TYPES OF DECISIONS

Decisions are of several types. Classification of these types is as follows:

1. Programmed and non-programmed decisions: Decisions are classified into
programmed and non-programmed decisions. While the former deals with the
routine and repetitive type of problems, the latter deals with problems which are
not routine and non-repetitive. For example, an enterprise has a set of
procedures to handle normal orders from the buyers and this matter need not be
referred to the Board of Directors or any other higher authorities for decision. As
this problem is repetitive, a standard procedure should be used for handling such
problems. This is a case of programmed decision. On the other hand, if the
enterprise receives unusually very large orders for its products in any particular
year, it would constitute a problem involving non-programmed decision. For
handling such large orders, the sales department may take the guidance of
board of directors, since it has to deal with the problem which is non-repetitive
and for which no definite procedure has been laid down.
2. Major and minor decisions: Decisions may be classified as major and minor.
For example, a decision to purchase a machine worth lakhs of rupees or deciding
to-open some branches is a major decision. On the other hand, purchase of some
pencils or paper for office use is a minor decision which can be taken by the
office superintendent.
3. Routine and strategic decisions: One more method of classification of
decisions is routine and strategic decisions. Usually routine decisions do not
require lengthy deliberations and such decision are taken in a routine way. Some
of the examples of routine decisions are deciding to send samples to government
test house, deciding to place a order with the supplier who has given a
favourable quotation, deputing a employee to annual conferences, etc. Strategic
decisions generally involving lengthy deliberations and also may have much
impact on the functioning of the business concern. Some examples .of strategic
decisions are: decisions relating to product diversification or product line,
entering a new market, pricing strategy, advertising strategy, etc.
4; Policy and operating decisions: Decisions can be policy decision and operating
decisions. While policy decisions are taken at a high level after lengthy
deliberations, operating decisions are taken at a much lower level. For example,
deciding to grant leave encashment benefit the employees is a policy decision
whereas calculating the amount due to each employee because of the leave
encashment benefit is an operating decision.
S. Organisational and personal decision: If any decision is taken by an executive
in his official capacity, that decision it is called organisational decision. For
example, decisions relating to appointment, promotion or transfer of employees
are organisational decisions. In the case of personal decisions, an executive
takes decisions as an individual and not in his official capacity. For example, to
opt for voluntary retirement from the business concern is the personal decision
of the executive.

6. Individual and group decisions: Another method of classification of decisions is

individual and group decisions. Individual decisions are taken by any individual
and generally, they relate to routine mattered. For example, sanctioning of leave
to a worker is an individual decision. In the case of group decisions, the superior
managers take decisions in collaboration with their subordinates. For example,
taking a decision by the production manager in consultation with his
subordinates to change the design of the product slightly is a group decision.
7. Departmental, inter-departmental and enterprise decisions: Decisions can be
departmental, inter-departmental or enterprise decisions. Departmental
decisions relate to the concerned department and they are taken by the
departmental heads. For example, allotting work to the employees of a
department is a departmental decision.
Inter-departmental decisions are made by the managers of the concerned or
affected departments with the help of the controlling manager. For example, a
decision relating to change the product design slightly is an inter-departmental
decision.
Enterprise decisions are those which are taken at a higher level, i.e., Managing
Director or Board of Directors. These decisions are concerned with the entire
enterprise. For example, decisions relating to opening of branches, entering a
new market, pricing decisions or decisions relating to giving of bonus to
employees are enterprise decisions.

Characteristics of Decision-Making
The characteristics of decision-making become clear by the following facts:
1. It is a Process of Selecting the Best from the Alternatives: The first
characteristic of decision-making is that under it the best alternative is
selected out of the' many available ones. There are many ways to solve a
problem. The manager selects the best one out of them all. For example, if an
organisation has the problem of increasing sales, there can be many ways of
solving this problem - like reducing prices, more and good advertisement,
making available the facility of selling goods on credit, etc. The manager has
to select the best appropriate alternative out of them.
2. Decision-Making is Based 9n Rational Thinking: Rational thinking is considered
to be the essence of decision-making because the conclusions arrived at with
the help of decision-making and their success depends on rational thinking or
intensive study.
3. Decision-Making is always related to Some Problem or Conflict: Since the
purpose of decision-making is to find-out solution to problems or conflicts, it is
naturally related to them. In other words. if there are no problems or
conflicts, decision-making and manager will both come to lose their

importance. In this context it is said that problems are the diet or food upon
which a manager lives and prospers.
4. It involves the Evaluation of Various Available Alternatives: It is evident that in
case there is only one solution to a problem, decision-making is not needed.
There should be many alternatives for taking a decision. When there will be
many alternatives, they will be evaluated through the medium of decisionmaking. In other words, the best alternative will be chosen after taking into
consideration its merits and demerits.
5. Decision-Making is Aimed at Achieving Organisational Goals: Decision-making
is not a futile exercise because through its medium efforts are made to
achieve the goals of on organisation successfully.
6. Decision-Making involves Commitment: Every decision taken by a manager is
a promise. In others words, a manager through, the medium of decision, tells
us that the consequences of the decisions taken by him will be good.
7. It is basically a Human Activity: One of the special characteristics of decisionmaking is that it is a human activity. Decisions are taken by men and are
meant for them.
8. Decision-Making is Both a Managerial Function and an Organisational Process:
rt is a managerial function because decision- making is the chief responsibility
of all the managers. It is called organisational process because there are
many decisions which a manager cannot take single-handed and they need a
group of managers or a committee of managers.
9. Decision-Making is the Core of Planning: Although decision-making is needed
for all the managerial functions, yet planning is completely dependent on
decision-making because all the chief or major decisions are taken here.
When under planning the functions of determining objectives, policies,
procedures, rules, etc.;: are performed, decision-making has a special
importance.
10.Decision Starts Action: When a problem arises, work is immediately
suspended and till a decision is taken the work 'cannot, recommence.
Therefore, the future activity starts only after a decision is taken.
11.Uncertainty of Results: It is true that the best alternative is chosen only after
an analysis of the various alternatives but the consequences of the best
alternative are uncertain as it is an imaginative action with reference to
future.
12.It is a Universal Mark of a Manager: Decision-making is a universal mark of a
manager, It means whatever a manager does is based on decision-making
and this specialty is found everywhere and in every manager.
13.It May be Negative: Decisions can both be positive and negative. Positive
decision means deciding to do something while negative decision means
doing nothing.

Difficulties in Decision-Making

1. Rigidity of Decision-Maker: A decision-maker may adopt a rigid stand in the

form of overemphasis on past experience, over insistence on specific

technique, prejudice, and so forth. He may fail to understand the dynamic

need of the situation. Ultimately, he makes erroneous decisions.
2. Overemphasis on Past Events: Some problems need a fresh outlook. However,
some managers are not able to visualise the drastic changes in present
situation from, their past experience. They try to match the situation with the
past events. This leads to serious mistakes in decision- making.
3. Clashing/Conflicting Priorities: In many cases, decision-maker may have to
decide between clashing priorities. For example, profit maximisation and
consumer satisfaction are two priorities that are opposite to one another. He
may fail to take the right decision in such a situation.
4. Overemphasis on a Specific Method: Some decision-makers insist on using
only a particular decision-making method(s) irrespective of the situation (type
of problem, objective, data available, time limit, and so forth). The method
may be inconsistent with the situation. Inconsistent method produces
inconsistent results that lead to erroneous decisions.
5. Time limit: Identifying problems, collecting data, analysing data, discussing
with relevant parties, etc., may take considerable time. Even, the
implementation may exceed the time limit. Delayed decision may complicate
the problem. In decision-making, the problem is not merely of taking a correct
decision.
6. Lack of Cooperation/Support: At times, a decision-maker is unable to solicit
the necessary support from both his superior as well as subordinates. Lack of
support results in poor decisions, or ineffective implementation of decisions,
or both.
7. Failure to Implement Decision: There are many reasons why implementation
fads, such as resistance from people in the organisation, lack of necessary
support from top authority, insufficient resources, fear of uncertain outcomes,
and likewise.
8. Subjectivity: It implies the presence of personal bias or absence of objectivity.
Right from defining the problem to implementation of decision, the whole
process of decision-making is influenced by personal values, needs,
perception, and attitudes. Pure objective (rational, neutral, impersonal, and
fact-based) decisions are difficult to observe in practice. Subjectivity affects
adversely the quality Of decision-making.
9. Assumptions: Most decisions are taken under conditions of uncertainty. A
decision-maker has to make assumptions about occurrence of the future
events. All assumptions may not turn true. Especially, long-term assumptions
are more difficult to set. To the extent the assumptions turn false, decisions
suffer.
10.Personal Risk: Uncertainty of outcomes is a common problem in decisionmaking. Risk is an integral part of decision-making and its implementation.
When a decision-maker is not insulated (protected) with sufficient security for
the decisions and the resulting outcomes, he hesitates to take decisions. A
manager does not prefer to take decisions on high personal risk.
11.Impact of Extraneous Factors: Despite taking all possible precautions to
ensure the prudent decisions, a decision-maker may fail due to the adverse
impacts of many extraneous (external uncontrollable) factors. Government

policies, international business environment, natural calamities, market trend,

competition, etc., affect the outcome of decision-making.
12.Lack of Facilities: A decision-maker needs reasonable support facilities. Like
staff, stationary, computer with internet, money, support from top authority,
and so forth, to take decisions in time. Scanty facilities hinder the decisionmaking process.
13.Un-supporting Environment: The environment - physical and organisational that prevails in an enterprise affects both the nature of decisions and their
implementation. If there is all round goodwill and trust and if the employees
are properly motivated, the manager is encouraged to take decisions with
confidence. On the other hand, under the opposite circumstances he avoids
decision-making.
14.Non-Acceptance by Subordinates; If subordinates have a stake in the decision
or are likely to be strongly affected by it, acceptance will probably be
necessary for effective implementation. On the other hand, subordinates may
not really care what decision is reached. In such situations, acceptance is not
an issue.
15.Ineffective Communication: Another important problem in decision-making is
the ineffective communication of a decision. This makes implementation
difficult. The manager should, therefore, take care to communicate all
decisions to the employees in clear, precise and simple language.

Guidelines- for Decision-making

1. Define the Goals: The decision-maker should define the goals that he seeks to
achieve by making a decision. The goal of a decision is derived from his
objectives which in turn are a part of the total organisational objectives. Thus,
the goal of a decision should be compatible with and contribute to larger
goals.
2. Ensure that the Decision Contributes to the Goal: Once the goal has been
determined, it becomes the criterion for making the decisions, as well as for
evaluating its results. Often, an executive seeks to achieve not one but more
than one goals through a decision. For example, the goal of a marketing
decision may be not only to increase the sales volume but also increase the
profit margin. These goals may not always be compatible. It requires the
decision-maker to balance the conflicting goals in such a manner that he can
achieve all the goals simultaneously.
3. Adopt a Diagnostic Approach: A decision-maker has to be a diagnostician in
many ways. He has to identify and define the problem. Further, he has to
diagnose what and how much information is relevant to the problem being
attacked, and where he will get it. Development and evaluation of alternative
also require diagnostic abilities. He also has to diagnose the surrounding
situation comprising the internal and external environmental forces. Thus,
effectiveness in decision-making significantly depends on an executive's
diagnostic abilities.
4. Involve Subordinates in Decision-making Process: Involvement of
subordinates in decision-making process serves many purposes. It improves

the quality of the decision, particularly if the decision-maker does not possess
all the special abilities required for making a particular decision. It is more
likely to happen than not, as every decision has several aspects such as
administrators, technical, human relations and financial aspects. The most
important stage at which subordinates' participation can enhance the
decision quality is the stage of development and evaluation of alternative
solutions to problems. Their participation can bring not only new insights to
the problem, but also elicit their commitment to implement the decision,
Those who participate in making a decision tend to become ego involved in it,
and thereby committed to its successful implementation.
5. Ensure Successful Implementation of the Decision: Event the best decision
will not yield satisfactory results unless it is implemented effectively.
Successful implementation of a decision significantly depends on the extent
of understanding of the decision and its implications, and motivation of the
subordinates who have to carry it. An. executive can enhance his
effectiveness in both these directions by promoting upward communication.
He should also be able to know when and what kind of guidance is needed by
them, and be willing to extend it to those who need it. He can be more
effective if he successfully welds his subordinates into a team with himself as
the team leader.
6. Evaluate the Results: The purpose of a decision is to accomplish some goal
which will not be attained without it. The results of the decision should,
therefore, be evaluated in terms of its predetermined goals.

7. Be Flexible: The decision-maker should adopt a flexible approach not only in

making the decision but also after the decision has been put into
implementation. If it is not yielding the desired results, he should modify,
discard, or replace it with another decision which may produce better results

Factors Involved in Decision-Making

The factors influencing decision-making are as follows:
1. Time Pressures: An important influence on the, quality of decisions is how
much time the decision-maker has in which to make the decisions.
Unfortunately, managers must make most of their decisions in timeframes
established by others. Lack of time can force a manager to decide without
gathering important facts or exploring possible solutions thoroughly.
2. Manager's Values: These values have a significant influence on the quality of
decisions. Values are the likes, dislikes, should, ought, judgements, and
prejudices that determine how one shall act. The value orientations of
management underlie much of their behaviour. The decisions managers make
in identifying their mission, objectives, and strategies, and how managers
interpret society's expectations also reflect their values. Some specific
influences which have value on the decision-making process are:

i.
ii.
iii.

Value judgements are necessary in the development of objectives and the

assignment of priorities.
In developing alternatives, it is necessary to make value judgements about
the various possibilities.
In selecting an alternative, value judgements will be reflected in the
alternative chosen.

3. Organisational Policy: Decisions are limited by the policies that higher

managers develop to guide the actions of the organisation. Decisions that
clearly violated policies will be rejected automatically. Some managers argue,
of course to change the policy to fit the decision if the decision seems sound.
This is good thinking, except that policies cannot be changed overnight. It is
usually an easier and more practical course to alter the proposed decision.
4. Other Determinants: The decision-making process is not only influenced by
the above stated factors but a host of others too. Other determinants of
decision making are as follows:
i.
The effect of other departments.
ii.
Higher-management attitude.
iii.
Personnel required. ,
iv.
Budget money.
v.
Subordinate reactions.