Why Decision Making is Important

Why is decision-making important? This article explores the importance of decision-making. Indecisiveness or lack of decision making will lead to nothing, but failures and wastage of time. Effective decision making is one of the factors of success.

Decision-making for an individual as well as for a business setting is equally important. For management, decision-making is an important component.

As an individual, the decisions you make have a huge impact on your life. They are important for your success and happiness.

Businesses make decisions every day. They take small and big decisions on a daily basis related to financing, investing, or human resource management, etc.

What is Decision-Making?

Decision-making can simply be defined as, making or choosing choices among different alternatives.  

In other words, decision-making can be regarded as an outcome of a mental process that leads to a selection of a course of action among several alternatives.

The output of a decision can be an action or an opinion of choice. Sometimes, decision-making is not easy; therefore it involves some degrees of risk as well.

 

Decision-Making Process

Decision-making is a process. In order to arrive at a particular decision, you will have to go through a process.

The process involves a sequence of steps. The steps in the decision-making process may vary. You will find 5 or 7 steps decision-making process. But, in my opinion, the 7 steps decision-making process is more relevant.

 

The 7 steps decision-making process:

1. Identify or define the problem, challenge, or opportunity
2. Gather relevant information
3. Identify the alternatives
4. Evaluation or analysis of the alternatives
5. Choosing among the alternatives
6. Take action or to decide
7. Review or evaluate the decision

 

Importance of Decision Making

The importance of decision-making can’t be ignored. It is important for an organisation as well as for an individual.

In this section, I explained the importance of decision-making from both perspectives, personal and organisational.

If you want success in life then you have to make good decisions. Good and effective decision-making can lead you to success and make you an extraordinary person.

In the same way, organisations have to make a good decision to grow and make a profit.

So, I divided this section into two parts:

1. Decision-making of an Individual
2. Decision-making in an organisation

 

1. Decision-making of an Individual

You should not ignore the importance of decision-making in life. Every one of us makes many decisions in life.

Success and failures are directly related to your decisions. Good decisions pave the way for success. Ineffective or lack of decision-making leads you to failures.

Whatever or who you are now is the product of your decisions or choices you made in past.

The quality of your life is connected with your decisions. And decision-making helps you to decide effectively.

In life, two decisions are the most important. When you decide about your;

• Relationship
• Profession

 

Relationship

Which relationship you have to stay is an important decision in life.

As an individual, you have to spend half of your time with your partner.

A strong relationship is the key to happiness. And the key to success is happiness in life.

When it comes to deciding about a relationship decision-making becomes extremely important.

People who stay in a wrong or weak relationship normally end up in stress and depression.

Therefore, when you decide about a relationship decision-making plays an important role, because you make the choice consciously.

 

Also read: Why is Personal Growth Important?

 

Profession

Your profession is important the same as your relationship. Your profession or work is the second thing to spend your time on.

Deciding about the profession is an important decision in life. The good profession you decide about, the more successful you become.

Many people in the world don’t get professional success because they don’t like what they do every day.

To be professionally successful you must decide about a profession that you like the most.

For an individual, decision-making is quite important when it comes to choosing a profession.

Apart from that, decision-making helps you what to do and what not. It gives you a direction.

Taking the wrong decision is not bad, but a lack of decision or indecisiveness is.

 

2. Decision-making in an Organisation

Decisions are imperative for an organisation or business. It is a driving force for any organisation.

Management in any organisation takes different decisions. Without decision-making, good business performance, success, and profit are almost impossible.

What are the benefits of decision-making? The decision-making process helps businesses in many ways. Some of those are:

 

Overall Direction of Organisation

The decision-making process helps the management to decide about the overall direction of a business.

The management decides about financing and investing, choosing from different alternatives. Financing and investing are two important factors that require careful research for alternatives and possibilities.

It also helps management to decide about vision, objectives, and goals for that organisation.

Decision-making is important to determine the course of actions to achieve desired results.

It is essential for correcting the overall direction of a business and an important tool for management.

 

Use of Resources

Decision-making helps to use the resources in an efficient way. A management chooses from the best alternatives, and those results in the best use of resources.

Effective decisions can help to utilise the resources such as man, machine, money, material, and other resources in a good manner.

When management takes the right decisions at a right time it saves resources and wastage of time.

It helps businesses to operate at minimum cost and high profit in the market.

 

Management Functions

As you know, management has different functions such as planning, organising, leading, and controlling. Management manages the work process through these functions.

A very important thing is that, decision-making is a part of all these functions. Without decision-making, it is not possible to perform all these functions.

For example, for planning, you need to make decisions for the future. For taking a decision you need different alternatives to select from them.

In the same way, the management has to take decisions for organising, leading, and controlling.

So, decision-making can help in the overall management of a business.

 

Source of Motivation

An effective decision-making process can be a great source of motivation for employees or subordinates.

When management takes logical and rational decisions it results in motivation for the company’s employees.

The employees feel positive when they participate in the implementation process of those rational decisions.

Good decisions can result in high profits, and in turn more financial and non-financial perks and privileges for employees. Therefore, decision-making is correlated with motivation.

 

Achieving Goals and Objectives

Every business or organisation makes efforts to achieve desired goals and objectives. Achieving desired objectives and goals mean achieving desired profits.

To achieve desired short-term and long-term goals you have to make good decisions. And good decisions come from good alternatives or choices.

Decision-making helps you to choose or select the best one from available choices or alternatives.

This process directs resources for achieving organisational objectives.

 

Dealing with Problems and Crises

The businesses or organisations face problems, difficult situations, and crises.

Decision-making helps the management to cope with problems and tough situations.

The management can choose a better alternative to handle the situation effectively.

The process of decision-making is useful for overcoming financial and non-financial crises.

 

Growth and Diversification

Continuous growth is the objective of every organisation. They make efforts to ensure an unbreakable growth.

For effective growth, organisations make effective decisions and those decisions lead to continuous growth.

Decision-making provides different alternatives for growth and the management can choose the best ones that suit the organisational culture.

Good decisions provide a basis for diversification. Diversification is important for an organisation.

Diversification comes from different choices or alternatives. It can be in the form of human resources, or investment.

The decision-making choices can help to have a diversified organisational culture.

 

Final Thoughts

Decision-making is an important part of your life. As an individual, you have to make important decisions. And those decisions have a huge impact on your life.

For organisations, decision-making is a fundamental factor. It helps management to make effective decisions for achieving desired results.

Decision-making affects all aspects of your life and in the same way, the performance of an organisation.

 

Frequently Asked Questions (FAQs)

Why it is important to make decision?

Making a decision is important to achieve anything in life. Lack of decision or indecisiveness will lead you to failure.

 

Why decision-making important in management?

Decision-making is quite important for management, because it has to make small and big decisions to achieve organisational goals.

 

Why does decision-making matters in our life?

To have a successful life, you have to make decisions. If you don’t make decisions you will face problems and failures in life.

 

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