DECISION MAKING

 Decision making is defined as:

“the selection of a future course of action from among

various alternative.”
Characteristics
 It is a continuous process
 It involves a choice and therefore presupposes the
existence of alternatives
 It is always purposive in that decisions should aim at
achieving some purposes
 It is an intellectual process supported by sound-
reasoning and judgment
 It is all persistent in the sense that all levels of
managers take decisions.
Types of Decisions
1. Programmed Decisions
 Repetitive in nature.
 Easiest to make.

 Decisions are taken in consultation with the existing

policy, rule or procedure.
 For example: making purchase orders, sanctioning of
different types of leave, increments in salary, settlement
of normal disputes, etc.
 Managers in dealing with such issues of routine nature
usually follow the established procedures.
Types of Decisions
2. Non-programmed Decisions
 They are non-routine in nature.
 They are related to some exceptional situations for which
there are no established methods of handling such things.
 For example: Issues related to handling a serious industrial
relations problem, declining market share, increasing
competition, problems with the collaborator, growing public
opposition towards the organization.
 The solutions may widely differ in the case of non-
programmed decisions.
 As one moves up in the hierarchy, many of the decisions that
managers make are non-programmed in nature.
Types of Decisions
3. Operational Decisions
 Operational or tactical decisions relate to the present.
 The primary purpose is to achieve high degree of
efficiency in the company’s ongoing operations.
 Operating decisions do not need intensive discussions
and huge resources and are taken by managers at the
lower levels.
 The focus is on the short-run or immediate present.

 For example: better working conditions, effective

supervision, prudent use of existing resources, better
maintenance of the equipment, etc.
Types of Decisions
4. Strategic Decisions
 Decisions which have far reaching impact on the
organization.
 They require extensive discussions and huge resources
and are taken by top level managers.
 They focus on the long run impact.

 For example: expanding the scale of operations,

entering new markets, changing the product mix,
shifting the manufacturing facility, striking alliances with
other companies, etc.
Types of Decisions
5. Organizational Decisions
 Decisionstaken by managers in the ordinary course of
business in their capacity as managers relating to the
organizational issues.
 For example: decisions regarding introducing a new
incentive system, transferring an employee, reallocation
or redeployment of employees, etc. are taken by
managers to achieve certain objectives.
Types of Decisions
6. Personal Decisions
 Managers do take some decisions which are purely
personal in nature.
 However, their impact may not exactly confine to their
selves and they may affect the organization also.
 For example: the manager’s decision to quit the
organization, though personal in nature, may impact for
the organization.
Types of Decisions
7. Individual Decisions

 Some decisions are taken by a manager individually.

 Individual decisions are taken where the problem is of
routine nature.
Types of Decisions
8. Group Decisions
 Important and strategic decisions which have a bearing
on many aspects of the organization are generally
taken by a group.
 Group decision making is preferred these days
because it contributes for better coordination among
the people concerned with the implementation of the
decision.
Steps in Decision Making Process
• Most important step
• A problem well-defined is half-solved.
Define the • Also called diagnostic stage.
Problem • Problem has to examined from different angles to identify exact causes.

• Past, present and future impact of the problem to be examined.

• Origin and factors contributing to problem need to be analyzed.
Analyze the • Helps to assess the scope and importance of the problem and initiate the necessary steps.
Problem

• It depends on manager’s creativity and imagination and vary from one manager to other.
Develop • A decision selected from among many alternatives tends to be a better one.
Alternatives

• Evaluate alternatives on basis of objectives to be achieved and resources required.

Evaluate • Involves thorough scrutiny of merits and demerits.
Alternatives

• After weighing pros and cons of the alternatives, select the best and implement.
Select and • The required resources necessary cooperation from the people concerned with or affected by the decision have to be ensured.
Implement
the Decision

• Decision has to be closely monitored.

• Take adequate follow-up measures.
Follow-up • Constant follow-up helps to take corrective measures as and when necessary.
and • Provides valuable feed-back on which the decision may be reviewed or reconsidered.
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