The decision process is described as a series of steps, starting with information output and analysis and culminating in resolution, namely a selection from several available alternatives. Decision is the act or process of deciding; determination, as of a question or doubt, by making a judgment.
Though managers are constantly called upon to make decisions and all managerial decisions are important in their own ways, some decisions have a limited scope while others involve the entire organization in a significant manner.
For better understanding of the managerial decisions, we may classify them as follows:
- Personal and organizational decisions
- Strategic and operational decisions
- Structured and unstructured decisions
- Crisis and research decisions
- Initiative or forced decisions
- Problem and opportunity decisions
Personal and organizational decisions
This classification was first mooted by Chester Barnard. Accordingly, personal decisions are concerned with the managers as individuals rather than the organizations. Personal decisions are based on subjective evaluation of the managers, these can neither be delegated nor there are any interference or influencing from the top.
In order to avoid bias in decision making, which may be harmful both to the organization and the decision-maker, a clear distinction between personal and organizational decisions has constantly to be maintained, though it is often a difficult task.
Strategic and operational decisions
Strategic decisions, which are often table for their novelty and complexity and involve uncontrollable factors such as actions of competitors or the state of the economy are invariably made by the top management.
Operational decisions are concerned with day-to-day operations of the enterprise. They do not involve much discretion or independent judgment on the part of managers, as the parameters within which the decisions have to be made, are often clearly defined.
Structured and unstructured decisions
Structured decisions are those which are made within the limits set by policies, procedures, tradition or custom. They do not require creativity or independent judgment on the part of the manager.
Unstructured decisions have neither any existing policies or procedures, nor any tradition or custom as their basis. For this reason, they call for a great deal of imagination and independent judgment and hence are often within the purview of the top management only.
Crisis and research decisions
Crisis decisions are those which are made to meet unanticipated situations which do not allow much scope for intensive investigation and analysis of the factors relevant to them. They have to made instantaneously under pressure of circumstances.
Research decisions are those which are made after a thorough analysis of pros and cons without any pressure.
Initiative or forced decisions
Initiative decisions are the hallmark of aggressive managers who search for or create situations calling for decision making by them.
Forced decisions are those where the managers have no alternative but to make decisions, either under orders from their superiors or due to pressured persuasion by subordinates.
Problem and opportunity decisions
Problem decisions are concerned with resolving problem situations which have arisen as anticipated, or otherwise.
Opportunity decisions pertain to taking advantage of an opportunity for increased profits, growth etc., the frequency of opportunity decisions will depend on how far the manager is prepared to take risks and his skill for recognition of an opportunity.
Decision is the ability to decide quickly and definitely what to do. And it is the act of deciding something or the need to decide something or decision is the act of deciding or settling a dispute or question by giving a judgment.