Introduction

One of the critical tasks of management is to make decisions.
It is the central process which influences all the operations in an organization.

As per Cole (2004), the process of decision making can be defined as a process which focuses on the identification of the problem, evaluation of the alternatives followed by the selection of the best alternative.
The best choice is made on the basis of the information and the alternatives which are available to the decision maker.

The process of decision making is focused on the generation of an optimal solution to the recognized problem.
All decision making activities comprise of the three basic activities of intelligence activity, design activity as well as the choice activity.

Even though the decisions are taken on the basis of these three primary activities, the domain of these activities varies as per the decision to be taken.
Some decisions are relatively simple while some types of decisions are complicated and require a complex range of considerations to be analyzed.

As such, individuals need to take a systematic approach to decision making since it is instrumental for the success of effective leadership and attainment of the objectives of the organization.

The Classical Approach to Decision Making

There are several approaches to the process of decision making.
The traditional approach is based on the concepts of classical decision making theory, also known as the rational economic model (Huczynski & Buchanan, 2001).
This is because this view has always emphasized on the relevance of rationality as well as rational decisions in the entire process of discussing and prescribing decisions.

The classical approach states that the decision making process starts with asking the right questions to identify the problem at hand, followed by finding creative answers and analyzing them to ascertain that the selected option is optimal and the best one at hand.

As per Hucaynski & Buchanan (2002), rationality is equivalent to the application of the concepts of positivism, scientific reasoning and empiricism. The decision criteria of reasoning, evidence as well as logical arguments are used to arrive at the decision and all those decisions which are based on rationality are termed rational decisions.

Griffin (2005) describes the six steps which must be followed to take rational decisions:
1. The first step is the recognition and definition of the decision situation. The

How should taxpayers and policymakers address systemic risk created...