Decision Making and Types of Decisions

Decision Making

The word decision has been derived from the  Latin word "decidere" which  means “cutting off". Thus, decision involves cutting off of alternatives between those that are desirable and those that are not desirable. In the words of George R. Terry, "Decision-making is the selection based on some criteria from two or more possible alternatives". Characteristics of Decision Making

ü Decision making implies that there are various alternatives and the most desirable alternative is chosen to solve the problem or to arrive at expected results.

ü The decision-maker has freedom to choose an alternative.

ü Decision-making may not be completely rational but may be judgemental and emotional.

ü Decision-making is goal-oriented.

ü Decision-making is a mental or intellectual process because the final decision is made by the decision-maker.

ü A decision may be expressed in words or may be implied from behaviour.

ü Choosing from among the alternative courses of operation implies uncertainty about the final result of each possible course of operation.

ü Decision making is rational. It is taken only after a thorough analysis and reasoning and weighing the consequences of the various alternatives.

Types of Decisions

1 Programmed decisions: Programmed decisions are routine and repetitive and are made within the framework of organizational policies and rules. These policies and rules are established well in advance to solve recurring problems in the organization. Programmed decisions have short-run impact. They are, generally, taken at the lower level of management.

2 Non-Programmed Decisions: Non-programmed decisions are decisions taken to meet non-repetitive problems. Non-programmed decisions are relevant for solving unique/ unusual problems in which various alternatives cannot be decided in advance. A common feature of non-programmed decisions is that they are novel and non-recurring and therefore, readymade solutions are not available. Since these decisions are of high importance and have long-term consequences, they are made by top level management.

3 Strategic and Tactical Decisions: Organizational decisions may also be classified as strategic or tactical.