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While leadership is a combination of many things, your characterization of
particular leaders and their leadership effectiveness is often a reflection of the
decisions that they have made or not made. In this chapter, you’ll learn that while
decisions are made every day within organizations, the process does not always go as
well as it could. Understanding how decisions are made, how they can be biased, and
how to make the decision-making process run smoothly will help you to be a more
effective manager. But first, let’s define decision making.
11.1 Understanding Decision Making
LEARNING OBJECTIVES
1. Define decision making.
2. Understand different types of decisions.
What Is Decision Making?
Decision making refers to making choices among alternative courses of
action—which may also include inaction. While it can be argued that management is
decision making, half of the decisions made by managers within organizations
fail. Therefore, increasing effectiveness in decision making is an important part of
[1]
maximizing your effectiveness at work. This chapter will help you understand how to
make decisions alone or in a group while avoiding common decision-making traps.
Individuals throughout organizations use the information they gather to make a
wide range of decisions. These decisions may affect the lives of others and change
the course of an organization. For example, the decisions made by executives and
consulting firms for Enron ultimately resulted in a $60 billion loss for investors,
thousands of employees without jobs, and the loss of all employee retirement funds.
But Sherron Watkins, a former Enron employee and now-famous whistleblower,
uncovered the accounting problems and tried to enact change. Similarly, the decisions
made by firms to trade in mortgage-backed securities is having negative
consequences for the entire U.S. economy. Each of these people made a decision, and
each person, as well as others, is now living with the consequences of his or her
decisions.
Because many decisions involve an ethical component, one of the most
important considerations in management is whether the decisions you are making as
an employee or manager are ethical. Here are some basic questions you can ask
[2]
yourself to assess the ethics of a decision.
• Is this decision fair?
• Will I feel better or worse about myself after I make this decision?
• Does this decision break any organizational rules?

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