Types of Decision Making

Taking decisions in the organisation is one of the most crucial functions of a manager. The quality of decisions made by managers at all levels determines whether a company succeeds or fails. 

Every managerial choice, whether it is about planning, organising, staffing, or directing, is about the decision-making process.

Decision-Making Characteristics:

The following are some of the key characteristics of decision-making:

1. Goal-Oriented:

Making a decision is a goal-oriented procedure. Most decisions are made to fulfil a certain aim or goal. The goal is to make progress “toward a desired state of affairs.”

2. Other options:

A decision should be considered as “a turning point in a chain of events.” It is defined by two activities: search and selection. The manager looks for opportunities, makes judgments, and considers alternatives so that action can be taken. Decision follows choice. It is the process of choosing a course of action to solve a problem. There is no need to make a decision when there are no options. Only when there is any doubt about the outcome does the need for decision-making arise.

3. Intellectual-analytical:

Making decisions is not solely an intellectual process. It encompasses both conscious and unconscious parts, as well as intuitive and deductive logic. Part of it can be learned, but part of it is determined by the decision maker’s personal characteristics. Decision-making is not entirely quantifiable, nor is it solely dependent on logic or intuition. Many decisions are made on the basis of feelings or instincts. Decision indicates the decision maker’s independence in making the final decision; it is uniquely human and the result of deliberation, judgement, and thought.

4. Dynamic Methodology:

Rather than being a single static entity, decision-making is described as a process. It is the process of efficiently utilising inputs in the solution of specific issues and the creation of useful outputs. Furthermore, it is a procedure for ‘finding worthwhile things to accomplish’ in a changing environment. A manager, for example, may consistently hire people on merit and, on occasion, select applicants recommended by a powerful party. Managers use discretion and judgement to make appropriate decisions based on the circumstances.

5. All-encompassing function:

Decision-making pervades all levels of management and touches every aspect of a business. In truth, anything a manager accomplishes is done only through decision-making; decisions and actions are the end products of a manager’s job. The essence of a manager’s work is decision-making.

6. Ongoing Activity:

The life of a manager is one of constant decision-making. He makes decisions on a regular and consistent basis. This isn’t a one-time bargain.

7. Time, effort, and financial commitment:

Making a decision entails investing time, effort, and money. Depending on the sort of decision, the commitment could be brief or long-term (e.g., strategic, tactical or operating). Following a decision, the organisation advances in a defined direction in order to fulfil the objectives.

8. Social and Human Processes:

Decision-making is a human and social process that involves reasoning, intuition, and judgement. When choosing between various options, the human and societal aspects of the decision are frequently taken into account. In the face of fierce competition, managers in a labour-surplus, capital-hungry country like India cannot simply close down plants, slash divisions, and deliver the golden handshake to thousands of workers.

9. Planning is an essential component:

‘Decision making is the essence of planning,’ according to Koontz. Both are mental activities that necessitate discretion and judgement. Both have the same purpose in mind. Both are dependent on the circumstances. Both involve making a decision between several options. Both are based on future risk and uncertainty projections and assumptions.

Decisions that are strategic, administrative, and routine:

Top management is in charge of strategic decision-making. These are critical, crucial decisions that affect many aspects of an organisation. They necessitate a significant investment of resources. They have long-term implications and are future-oriented. They can either propel a company to new heights or turn it into a “bottomless hole”!

Administrative decisions are concerned with operational issues, such as how to smoothly implement various components of strategic decisions at various levels within an organisation. They are primarily managed by intermediate managers.

Individual and organisational choices:

Personal decisions include whether or not to watch television, study, or retire early. Managers as people are responsible for such decisions. They have an indirect impact on the organisation. A personal decision to buy a Maruti rather than an Ambassador, for example, benefits one firm indirectly through the sale while hurting another due to the lost transaction. Personal decisions cannot be delegated since their impact is limited.

Decisions that are programmed and non-programmed:

A routine and recurring decision is referred to as a programmed decision. To tackle reoccurring problems swiftly, rules and procedures are set in advance. For example, a hospital sets a system for admitting new patients, which allows everyone to get things set up swiftly and efficiently, even when there are a large number of patients seeking admission. There is no opportunity for discretion in programmed decisions. They must be followed in a specific manner. They’re usually made by lower-level employees who follow set norms and processes.

Conclusion

Therefore we can finally conclude that a decision should be considered as “a turning point in a chain of events.” It is defined by two activities: search and selection. The manager looks for opportunities, makes judgments, and considers alternatives so that action can be taken. The quality of decisions made by managers at all levels determines whether a company succeeds or fails.