Decision-making is an act of choice wherein an individual or a group selects a particular course of action from the available alternatives in a given situation. The basic characteristics of the decision-making process are as follows:
I. It is a human process involving to a great extent the application of intellectual abilities.
II. It is a process of choosing a course of action from among the alternative courses of action.
III. Decision-making in business is always related to certain objectives.
IV. It is the end process preceded by deliberation and reasoning.
V. It is always related to a situation. A manager may take one decision in a particular set of circumstances and another in a different set of circumstances.
VI. It involves some commitment, may be even for a short period.
Decision-making is at core of managerial planning. It involves establishing goals, defining tasks, searching for alternatives and choice of the best alternative. In an organization, decision-making may be carried out by both individuals and groups. In modern organizations facing the environmental uncertainties, group decision-making has become almost indispensable.
In any organization, decisions are made by individuals without taking the help of the group members while more decisions are made by group. Therefore, the question arises: what are the situations in which individual decisions should be preferred and what are the situations in which group decisions should be preferred? Following is the analysis of situations for individual and group decisions:
1) Nature of problem: if the policy guidelines are given, individual decision-making will result in greater creativity as well as more efficiency. Where the problem requires a variety of expertise, group decision-making is suitable.
2) Acceptance of decision: where organizational prescription makes it mandatory to go for group decision, the decision would be accepted only when It has been made by the appropriate group, for example, committee decision. In other cases also, group decision is more accepted for implementation.
3) Quality of decision: group decision-making generally leads to higher quality solutions unless an individual has expertise in the decision area and this is identified in advance.
4) Climate of decision-making: supportive climate encourages group problem solving whereas competitive climate stimulates individual problem solving.
5) Time availability: group decision-making is a time-consuming process and, therefore, when time at the disposal is sufficient, group decision-making can be preferred.