To come to a decision means to cut off deliberations and to come to a conclusion. Decision-making is a process of selection and the aim is to select the best alternative. A decision is an act of choice wherein an executive forms a conclusion about what must and must not be done in a given situation. It is a conclusion that the manager has reached as to what he or others should do at some later time. It is a solution selected after examining several alternatives.
According to George R. Terry, “Decision-making is the selection based on some criteria from two or more possible alternatives."
Types of Decision Making
1. Programmed and Non-programmed Decisions
Programmed decisions are normally of repetitive nature and are taken within the broad policy structure. An organisation can develop specific processes for handling these decisions. Programmed decisions have a short-run impact and are taken by lower-level managers, such as granting leave to an employee, purchase of material in normal routine, etc.
Non-programmed decisions are of non-repetitive nature. Their need arises because of some specific circumstances, such as operating a new branch, introducing a new product in the market, etc. They involve judgment, intuition, and creativity. Such decisions are taken by top management.
2. Major and Minor Decisions
A decision related to the purchase of a big machine worth, say a lakh of rupees, is a major decision. On the other hand, the purchase of fountain pen ink or a few reams of paper are minor decisions.
3. Routine and Strategic Decisions
Routine decisions are also known as tactical decisions. They are taken in the context of the day-to-day operations of the organisation. They are repetitive and do not require much analysis and evaluation and can be made quickly.
Strategic or Basic decisions are related to policy matters and usually involve large investments or expenditure of funds. They are non-repetitive in nature. Also, such decisions require careful analysis and evaluation of various alternatives.
4. Policy and Operative Decisions
Policy decisions are taken by top management and mostly relate to basic policies. Operative decisions relate to the day-to-day operations of the enterprise.
5. Organisational and Personal Decisions
The executive makes organisational decisions when he acts formally as a company officer. Such decisions reflect the basic policy of the company. Personal decisions relate to the executive as an individual and not a member of an organisation. Such decisions cannot be delegated.
6. Individual or Group Decisions
Individual decisions are taken by a single individual in the context of routine or programmed decisions. Group decisions are taken by a group or a standing committee constituted for this specific purpose. Such decisions are very important for the organisation, because they involve the participation of a large number of persons.
7. Long-term, Departmental and Non -economic Decisions
Long-term decisions, the period covered is long and the risk involved is more. Departmental decisions are taken by the departmental heads and relate to the department only. Decisions relating to non-economic factors (such as technical values, moral behavior, etc.) Maybe termed as non-economic decisions.
Process of Decision-Making
Diagnosing the problem of defining it
|
Secure and Analysis Pertinent Facts
|
Develop alternative solutions or courses of action
|
Decide upon the Best Solution or Optimum Course of Action
|
Convert the Decision into Effective Action
|
Implementing and Verifying the Decision