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Decision making may be classified under various categories based Share Your Knowledge
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on the scope, importance and the impact. Decisions have been Share Your Word File
classified by various authorities in various ways.
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Some of the types of decision making are:-
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1. Programmed Decisions 2. Non-Programmed Decisions 3.

Operational Decisions 4. Organizational Decisions 5. Personal
Decisions 6. Routine Decisions 7. Strategic Decisions
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by Taboola
Types of Decision Making – 4 Types of Decisions that
are Usually Taken by Managers in the Organization:
Programmed, Non-Programmed, Operational, LATEST

Strategic and a Few Others Factors Determining Capital Structure

Decision may be classified under various categories based on the Types of Mergers
scope, importance and the impact.
Credit Rating

The following are the different types of decisions that are Types of Cost of Capital

usually taken by managers in the organization:

Techniques of Time Value of Money

1. Programmed and Non-Programmed Decisions:

TABLE OF CONTENTS
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Types and Classification of Decision Making:
Programmed, Organizational, Decision Handling,
Policy, Individual and Others..
Types of Decision Making – 4 Types of Decisions
that are Usually Taken by Managers in the
Organization: Programmed, Non-Programmed,
Operational, Strategic and a Few Others
Types of Decision Making – Routine, Strategic,
Policy, Operating, Organisational, Personal,
Programmed, Non-Programmed, Individual and
Group Decisions
Types of Decision Making – 17 Important Types of
Decisions
Types of Decision Making – 10 Types of Decisions
Types of Decision Making – Classified by Various
Programmed decisions are repetitive in nature. Such decisions deal Authorities: Basic and Routine Decisions, Policy and
with simple, common, frequently occurring problems that have Operative Decisions, Individual and Group Decisions

established procedures. These decisions are taken based on the and a Few Others
Types of Decision Making – On the Basis of
existing policy, rule or procedure of the organization. For example: Procedures, Beneficiary, Activity, Nature,
making purchase orders, sanctioning of different types of leave, Responsibility and Number of Persons
Types of Decision Making – Programmed and Non-
increments in salary, etc. Managers in dealing with such issues of
Programmed Decisions, Major and Minor Decisions,
routine nature, follow the established procedures. Routine and Strategic Decisions, Operating
Decisions and a Few Others

Non-programmed decisions are not routine in nature. They are Types of Decision Making – According to Herbert
Simon
related to exceptional situations for which there are no established
procedure. For example- Issues relating to declining market share,
increasing competition, etc. fall in this category. These problems
have to be handled in a different way. Many of the decisions that
managers at top levels make are non-programmed decisions.

2. Operational and Strategic Decisions:

Operational or tactical decisions relate to the present issues or

problems. The main purpose is to achieve high degree of efficiency.
Better working conditions, effective supervision, prudent use of
existing resources, better maintenance of the equipment, etc. fall in
this category.

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While, expanding the scale of operations, entering new markets,

changing the product mix, shifting the manufacturing facility,
striking alliances with other companies, etc. are strategic in nature.

Usually, routine decisions are taken by managers at the lower levels,

while strategic decisions are taken by top level managers. The focus
in the operational decisions is on the short-run or immediate
present, while it is on the long- rum in the case of strategic
decisions.

3. Organizational and Personal Decisions:

Decisions taken by managers in the ordinary course of business in

their capacity as managers are organizational decisions. For
example: decisions regarding introducing a new incentive system,
transferring an employee, reallocation or redeployment of
employees etc. are taken by managers to achieve certain objectives.

On the other hand, managers do take some decisions which are

purely personal in nature. However, their impact may affect the
organization also. For example: the manager’s decision to quit the
organization, though personal in nature, may create some problems
for the organization.

4. Individual and Group Decisions:

Individual decisions are taken where the problem is of routine

nature, whereas important and strategic decisions which have a
bearing on many aspects of the organization are generally taken by a
group. Group decision making is preferred these days because it
contributes for better coordination among the people concerned
with the implementation the decision.

Types of Decision Making – Routine, Strategic,

Policy, Operating, Organisational, Personal,
Programmed, Non-Programmed, Individual and
Group Decisions
Decisions may be classified according to different bases
which are discussed below:

Type # 1. Routine and Strategic Decisions:

Tactical or routine decisions are made repetitively following certain
established rules, procedures and policies. They neither require
collection of new data nor conferring with people. Thus, they can be
taken without much deliberation. They may be complicated but are
always one-dimensional. They do not require any special effort by
the manager.

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Such decisions are generally taken by the managers at the middle

and lower management level. Strategic or basic decisions, on the
other hand, are more important and so they are taken generally by
the top management and middle management. The higher the level
of a manager, the more strategic decisions he is required to take.

The strategic decisions relate to policy matters and so require a

thorough fact finding and analysis of the possible alternatives.
Finding the correct problem in such decisions assumes great
importance. The managers are more serious about such decisions as
they influence decision-making at the lower levels.

Type # 2. Policy and Operating Decisions:

Policy decisions are of vital importance and are taken by the top
management. They affect the entire enterprise. But operating
decisions are taken by the lower management in order to put into
action the policy decisions. For instance, the bonus issue is a policy
matter which is to be decided by the top management, and
calculation of bonus is an operating decision which is taken at the
lower levels to execute the policy decision.

Type # 3. Organisational and Personal Decisions:

Organisational decisions are those which a manager takes in his

official capacity. Such decisions can be delegated. But personal
decisions, which relate to the manager as an individual and not as a
member of the organisation, cannot be delegated.

Type # 4. Programmed and Non-Programmed Decisions:

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The programmed decisions are of a routine and repetitive nature

which are to be dealt with according to specific procedures. But the
non-programmed decisions arise because of unstructured problems.
There is no standard procedure for handling such problems. For
instance, if an employee absents himself from his work for a long
time without any intimation, the supervisor need not refer this
matter to the chief executive. He can deal with such an employee
according to the standard procedure which may include charge
sheet, suspension, etc.

But if a large number of employees absent themselves from work

without any intimation, such a problem cannot be dealt in a routine
manner. It has to be dealt with an unstructured problem and the
decision should be taken by the chief executive. Non-programmed
decisions require thorough study of the problem and scientific
analysis of the situational factors. There has to be adequate probing
and analysis of various alternatives before taking such decisions.

Type # 5. Individual and Group Decisions:

When a decision is taken by an individual in the organisation, it is

known as individual decision. Such decisions are generally taken in
small organisations and in those organisations where autocratic
style of management prevails. Groups or collective decisions refer to
the decisions which are taken by a group of organisational members,
say Board of Directors or a Committee.

Types of Decision Making – 17 Important Types of

Decisions
Some of the decisions are discussed below:

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1. Programmed Decisions:

They are otherwise called routine decisions or structured decisions.

The reason is that these types of decisions are taken frequently and
they are repetitive in nature. This decision is taken within the
purview of the policy of the organisation. Only lower level
management takes programmed decision and has short-term
impact.

Granting over time work, placing purchase order (for materials) etc.,
are some of the examples of programmed decisions. There is a clear
cut procedure to take programmed decisions. The decision-maker
need not ask anything from the Personnel Manager or Board of
Directors while taking programmed decisions.

2. Non-Programmed Decision:

They are otherwise called strategic decisions or basic decisions or

policy decisions or unstructured decisions. This decision is taken by
top management people whenever the need arises. A careful
analysis is made by the management before taking a policy decision.

The management may publish its policy in small book which is

known as policy manual. Policy decision involves heavy expenditure
to management. Starting a new business, whether to export or not,
acquisition of a business etc., are some of the examples of non-
programmed decisions. This decision has a long-term impact on
business. A slight mistake in the policy decision is bound to injure
the entire organisation.

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3. Major Decision:

Major decision relates to the purchase of fixed assets with more

value. The purchase of land and building is an example of major
decision. This decision is taken by the top management.

4. Minor Decision:

Minor decision relates to the purchase of current assets with less

value. Purchase of pencil, pen, ink, etc., are some of the examples of
minor decision. This decision is taken by lower level management
people.

5. Operative Decision:

A decision which relates to day-to-day operation of an organisation

is known as operative decision. This type of decision is taken by
middle level management people normally. The reason is that they
are working at supervisory level and have a good knowledge of the
operations. The time of payment of overtime wages is fixed by
middle level management people. It is an example of operative
decision.

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6. Organisational Decision:

The decision-maker takes a decision and implements it for effective

functioning of organisation and it is called organisational decision.
He takes this decision on his authority and capacity.

7. Personal Decision:

The decision-maker takes a decision for his personal life which is

known as personal decision. He implements this decision in his
home and sets right his personal life. This decision does not reflect
the functioning of an organisation. The decision maker is not a
member of an organisation while taking a personal decision.

8. Individual Decision:

Confusion exists regarding the difference between individual

decision and personal decision. They are not one and the same. The
decision-maker is a member of an organisation while taking an
individual decision. He can implement it in the organisation. He is
delegated with authority to take individual decision. He considers
the policy and situation prevailing in an organisation while taking
individual decision.

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9. Group Decision:

A committee is formed by the top management for specific

purposes. Here, the top management feels that no individual can
take effective decision to solve a problem. The top management
fixes the time within which the committee is expected to submit its
report with concrete decisions.

10. Departmental Decision:

Here, the decision-maker is department head or department

manager. He takes a decision to run the department. Department
decision has no impact on other departments. This decision is
implemented within the concerned department itself.

11. Non-Economic Decision:

Non-economic decision refers to a decision which does not incur

any expenses. These types of decisions are taken at all levels of
management. A decision which relates to setting right the morale
behaviour of workers is termed as non- economic decision.

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12. Crisis Decision:

A decision is taken to meet unexpected situations. There is no

possibility and time for the decision-maker for getting through
investigation while taking a crisis decision. It may be otherwise
called spot decision. The reason is that whenever a need arises, the
decision maker has to take a decision without wasting a second.

13. Research Decision:

A decision is taken after analysing the pros and cons of a particular

matter. There is no pressure on the decision-maker to take such a
decision. Research decision requires a lot of information. The
quality of research decision is fully depending upon the availability
of reliable information.

14. Problem Decision:

A decision is taken to solve a problem. The problem may be an

expected one or unexpected one. Besides, the arrived decision does
not create any more problems to the organisation.

15. Opportunity Decision:

This pertains to a decision taken to make use of the advantages

available to the company or organisation. The advantages may be
increasing the turnover, introducing a new product, building of
another similar unit to avoid competition etc.

16. Certainty Decision:

Here, the term certainty refers to accurate knowledge of the

outcome from each choice. For example, ascertaining how much
profit will be maximised by introducing a new product or increasing
the selling price and the like. There is only one outcome for each
choice. The decision-maker himself knows the outcome and
consequences of choice.

17. Uncertainty Decision:

The outcome is not accurate or several outcomes are possible

whenever a decision is taken. The reason is that the decision-maker
has incomplete knowledge and he does not know the consequences.
For example, while marketing a new product, the decision (amount
of profits) depends upon the prosperity period of that product. If the
prosperity period is long, the amount of profit is high and vice versa.

Management people take a number of decisions every day. These

decisions are aimed at solving the existing problems. No decision
creates any new problem to the management. There should be
justice in taking a decision.

Types of Decision Making – 10 Types of Decisions

Type # 1. Organisational and Personal Decision:
Decisions in any organisation are taken by persons working in it. All
the decisions are related either to organisation or to individual.
Whenever a person assuming the charge of a manager takes any
decision it is a decision of the manager and not the person. Such
decisions are related to organisational matters and taken by a
person as a manager.

These decisions are known as organisational decisions. Capital

formation, new methods or techniques of production, new
production line, closing any unit, rules, methodology of working etc.
fall in the preview of organisational decisions. Such decisions
directly affect the organisation.

On the other hand, if the same person decides to go on leave, retire,

or resign, such decisions are his personal decisions. They directly
affect him though they may have indirect effect on the organisation.
Organisational decisions are to be implemented throughout the
organisation and they are binding on all concerned people.

Whereas personal decisions have nothing to do with the

organisation. They may have some indirect effect on the
organisation as they are directly related to his individual personality
and not his personality as a manager.

Type # 2. Basic (Strategic and Routine) Operational

Decisions:

Organisational decisions may be related to either strategies or

operational methodology and allied matters. Strategic decisions are
known as “Basic decisions” also. These are generally based on
original plans and relate to formulate policy to implement the plans.
Such decisions are mostly one time decisions and are in
implementation for a pretty long period. These decisions provide
guidelines for attainment of organisational goals.

Once the strategies and guidelines are decided, all the lower level
managers have to work according to the strategies and within the
preview of guidelines. But methodology or the operational ethics are
needed to be prepared. Decisions in this regard are known as
operational or routine decisions. These decisions are required to be
altered according to the prevailing situations. Naturally they are of
repetitive nature. Such decisions are taken for routine work
therefore they are at times, known as day- to-day decisions.

Type # 3. Structural (Programmed) and Unstructured

(Un-programmed) Decisions:
As seen above strategies are decided for a pretty long period along
with guidelines for the implements i.e. lower level managers. In
order to facilitate day-to-day working the lower level managers have
to take some decisions to set right the operational machinery for
better performance.

For example – assignment of work to employee, grant of short leave

to the worker, method of utilising resources etc. Such decisions are
known as structured or programmed decisions. These have a very
short impact and are changeable from time to time.

But if a new unit is to be started or any of the existing units is to be

closed, or change in product line or change in the wage or salary
structure is to be made, decisions are required to be taken by the top
level management. Such decisions have a long term impact on the
organisation. These decisions are known as unstructured or un-
programmed decisions.

Type # 4. Major and Minor Decisions:

Basic and unstructured decisions are major decisions. They are
taken by top management. Operational and structured decisions are
of minor nature and are taken by lower level managers. Major
decisions may bring a major change in policy and strategy that
affects the total organisation. These are independent decisions of
the policy makers. Minor decisions are aimed at fulfilment of major
decisions. Such minor decisions are to be kept in the sphere of
major decisions. Minor decisions are generally taken by lower level
managers.

Type # 5. Crisis and Intuitive and Research Decision:

Whatever decisions are taken in crisis situation like stress, surprise,
unusual circumstances, emergencies are called as crisis or intuitive
decisions. Crisis decisions are often based on experience, detailed
analysis and confidence. These decisions are generally made under
pressure. On the other hand research decision can be made under a
minimum time-pressure.

Type # 6. Referred Decisions:

Lower level managers have to face situations arising during the
course of working. They have to overcome such situations by taking
immediate decisions, but some mangers (Lower level) are
unambitious, inactive and incapable of taking decisions. At time
they are afraid about the correctness of the decision which they may
take for lack of confidence. They refer the matter to their superiors
and request for their decision. Such decisions are called referred
decisions.

Type # 7. Problem Solving and Opportunity Decisions:

Top level management is required to pay attention to problems that
are existing and that may crop up in future. Capable top
management can foresee future problems, the same way good
managers can imagine and foresee future situations and probable
opportunities.

Naturally top level management remains in readiness with problem

solutions and with utilisation plan of future situations and probable
opportunities. Proper decisions are thus taken by them in present
period i.e. in advance. Such decisions are known as problem solving
and opportunity decisions.

Type # 8. Individual and Group Decision:

If a decision is taken by an individual person it is known as

individual decision. On the other hand when a number of persons
collectively take the decisions they are known as group decisions.
Individual decisions are, often, taken in small organisation of small
sized top level management. On the other hand big size
organisations like companies, are managed not by an individual but
by group of individuals like board of directors. Naturally strategic
decisions are taken by the group.

Type # 9. Short-Term and Long-Term Decisions:

Short-term decisions are taken for short span of period. Such

decisions generally involve less uncertainty and risk. On the other
hand long term decisions are taken for a longer duration. Therefore
there is more risk and uncertainty. Most of the times short term
decisions are taken by subordinates and long term decisions are
taken by the top management.

Type # 10. Economic and Non-Economic Decisions:

Economic decisions are related with financial matters and non-
economic decisions are related with, social values, ethical values,
moral values, social, cultural, religious, educational, political
psychological factors.

Types of Decision Making – Classified by Various

Authorities: Basic and Routine Decisions, Policy and
Operative Decisions, Individual and Group Decisions
and a Few Others
Decisions have been classified by various authorities in various
ways.

The main types of decisions are as follows:

1. Programmed and Non-Programmed Decisions:

Professor Herbert Simon has classified all managerial decisions as

programmed and non-programmed decisions. He has utilized
computer terminology in classifying decisions. The programmed
decisions are the routine and repetitive decisions for which the
organization has developed specific processes. Thus, they involve no
extraordinary judgement, analysis and authority. They are basically
devised so that the problem may not be treated as a unique case
each time it arises.

On the other hand, the non-programmed decisions are the one-shot,

ill-structured, novel policy decisions that are handled by general
problem-solving processes. Thus, they are of extraordinary nature
and require a thorough study of the problem, its in-depth analysis
and the solving the problem. They are basically non-repetitive in
nature and may be called as strategic decisions.

2. Basic and Routine Decisions:

Professor George Katona has made a distinction between basic

decision and routine decisions. Routine decisions are of repetitive
nature and they involve the application of familiar principles to a
situation. Basic or genuine decisions are those which require a good
deal of deliberation on new principles through conscious thought
process, plant location, distribution are some examples of basic
decisions.

3. Policy and Operative Decisions:

Policy decisions are important decisions and they involve a change

in the procedure, planning or strategy of the organization. Thus,
they are of a fundamental character affecting the whole business.
Such decisions are taken by the top management. On the contrary,
operating decisions are those which are taken by lower levels of
management for the purpose of executing policy decisions. They are
generally concerned with the routine type of work, hence
unimportant for the top management.

They mostly relate to the decision-makers own work and behaviour

while policy decision influences the work and behaviour of
subordinates.

4. Individual and Group Decisions:

Individual decisions are those decisions which are made by one

individual-whether owner of the business or by a top executive. On
the other hand, group decisions are the decisions taken by a group
of managers-board, team, committee or a subcommittee.

In India, individual decision-making is still very common because a

large number of businesses are small and owned by a single
individual. But in joint stock Company’s group decisions are
common. There are both merits and demerits of each type of
decision.

Types of Decision Making – On the Basis of

Procedures, Beneficiary, Activity, Nature,
Responsibility and Number of Persons
1. Decision on Basis of Procedures:
i. Programmed Decisions:

a. Taken by lower level management.

b. Solution to routine problems.

c. Taken within policy framework of organization.

d. Risk free decisions.

e. Decisions rules and procedures already established to save time.

Examples:

(a) Granting casual leave, applying medical leave, etc.

(b) Applying for earned leave surrender.

(c) Inviting tender.

(d) Placing order.

(e) Admission of patient in a hospital.

ii. Non-Programmed Decisions:

a. Taken for non-repetitive problems.

b. Requires high degree of executive judgement and recalibration.

c. Taken by top management.

d. Made at high risk.

e. Made in uncertain condition.

Examples:

(a) Location of plant.

(b) Introduction of new product.

(c) Purchase of new machinery.

(d) Product diversification.

(e) Entering new geography for expanding the business.

iii. Routine/Mechanistic Decisions:

a. Decision taken on a day to day basis.

b. Taken by middle and lower level managers who have a thorough

knowledge of the problem.

c. Decisions taken in the light of guidelines, rules, procedures.

Examples:

(a) Fixing delivery schedule.

(b) Cutting wastage.

(c) Employing contract labour.

(d) Checking working condition of tools.

iv. Strategic Decisions:

a. It is a major choice of action concerning allocation of resource

and contribution to the achievement of organizational objective.

b. It is a major decision affecting the whole or part of the

organization.

c. Contributes directly to the attainment of organizational objective.

d. It is a non-programmed decision which is made under conditions

of uncertainty.

e. It contains three elements namely action element meaning means

to decision, result element meaning final objective, commitment
element denoting allocation of physical and human resources.

f. Most of the strategic decisions are of irreversible nature.

Examples:

(a) Introduction of new product

(b) Location of new plant.

(c) Direct distribution of product.

(d) Advertisement media decision.

(e) Pricing decision.

(f) Sales promotion decision, expansion and modernization

decision.

v. Tactical Decisions:

It denotes the decisions relating to day to day operations of

business.

a. Decisions relating to day to day operations and born out of

strategic decisions.

b. It is mostly a programmed one. It is programmed through

policies, rules and procedures.

c. Outcome of tactical decision is short tenured and affects a part of

the organization i.e., domain related or function related.

d. These decisions are of delegatable nature.

Example:

(a) Purchase of raw materials.

(b) Deciding entitlement to overtime.

(c) Production of goods with low cost.

2. Decision on the Basis of Beneficiary:

a. Organizational Decisions:

These are decisions made to promote the interests of the

organization. They are made by managers in their official capacities.
They fall into any of the aforesaid category like strategic,
operational, tactical, programmed and so on. These decisions are
taken in terms of personal experience and rational judgement. They
may or may not be delegated given its type. They influence the
functioning of an organization.

b. Personal Decisions:

These are decisions taken by a manager in his personal capacity. It

has nothing to do with the organization. For example, decision to
come by his own conveyance, decision not to marry, not to accept
bribe, decline promotion, not to use organizational resource for
personal requirements, retire early, over stay and so on. These
decisions have a bearing on his personal life. Certain personal
decisions may affect the organization directly or indirectly. For
example, decision to take VRS, decision to come by one’s own
conveyance, etc.

3. Decisions Based on Activity:

a. Entrepreneurial Decisions:

These are decisions involving starting or initiating something new.

For example, starting operation in a new location, abandonment of
old product, product diversification, adding new channels of
distribution, finding new uses for existing product, etc.

b. Disturbance Handling Decisions:

Decisions made to address disturbances like strike, lock out, go

slow, labour unrest, work place accident, machinery break down,
stoppage of supply of raw materials, etc. In short, decisions made to
address the crisis come under this type.

c. Resource Allocation Decisions:

Allocation of resources like men, money and material comes under

this category. For example, choice of Investment Avenue, transfer of
human resources, deciding word load, allocation of territories to
sales persons, allocation of profits for various purpose, dividend
decision, ploughing back of profit, etc.

d. Negotiating Decision:

Bargaining on behalf of the enterprise comes under this

classification e.g., negotiating favourable terms for the enterprise,
fixation of remuneration after interview, negotiating with suppliers
for various services, negotiating with unions for various issues,
negotiating with contractors, etc.

4. Decisions Based on Nature:

a. Policy Decisions:

Decisions taken by top level management in respect of recurring

issues like purchase policy, credit policy, recruitment policy,
financial policy, marketing policy and so on.

b. Administrative Decisions:

It is taken by middle level management in respect of such issues

which are repetitive in nature but have far reaching consequences,
like administration of welfare measures, purchase policy, market
policy. Middle level executives decide as to how to execute the
policies framed by top management.

c. Executive Decisions:

Decisions taken by low level employees while translating

administrative decision into reality e.g., calling maintenance
department to repair machine.

5. Decisions on the Basis of Responsibility:

a. Major Decisions:

It refers to those decisions which involve huge expenditure. The

consequences of major decisions are expected to last for many years.
It benefits the organization as a whole. For example,
computerization of operations, introduction of new product,
expansion of business, modernisation and so on.

b. Minor Decisions:

It refers to decisions concerning day to day operations. E.g.,

granting casual leave, purchase of consumables and stationery,
changing the workers among the different shifts, delivery decisions
and so on.

6. Decisions Based on Number of Persons:

a. Individual Decisions:

Decisions made by a single individual are called individual

decisions. They are mostly pertaining to routine matters.
Individuals working in the organization are delegated powers to
take decision. He/she takes decision in the light of policies, rules,
procedures and so on. Such decisions taken in one’s official capacity
refer to an individual decision.

b. Group Decision:

Group decision is the process by which individuals who are

identified as a group participate together in a decision-making
process. Board of Directors, which represent the highest decision-
making body, is an example for group decision making.

Similarly, many committees functioning in the organization like

canteen committee, grievance committee, finance committee,
recruitment committee, disciplinary action committee, safety
committee etc., are delegated powers to take decisions. They
represent group decision making.

Types of Decision Making – Programmed and Non-

Programmed Decisions, Major and Minor Decisions,
Routine and Strategic Decisions, Operating Decisions
and a Few Others
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 decisions 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 an order with the supplier
who has given a favourable quotation, deputing an employee to
annual conferences, etc.

Strategic decisions generally involve 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 decisions 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 to employees is a policy
decision whereas calculating the amount due to each employee
because of the leave encashment benefit is an operating decision.

5. Organisational and Personal Decision:

If any decision is taken by an executive in his official capacity, that

decision 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 matters. 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.

These are the basic types of decision taken in an organisation.

Adopting a specific type, depends upon the situation that prevails in
the organisation. Good decision or bad decision is better than
indecision. Managers should not postpone decision on an issue.
Postponing any type of decision will make the problem more
complex and put the organisation into trouble.

Types of Decision Making – According to Herbert

Simon
In terms of Herbert Simon, organizational decisions are
categorized as:

1. Programmed decisions and

2. Non-programmed decisions.

1. Programmed Decisions:

Routine decisions and repetitive decisions and which are made

within the framework of organizational policies, rules and
programmed decisions. They are usually highly structured, with
clear and well-known goals. Predefined decisions making process
and available sources and channels of information, programmed
decisions are easy to make and do not involve much risk,
programming of recruitment schedules, etc.

2. Non-Programmed Decisions:

Decisions that occur suddenly or infrequently and do not have any

previously developed procedure are called non-programmed
decisions. For these decisions, the situation is not well structured
with ambiguous information and vogue goals. Many a time these
decisions have long-term consequences; as such the higher level
management team makes them.

Other classification of decisions is:

(a) Organizational and Personal Decisions:

Organizational decisions are made by the business executive in the

interest of the organization to fulfill its goals and objectives. When a
person makes a decision to satisfy is personal goals it is known as
personal decision.

(b) Routine and Strategic Decisions:

The decisions made to meet the day-to-day operations of an

organization, which are well structured and repetitive in nature, are
known as routine decisions. In case decisions are made to meet the
current period demand/requirement, whose effect is felt during
some future period are known as strategic decisions.

(c) Policy and Operative Decisions:

Top executives of the organization, which is concerned, with the

basic policies of the organization make policy decisions and they
have long-term impact. Operative decisions are made by middle or
lower (supervisor) level managers to meet the needs of day-to-day
operation of the business.

(d) Programmed and Non-Programmed Decisions:

Programmed decisions are repetitive in nature and have short-term

effect and are made by middle level managers and these are made
within the broad policy structure. Non-programmed decision are
non-repetitive in nature and are made by top level management as
they require commitment of organizational resources and the effect
will be seen in long period. The Non-programmed decisions include
problems like change of product line, opening of branch of the
organization etc.

(e) Individual and Group Decisions:

When an individual takes decision to fulfill his persona] desires, it is

known as individual decision. When a group of people or a
committee or a group of certain interest makes decisions it is known
as group decision, which are taken to satisfy the needs of the group.

(f) Reversible and Irreversible Decisions:

Reversible decisions are subjected to change completely either

before, during or after the agreement of taking action. It makes it
possible to acknowledge a mistake early in the process rather than
perpetuate it. These are useful for changing circumstances where
reversal is necessary. Irreversible decisions which if made once
cannot be undone. Whatever is decided would then have its
repercussions for a long time to come. It commits one irrevocably
when there is no other satisfactory option to be chosen course. A
manager should never use it as an all-or-nothing but instant escape
from general indecision.

(g) Experimental:

When a manager is not much clear about the future and sufficient
data is not available to take an effective decision, Experimental
decisions are useful which will have general clarity regarding the
direction of action. These are not final decisions and they are made
experimentally to test the outcome of the decision. Hence, until first
results appear and prove themselves to be satisfactory and the
feedback is positive then proceed to make the real decision.

(h) Trial and Error Decisions:

In Trial and Error decision-making, knowledge is derived out of the

past mistakes. A certain course of action is selected and is tried out,
if the results, are positive, the action is carried further. In case of
negative results, another course of action is selected by terminating
the first one. This act of making one decision and testing it, if fails
selecting the next decision is continued until get a suitable
alternative to select the course of action. It allows the manager to
adopt and adjust plans continuously before the final commitment.

(i) Decisions Made in Stages:

Here the decisions are made in stages until whole action is

completed. As soon as one stage is over, by monitoring the risk and
testing the indications of from outcome and tackling the obstacles at
every stage, further steep is decided. Decision by stages allows
feedback and further discussion before the next stage of the decision
is made.

(j) Cautious Decisions:

Once a decision is made, many a time problems/risks may crop up

at the time of implementation. But decision makers always put their
best efforts to adopt right course of action. Many a time, cautious
decisions help to limit the risk that are inherent in decision-making
process. Here manager will be very cautions to reject/scale down
risky projects if necessary and the situation dictates.

(k) Conditional Decisions:

Conditional decisions are either/or type of decisions with all options

kept open. These decisions can be alerted if certain unexpected
circumstances arise. It prepares manager to react, if the
competitions make a new move or if the game plan changes
radically. It enables one to react quickly to the ever-changing
circumstances of competitive market.

(l) Delayed Decisions:

A decision is made and put on hold till a right time is identified to

release the decision and ask the lower level managers to start action
when the required elements are in place. A decision made in wrong
time may have adverse effect on the organization. This is prevents a
manager from making decisions made in wrong time or before all
the facts are known. Sometimes it may happen that the organization
may forgo an opportunity in the market that require prompt action.

(m) Rational Decision:

Rational decision-making brings a structured or reasonable thought

process to the act of deciding. The choice to decide rationally makes
it possible to support the decision maker by making the knowledge
involved with the choice open and specific. This can be very
important when making high value decisions that can benefit from
the help of tools, processes, or the knowledge experts.

Choosing rationally is often characterized by the

following:

(i) Decision-making will follow a process or orderly path from

problem to solution.

(ii) There is a single best or optimal outcome. Rational decisions

seek to optimize or maximize utility.

(iii) The chosen solution will be in agreement with the preferences

and beliefs of the decision maker.

(iv) The rational choice will satisfy conditions of logical consistency

and deductive completeness.

(v) Decision-making will be objective, unbiased and based on facts.

(vi) Information is gathered for analysis during the decision-making

process.

(vii) Future consequences are considered for each decision

alternative.

(viii) Structured questions are used to promote a broad and deep

analysis of situation or problem requiring solution.

(ix) Risk and uncertainty are addressed with mathematically sound

approaches.

In the ideal case, all rational decisions makers would come to the
same conclusion when presented with the same set of sufficient
information for the decision being made. This would suggest that
collaborative decision-making will often employ a rational decision
making process.

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