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"A centre of Excellence in the Service of Banks, FIs and their Customers"  


Director (2011-2012)

Decision- making: some reflections

Effective decision-making is vital for success of the organization. Management decisions can be broadly divided into two categories. One is Systemic decision and the other is transactional decision. The main question is whether it is a fundamental disorder or a stray event.

The generic has to be always answered through rule, principle and here systemic decision is involved. This is a systemic decision. But transactional decisions are transaction-based dictated/determined by already set procedures and rules. These decisions have limited impact and can be quietly taken based on experience. Sometimes, the decisions can also be classified as four different types of occurrences.

First, there is the truly generic event, of which the individual occurrence is only a symptom. Most of the so-called problems that come in work place are of this nature. But when we address the individual occurrence of the symptoms, we merely make a series of adaptations, rather than taking the systemic decisions addressing the generic issue.

Second, type of occurrence is the problem which is one unique event for the institution and which sometimes appears to be reflecting a systemic issue, but in actuality it is generic problem, going by its very impact and far reaching implications, e.g., say merger of two banks.

Third, is the truly exceptional event that the executive must distinguish but may not be of systemic nature, say a huge power failure on the day of annual closing. When exceptional event take place, question is asked whether it is truly exceptional or just manifestation of a generic problem.

Fourth, a purely exceptional event but has a manifestation of systemic issues. Of course, it needs no elaboration to say that all systemic and generic issues need more thinking and exhaustive groundwork for taking an effective decision.

Now let us enumerate few sequences of steps of taking decision:

Classifying the problem. Is it generic? Is it exceptional and unique? Or is it is the first manifestation of a new genus for which a rule has yet to be developed?

Defining the problem. What are we dealing with?

Specifying the answer to the problem. What are the “boundary conditions”?

Deciding what is “right”, rather than what is acceptable, in order to meet the boundary condition. What will fully satisfy the specifications before attention is given to the compromise, adaptations, and concessions needed to make the decision acceptable?

Building into the decision and action to carry it out. What does the action commitment have to be? Who has to know about it?

Testing the validity and effectiveness of the decision against the actual course of event. How is the decision being carried out? Are the assumptions on which it is based appropriate or obsolete?

The decision:

The effective executive has to start out with what is “right” rather than what is acceptable precisely because a compromise is always necessary in the end. But if what will satisfy the boundary conditions is not known, the decision maker cannot distinguish between the right compromise and the wrong compromise and may end up by making the wrong compromise.

A decision is not decision, which does not, results in action. Such decision is mere contemplation or wishful thinking rather than the executive decision.

An effective executive makes decision in a systematic process with clearly defined elements and in a distinct sequence of steps. Indeed, to be expected (by virtue of their position or knowledge) to make decisions that have significant and positive impact on the entire organization, its performance and its results characterize the effective executive.

Time element is also important in decision-making. Dabbling through varied information without actually taking decision and sometimes even skewed decision lead to ineffective decision-making. Taking responsibility for the decision is again a vital aspect. If one executive is not prepared to take responsibility, automatically then his contribution will be minimal to the decision making process.

On this subject, another import aspect of executive decision-making is people decision i.e., placing people, giving them responsibility. People decisions are those involving managing people, i.e., placement, job assignment, evaluation, etc. No other decisions are long lasting in the consequences, or so difficult to unmake. But here we can’t unmake it. Some studies reveals that only 1/3 rd of the people decisions are effective whereas the rest is having a negative bearing.

Some of the decision-making steps:

  • Think through the assignment
  • Look at a number of potentially qualified people i.e. how many people have the required traits and qualifications and skills to fill the slot.
  • What are the strengths each possesses and whether these are the right strength for the assignments
  • Discuss each of the candidates with several people who have worked with them
  • Make sure the appointee understands the job

People’s decisions are high-risk decisions. Executives who do not make the effort to get their people decisions right, do more than risk poor performance. They risk losing their organization’s respect.

I will sum up the discussion with two beautiful quotes on the topic

“Take time to deliberate, but when the time for action has arrived, stop thinking and go in for”
Napoleon Bonaparte

“Each indecision brings its own delays and days are lost lamenting over the lost days…What you can do or think you can do, begin it. For boldness has magic, power and genius in it”
Johann Wolfanag