TYPES OF DECISIONS

Though managers are constantly called upon to make decisions and allmanagerial decisions are important in their own ways, some decisions have a limitedscope while others involve the entire organization in a significant manner. For betterunderstanding of the managerial decisions, we may classify them as follows:

1. Personal and organizational decisions. This classification was firstmooted by Chester Barnard. Accordingly, personal decisions are concerned with themanagers as individuals rather than the organizations. As against this, organizationaldecisions are made by the managers in their official capacities and within the constraintsset by their formal authority. Since personal decisions are based on subjective evaluationof the managers, these can neither be delegated nor there any interference or influencingfrom the top. But organizational decisions may be, and often are delegated tosubordinates.

In order to avoid bias in decision-making, which may be harmful both to theorganization and the decision-maker, a clear distinction between personal andorganizational decisions has constantly to be maintained, though it is often a difficulttask.

2. Strategic and operational decisions. Strategic decisions, which areoften table for their novelty and complexity and involve uncontrollable factors such asactions of competitors or the state of the economy, are invariably made by the topmanagement. Increasing the rate of dividend, expansion of business, etc., are theexamples of strategic decisions.

Operational decisions are concerned with day-to-day operations of theenterprise. They do not involve much discretion or independent judgment on the part ofmanagers, as the parameters within which the decisions have to be made, are oftenclearly defined.

3. Structured and unstructured decisions. Structured decisions are thosewhich are made within the limits set by the policies, procedures, tradition or custom.They do not requirecreativity or independent judgment on the part of the manager. Asagainst this, unstructured decisions have neither any existing policies or procedures, norany tradition .or custom as their basis. For this reason, they ca11 for a great deal ofimagination and independent judgment, and hence are often within the purview of thetop management only.

4. Crisis and research decisions. Crisis decisions are those which aremade to meet unanticipated situations which do not allow much scope for extensiveinvestigation and analysis of the factors relevant to them. They have to be madeinstantaneously under pressure of circumstances.

As against this, research decisions are those which are made after a thoroughanalysis of pros and cons without any pressure.

5. Initiative or forced decisions. Initiative decisions are the hall-mark ofaggressive managers who search for or create situations calling for decision-making bythem. Most of such decisions may not be needed in many cases. As against this, forceddecisions are those where the managers have no alternative but to make decisions, eitherunder orders from their superiors or due to pressured persuasion by subordinates.

6. Problem and opportunity decisions. Problem decisions are concernedwith resolving problem situations which have arisen as anticipated, or otherwise. On theother hand, opportunity decisions pertain to taking advantage of an opportunity forincreased profits, growth, etc. The frequency of opportunity decisions will depend onhow far the manager is prepared to take risks and his skill for recognition of anopportunity.