Making decisions is an intelligent action that any normal human being performs several times each day, starting from the time one decides to get up out of bed and ending with what one decides to think about as one falls asleep at the end of the day. In between are thousands of decisions that are made following a few basic and simple rules, but these decisions may differ in their complexity.
Some decisions are simple and have short-term consequences, such as deciding what to wear to school or at work, but some may be complex because they have long-term consequences, such as deciding what academic programme to take up in the university. The complexity of decision-making depends on several factors, of which the time frame – of making the decision and the consequences of the decisions made – is only one. Examples of other factors are the impact of the decisions on the person, the number of people involved in making the decision and who would be affected by the consequences of that decision, and the risks to which decision-makers are willing to expose themselves and their resources.
Organisations, being made up of several people with a common set of objectives, are subject to these same factors that affect the way that decisions are made. However, unlike personal decisions that may affect only one person, i.e., the decision-maker, organisational decisions have an impact on everyone in the organisation, on the customers that the organisation exists to serve, the owners of the business, and on other parts of society in which the organisation operates. Thus, organisational decisions carry greater risks, which is the probability that the perceived effect of the decision would not be the same as or even close to what is originally intended. Decisions are made to achieve a specific outcome, and in the case of a business organisation, such an outcome is intended to be in line with the purpose and business of the organisation (Sitkin