Types of Decision (Decision Making)
Decision-making is a crucial component of management. It is an intellectual art to choose the right option out of many. In organizations, managers have to make several decisions as to needs and situations. The types of decisions or decision-making can be many some major decision types found in the organization are mentioned below.
A programmed decision is repetitive in nature and usually follows the established procedures of the organization. While taking such programmed decisions managers do not have to give their in-depth knowledge to come to a conclusion since they have already available rules, regulations, and procedures to execute them.
Usually, programmed decisions are taken by the lower level management for regular activities like purchasing raw materials, keeping records, disputes settlement, etc.
The non-programmed decision is the opposite of the programmed decision where managers do not take decisions regularly. These decisions are specific in nature and are taken by the more authoritative or executive body of the firm.
Similarly, non-programmed decisions have no such established procedures to follow, and when the time comes executives have to collect and analyze the data to come to a decision.
Routine or Tactical Decision
The routine decision is related to the day-to-day activities of the organization. Routine decisions are made to solve repetitive problems that may arise in the regular activities of the company to bring smoothness to regular activities.
Routine decisions are also called tactical decisions. These decisions are normally taken by the lower level or departmental level managers for their respective working areas.
Basic Decision or Strategic Decision
Strategic decisions are those that are made at the highest levels of management with the long term in mind. Basic decisions are another name for strategic decisions. Such choices are crucial for the organization’s long-term survival and growth.
Making such strategic decisions are usually in the hand of top managers which requires intuition, creativity, and an in-depth review of the future impact of alternatives. Long-term goals, objectives, and strategic plans are strategic decisions.
When you make decisions as manager on behalf of the organization that affects the organization’s performance such a decision is known as an organizational decision. Organizaitonal decision is formal in nature as such it is also called formal decision.
These decisions are delegative in nature and can be transferred to subordinate employees when managers become absent or according to time and situations.
A personal decision is when managers take decisions in their personal capacity that does not affect the regular activity of the organization. It is informal in nature that has no impact on the firm’s regular performance. And, these decisions can not be delegated to others.
By the involvement of persons in decision-making, the types of decisions can also be group decisions and individual decisions.
In group decisions, a group of people is formed to discuss some subject matter and they come to a solution after the discussion is finished through mutual understanding.
In big organizations, group decision-making is a common thing. This decision technique is adopted to solve unique problems. And, group decisions are usually also found in an organization that follows the participative management style.
When a manager alone takes a decision in his official capacity such decision is known as an individual decision. While making such decisions managers are responsible to think about the firm’s objectives and performance.
Usually, the practice of individual decision-making is found in small organizations and organizations that follow an autocratic management style.
Top-level management makes policy decisions, which have a long-term effect on organizational performance. These choices include the introduction of new rules, regulations, and programs as well as the modification of current rules and the introduction of new products.
Top managers typically have to take future performance into account when making such choices.
Lower-level management makes operational decisions, which are related to the organization’s daily operations. These choices are made in order to put top management’s objectives and policies into effect.
These decisions involve changes in the schedule of work, amount of remuneration to employees, set-up of machines and equipment, etc.