DECISION MAKING IN MANAGEMENT

DECISION MAKING IN MANAGEMENT

Concept:

  - Indispensable component of management process

  - Process of selection of a best course of action out of many alternatives

  - Process:

  * Identifying and defining the problems

  * Development of alternative solutions

  * Evaluation of alternatives in terms of possible consequences

  * Selection of best alternatives & implementation of decision

  - Management makes decision regarding the organizational problems choosing the best alternative considering organizational interests   and objectives

  - Decision making process on various actions:

  * Goal setting  * Planning  * Taking action

  * Strategy formulation * Job assignment  *Performance  evaluation

Programmed & Non-Programmed:

  - Programmed:

  * Routine & repetitive

  * Daily operational decision

  * No consideration of past decisions

  * Made by first line managers

  * Basis: policy framework, rules, regulations, standard operating  procedures

  * Requirement: little deliberation and thinking

    little interest in future growth, stability,     profitability

   - Non-Programmed:

  * Unique/creative nature decision

  * One time decision

  * No existing policies/standard operating procedures to guide decision

  * Strategic decision, truly managerial decision

  * Basis/Requirement: deep knowledge, brain storming, experience, foresightedness

  * Decisions: product diversification, marketing strategy, dropping an existing product, new investment, all policy      decisions

Routine & Basic Decisions:

  Routine Decisions-

  * Related with day-to-day operation

  * Taken promptly

  * Solutions for repetitive problems

  * By lower level of management

  * Like programmed decisions

  * Decisions: exchange of works between co-workers, machine repair & maintenance, making availability of raw materials etc. 

  Basic Decisions-

  * Strategic decisions

  * For long run survival and growth

  * Long term decisions

  * Top level management

  * Similar to non-programmed decisions

  * Requirements: creativity, through study of future impacts, judgment and intuition

  * Decisions: capital investment, business expansion, plant replacement, recruitment and selection etc.

Organizational & Personal Decisions:

  Organizational Decisions-

  * Formal or official decision

  * Decision maker consider official authority

  * Fulfill official procedures, system and formalities

  * Decisions: appointment, promotion, transfer etc.

  Personal Decisions-

  * Informal or individual decision

  * On the basis of personal skill, knowledge, capacity, personal  interest, desire, necessity

  * No effect to regular performance of organization

  * Decisions: voluntary retirement, reject promotion, refuse higher education etc.

Individual & Group Decisions:

  Individual Decisions-

  * Single person involved

  * General manager, departmental manager etc.

  * Consideration: Organizational objectives, working environment

  * Use: Personal knowledge, idea, skills, experience

  Group Decisions-

  * Group of persons involved

  * BOD, management committee, partners etc.

  * Joint stock company, partnership firms, co-operatives etc.

  * The group of authority come to a decision through mutual consent or majority of votes

 Policy & Operational Decisions:

  Policy/Strategic Decisions-

  * By top level management

  * Having long term impact on organizational performance

  * Decisions: new rules, regulations and programs, amendment

  Operational Decisions-

  * By lower level management

  * Concerned with day-to-day operation

  * For: implementation of plans & policies formulated by top   management

  * Decisions: change in work schedule, set-up of machines & equipments