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Explain the different types of Decisions?

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There are four basic standards that can be used for deciding the nature of the decision and also the level of authority that should make the decision. These are:-

i. The degree of futurity in the decision;

ii. The impact of the decision on other functions or on the business as a whole;

iii. The number of quantitative factors in the decision; and

iv.The decision is rarely taken or it has to be taken periodically.

1. Organizational and Personal Decisions: when a particular decision has been taken by a person as an executive of an organization, such decision can be considered as an organizational decision. The impact of such decision can be felt on the working of the entire organization. The power of taking an organizational decision can also be delegated by a superior to the subordinates. On the other hand, an executive can also take a decision that is related with himself. Such decisions are known as personal decisions. Generally the effect of these decisions is on the personal life of the decision-maker. At the same time, the authority of taking such decision cannot be delegated to others.

2. Routine and Strategic Decisions: The routine decisions have to be made periodically and therefore there are certain established procedures, policies and rules regarding these decisions. The routine decisions have to be made regarding the day-to-day affairs of the organization. For the purpose of making these decisions, fresh information or discretion is not required. The routine decisions are generally taken by the middle or the lower level management of the organization. On the other hand, the strategic decisions are related with significant matters and therefore they have to be taken by the top-level management of the organization. These strategic decisions are related with policy matters and therefore, different alternatives have to be developed and analyzed. The strategic decisions have an impact on the organizational structure, objectives, finances and the working conditions etc. The strategic decisions are basic and the effect of these decisions can be felt for a long time.

3. Programmed and Non-programmed Decisions: The programmed decisions are of a routine nature and no specific procedure has to be followed for taking these decisions. The effect of these decisions is short-term and these decisions are taken by the lower level management of the organization. For example, the decision to make routine purchases or to grant a leave can be described as programmed decisions.

4. Policy and Operating Decisions: The policy decisions are used for deciding the basic policies related with the organization. These decisions are taken by the top management of the organization. The policies that have been decided by the top management also act as the basis for the operating decisions. No decision can be taken that goes beyond the policy framework. In this way, the policy decisions are very important and their impact is also long-term. On the other hand, the operating decisions are less significant. These are related with the day-to-day operations of the organization. The operative decisions are taken while keeping in view the policies that have been decided by the organization. The operative decisions are taken by the middle and the lower level management because in these decisions, real execution and supervision is also involved. For example, the decision to grant bonus to the employees of the organization can be described as a policy decision but once this decision has been made, the exact amount that is going to be paid to each employee will be an operated decision.

5. Individual and Group Decisions: The classification of decisions as individual and group decisions is based on the number of persons that are involved in the process of making the decision. Therefore if only one person has taken the decision, it can be described as an individual decision. Such decisions are generally taken by the owners of small businesses. Even in case of large organizations, it is possible that the major decisions may be taken by one person alone. Generally the individual decisions are also programming decisions. But when a group of persons is involved in taking the decision, it is described as a group decision. For example, the decision taken by the board of the company can be described as a group decision. Generally group decisions are very significant for the organization and they are related with policy matters. As a result, these decisions have to be taken by the group after comprehensive discussions by the persons who have the responsibility to take the decision. However, a major problem that is present in case of group decisions is the problem of delay.

This article has been written by KJ Singh a MBA Graduate from a prestigious Business School In India
Article Published:April 2, 2016
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