We are always faced with situations where we have to make choices almost every day of our lives and making a choice out of many constitutes a decision. This decision may be a simple one such as choosing clothes to wear, selecting food from a menu or deciding general activities for the day or it may be a major decision such as changing a job or purchasing a house.
Rational decision making and problem solving may be used interchangeably since a problem has to exist and a decision is made to solve such a problem. While most decisions indeed involve a problem, some decisions are comparatively routine and may not involve a problem.
For example, decisions as to what to wear or which movie to see or whether to stay or go swimming are routine decisions and simple choices among available alternatives requiring common sense and simple qualitative judgement.
Problem solving on the other hand is a much more vigorous process which requires rational inquiry based upon unemotional reasoning requiring identifying the problem, generating feasible solutions for it, choosing the best solution from utility point of view and then applying this solution to see if it works efficiently and effectively. In general, while decision making results in a choice from many alternative courses of action, the problem solving results in resolving the disparities between the desired performance and the performance that is actually obtained.
Decision making really is a complex mental exercise. Some of the decisions we make are highly significant with highly important consequences. The more significant decisions very often need the exercise of considerable analytical judgement and the quality of such judgement is the backbone of successful decisions.
These judgements must eliminate the root causes of the problems that have necessitated such decisions. Ineffective decisions attack only the symptoms and are only cosmetic in nature. They may solve the problem on the surface or on a short run basis, but in order to find a lasting solution, the problem must be attacked at its roots.
As we all face the future, its unpredictability brings to us certain situations which are unexpected and hence problematic in nature. As we grow older and share added responsibilities, we develop certain characteristics which give us some intuitional senses which help us solve some of these problems and we also learn some techniques and methodologies through the acquisition of knowledge and skills which assist us in solving certain types of problems. These problems which require decisions exist at personal level, organizational level and at societal level.
Individuals must make major decisions regarding their careers, their marriage and family and other decisions which have far reaching personal implications. The organizational decisions involve problems relating to investments, products, marketing, and location of production or service facilities, dealing with personnel problems, and contributions towards community welfare and so on.
Societies, in general, have many problems that affect their very survival such as crime, energy shortages, and depletion of finite resources, health services, employment, and political conflicts among nations and so on.
All these problems have to be faced and solved. No person can avoid problems and ignoring a problem is never a solution. As Thomas J. Watson Jr put it:
“I never varied from the managerial rule that the worst possible thing we could do would be to lie dead in the water with any problem. Solve it, solve it quickly, and solve it right or wrong.
If you solved it wrong, it would come back and slap you on the face and then you could solve it right. Doing nothing is a comfortable alternative because it is without immediate risk, but it is an absolutely fatal way to manage a business.”
From organizational point of view, the decision making process is such an integral and important part of management that some management thinkers propose that management is simply a decision making process.
They call it the “decision theory school of management.” The basic emphasis of this school is not on people or environmental variables influencing the management behaviour but on the process of decision making and the theory that all management thought can be built around it. According to Simon:
“A theory of administration should be concerned with the process of decision as well as with the process of action. Even if the decision making is not the only skill required for effective management, it cannot be denied that in fact it is an essential and highly important skill. This skill is actively utilized in all other functions of management such as planning, organizing, directing and controlling.
Hence, decision making is widely acknowledged as the center of executive activity in business and industry and is considered as the major criterion for the evaluation of an executive’s administrative performance.”