TYPES OF DECISIONS

TYPES OF DECISIONS

1 Programmed and non-programmed decisions: Simon has classified all decisions into two classes:

1 Programmed decisions: are normally of repetitive nature and are taken within the board policy structure. An organization can develop specific processes for handling these decisions e.g. standing operation procedures and policies. Programmed decisions have short run impact and are taken by lower level managers such as granting leave to an employee purchase of materials in normal routine etc. for example if there is a habitual absentee in an enterprise you have a set procedure to deal with him and you need not refer the problem to the personnel managers or to the board of directors in order to arrive at a solution. If a manager spends appreciable time in dealing with programmed decision he is wasting time which he could more profitably spend in dealing with non-programmed decisions.

2 Non-programmes decisions: are of non-repetitive nature. There need arises because of some specific circumstances such as opening of a new branch introducing a new product in the market etc. they involve judgment intuition and creativity. Such decisions are taken by top management. For example if a large number of employees suddenly started absenting themselves without information it would constitute a problem involving the non-programmed decision. No routine decision can be taken in such a case merely by issuing a charge sheet to all the workers and taking disciplinary action against each one of them. The management should thoroughly probe into the causes and consequences of such a problem.

2 major and minor decisions: decisions may be classified as major and minor. For example if it relates to the purchase of a big machine worth say a lake of rupees it is a major decision. On the other hand purchase of fountain pen ink or a few reams of paper are minor matters and may be decided by the office superintendent.

3 routine and strategic decisions: routine decisions are also known as tactical decisions. They are taken in the context of day to day operations of the organization. They are not very important. Mostly they are of repetitive nature and do not require much analysis and evaluation and can be made quickly. Authority for taking such decisions is generally delegated to middle and first line managers. They do not involve any high risk or uncertainly. For instances sending samples of product to the government investigation centre is a routine decision. Strategic or basic decisions relate to policy matters and usually involve large investments or expenditure of funds. These decisions are mostly non-repetitive in nature. These decisions are taken by higher level management after careful analysis and evaluation of various alternatives. A slight mistake in these decisions is bound to injure the entire organization. Examples of strategic decisions are major capital expenditure decisions all decisions affecting organization productivity pricing location and size of the business change in product line etc.

4 policy and operative decisions: policy decisions are taken by top management and they mostly relate to basic policies. Such decisions are very important and they have a long term impact. Big concerns generally publish their policy decisions in the form of a "Policy Manual" which becomes the basis for other operative decisions. Operative decisions relate to the day to day operations that are more closely related with the supervision of actual operations. Whether to give profit bonus to employees or not is a matter of policy to be decided by the top management, but calculating the bonus in respect to each employee is an operating decision which can be taken at a much lower level.

5  Organizational and personal decisions: the executive makes organizational decisions, when he acts formally as a company officer. Such decisions reflect the basis policy of the company. They can be delegated to others.

6  Individual and group decisions: as is apparent, individual decisions are taken by a single individual in the context of routine or programmed decisions where the analysis of the variables is simple and for which broad policies are already provided. Group decisions are taken by a group or a standing committee constituted for this specific purpose. Such decisions are very important for the organization because they involve the participation of a large number of persons.

7 long term departmental and non-economic decisions: decisions may also be classified as long term departmental and non economic. In the case of 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 behaviour etc) may be termed as non economic decisions. While taking decisions on these factors care should be taken to see that justice is done to all and as a result of this decision no new problem is created for the organization.

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