Types of Decision Making in Management

Selecting the best option among lots of different alternatives for the sake of the company’s success is no doubt, the most significant action to increase the productivity of an organization. That’s why decision making plays an important role in boosting up the efficiency of a company. It depends upon the process of decision making whether the organization will be able to gain higher revenue the following year or not.

Decision-making is quite an overwhelming task for management. Managers have to turn their days and nights equal to come up with a high-yielding decision. They have to opt for different methods and strategies so that they don’t miss out on any opportunity for success.

If the management has made a wrong decision either mistakenly or knowingly, the company would have to suffer its consequences for the next few years. Any opportunity you miss during decision making is going to cost your company a big loss.

Decision making is a complex process and isn’t that simple and straight. There are various strategies and types of decision making in management. And today we are going to discuss the 4 most important types of decision making, so let’s begin.

4 Types of Decision making in Management

Give the following are the main types of decision-making in management that every company has to consider in order to increase productivity and efficiency. 

1. Organizational and Personal Decisions

When an executive takes a decision on the behalf of the organization because of having an official capacity, then this type of decision-making will be referred to as organizational decision. An executive who makes an organizational decision is in a state to delegate these decisions on the employees and subordinates.

For example, decisions made by managers and executives regarding the transfer of an employee, or like introducing a new inducement system in the company are organizational decisions as they are made on the behalf of the organization.   

While on the other hand, when an executive takes a decision in his personal capacity that does not involves or relates to the organization in any possible way is known as a personal decision. These decisions are related to the manager’s personal life within the organization and cannot be delegated to subordinates.

For example: what to eat during the lunch break, what clothing to wear in the office, what hairstyle to make for the work, these all lies under personal decisions.      

2. Individual and Groups Decisions

In an organization, when a decision is taken by one individual only in an official capacity and no other team member or employee is involved in making that decision, then that type of decision will be called as an individual decision. Even though this decision is taken by one individual only, the decision is applied to the whole organization.

For example: when you ask your boss for a leave, the decision is made by the boss only, no other manager or subordinate is involved in it.

Whereas, in group decisions, the decisions are made by a group of people either employees or managers. For example: when the board of directors makes a collaborative decision, it is called a group decision.

3. Programmed and Non-Programmed

Programmed decisions are kind of rules and regulations. These decisions are pre-planned, organized, and lined up decisions and are generally taken by the lower-level managers and are implemented on employees for the day-to-day tasks and functioning. The manager repeats these decisions again and again.

Examples of these types of management decisions are decisions regarding the assignments of workers and granting leaves to the workers etc. These types of decisions are not long-term and can be changed anytime.

And when it comes to the non-programmed decisions, these are just the opposite of what is said above. Non-programmed decisions are made by the top-level management instead of lower managers and these decisions are generally unstructured.

The need for these decisions arises when an unusual problem arises. These decisions are not repeated again and again and unlike tactical decisions, these have a long-term impact on the organization.

For example, decisions made regarding the opening or closing of a unit, making changes in the wage, etc. 

4. Major and Minor Decisions

Another type of decision making is major and minor decisions. The major decisions are taken by the top management only and it involves some important and crucial settlements.

For example: buying a new factory or a building is a major decision and can only be made by the owners or top management. While on the other hand, buying daily items like computers, seats, and desks, stationery, etc. are called minor decisions. These decisions are generally made by lower-level management.

Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.