Various types of decisions that a manager should take

 

Types of decision



Decision is selecting the best alternative between at least two accessible other options. Decision making is the process of understanding various available options, ways to solve a particular issue and choosing the most suitable alternative among the other options.

A manager holds the power, responsibility to make decisions, to convey them to the subordinates. A decision of a manager requires high implementation cost, it can influence the whole organization, can have a long-term impact on the organization, or a decision of a manager can be influencing only a few individuals of the organization, require small amount of money to implement, can have a short-term impact on the association.    

A management decision can be classified into 2 types such as:

1. programmed decision

2. non- programmed decision 

1. programmed decision

Programmed decisions are made for cyclical natured problems which are structured. These decisions are made by low level managers. A standard procedure is followed to handle such issues, to simplify the decision-making process. 

A programmed decision can be a procedure that should be followed in order to solve a problem, or a rule which the manager simply follows to solve issues, or it can be a policy which allows the manager to make decisions into certain boundaries. 

 Example: purchasing raw materials.




2.Non programmed decisions 


Non programmed decisions are implemented on abnormal situations which are difficult to handle, or to find a solution. These decisions are made by high level managers. Every situation is unique, complexed and requires different set of actions to solve the issue.

Example: A fire accident in a building of the organization. 



It is important that a manger considers the decision-making conditions while making decisions. Certainty, risk, uncertainty, and ambiguity are the 4 conditions that a manager faces while making decisions. 

Certainty: Certainty is the availability of all information the manager needs to make a decision. A manager will make a clear decision as all outcomes of the decision are known. 

Risk: Risk is the situation in which a manager predicts certain outcomes based on the past experience. A manager will not be able to clearly make a successful decision. 

Uncertainty: Uncertainty is the unavailability of required information to make a clear decision. Decisions are made with the knowledge, intuitions, experience obtained by the manager.

Ambiguity: Ambiguity is the hardest condition that a manager faces while making decisions. Managers will not be able to identify the output as no clear information, alternatives are available.

Example 


A purchasing manager purchasing raw materials is a programmed decision made by the manager as it occurs more often, has a purchasing procedure that is followed, considering the rules, policies of the organization. This is a condition of certainty as the manager has all information on making the purchasing decision.

The procedures that should be followed after a fire accident in a building of the organization is a non-programmed decision as this is a unique, complexed situation that will not be faced more often. This is a condition of uncertainty, as there would not be clear information of what caused the fire, as the manager will have to make decisions with the knowledge, experience that he/she holds.

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