixation of authority and responsibility, integration of efforts etc. Operating level management makes regular operating decisions such s preparation of schedule of daily works, divisions of works, delegation of authority etc. Thus, decision making function is performed in all the levels of management according to needs. This is necessary to bring uniformity and smoothness in the organizational performance.
2. Indispensable Component
Decision making is known as an inseparable part of management functions. It is one of the essential processes for successful operation of business. It determines all management functions and covers every part of the organizational structure. Every manager from top level to the first line is involved in the decision making process according to the nature of works.
3. Evaluation Of Managerial Function
Decision making is a time consuming process and decision makers spend more time to select the alternative. The quality of decision serves as the yardstick for evaluating managerial performance. It provides a clear line of guidance to the management for the achievement of defined objectives. The achievement of managerial performance is evaluated and measured with planned performance.
4. Selection Of Best Alternatives
Decision making is the process of selecting a best course of action from among many alternatives. A problem might be solved in different ways on the basis of time and situation. The decision maker evaluates all the possible alternatives on the basis of organizational process and suitability. The selection of the best course of action is significant to bring smoothness in operation and achieve organizational goals.
5. Establishment Of Plans And Policies
The establishment of plans and policies is the initial part of decision making. Every organization is established for a definite objective and for this, formation of plans and policies is necessary. Thus, at the initial stage, the management decides the clear line of action and the procedures to gain defined objectives. The practical implementation of defined line of actions and procedures is an efficient way in bringing smoothness and uniformity in organizational performance. Finally, it is helpful in achieving organizational goals.
6. Successful Operation Of Business
Decision making is one of the important tools for the successful operation of the business. In course of operation, many problems may arise at different situations and times. The management solves those problems in time by using decision making tools.
