When there are different ways of performing a task, it becomes necessary to find out the best way and that is what decision-making is all about.

The need for decision-making may be stated as follows:

  1. Decision-making makes it possible to adopt the best course of action in carrying out a given task. When there are different ways of performing a task, it becomes necessary to find out the best way and that is what decision-making is all about. The course of action finally selected should produce the best results.
  2. By choosing the best method of doing any work, decision-making ensures optimum use of the enterprise resources, namely, men, machines, materials and money. Resources are always scarce and therefore, it is necessary to make a proper use of the same.
  3. Decision-making helps to find a solution to any problem in a work place. For example, if an organization faces the problem of low productivity, such a problem cannot be ignored and it becomes necessary to find a remedy. To find a remedy, the actual cause of the problem must be identified after which corrective action may be taken. If negative employee attitude is found to be the root cause of low productivity, the management may have to decide on the right course of action to be adopted to change such a negative attitude.
  4. Decision-making helps to identify the best course of action in each given situation and thereby promotes efficiency. The course of action finally selected should be acceptable to both the workers and the management. Satisfied workers put in their best efforts and this result in higher output. Higher output satisfies the management and it may come forward to share the gain with the workers. Thus, there is improvement in the overall efficiency of the organization.
  5. The conflicts in an organization are resolved through decisions. For example, the workers may want better pay and improved working conditions and put forth their views to the management. If the management avoids taking a decision on the matter, the workers are not going to give up. A decision, therefore, becomes necessary. Such a decision need not be one-sided decision. The management may evolve a formula that is acceptable to the workers as well.