TYPES OF DECISION MAKING
- Programmed Decisions
- Unprogrammed decision making
Programmed Decisions relate to those kinds of decision making carried out in structured situations where the problems targeted are fairly routine and recurrent. For instance, issues affecting employees’ leave allowances are solved using the firm’s policies on leave claims. A worker must meet certain requirements in order to qualify for such claims. While this example may be rather simple, in reality there may be routine situation that are more complex in nature. Consider a routine in the production department where the production manager orders for an inventory to be taken when production reaches re-order point.
However, this routine cannot be followed in instances where demand for the product suddenly increases. The manager must go against this routine by not waiting for the re-order point because he must order earlier than usual. We can therefore deduce from the examples given above that while there may be programmed decisions which are simple, there are other programmed decision which are necessary and a lot more complex. In both situations, the manager has to follow a pre-determined set of requirements for taking his decision. Programmed decisions do not need major brainstorming, they are taken based on already existing company policies and work procedures. In other words, programmed decisions do not need managers to figure out a new or creative way of solving the problems they are intended for. In other words, programmed decisions involve some amount of certainty.
If we are to summarize important features of programmed decision we can say that: Programmed decisions are taken in accordance with the way things are done in the firm. The way things are done in the firm is often called standard operating procedures.
- Programmed decisions are used to address frequently occurring or routine decisions for example request for a leave or determining whether the employee going on leave qualifies for a leave allowance or similar such situations that happens frequently.
- Programmed decisions are more appropriate for problems which happen frequently and are similar.
- Programmed decision in reality are made by managers only once and later specified as the way to approach problem when similar situation in the future arise.
- Programmed decision could lead to the formulation of policies, rules and procedures.
The various kinds of organisational decisions are the following: Organisational decision, Operational decisions, Research decisions, and Opportunity decisions.
NON-PROGRAMMED DECISION MAKING
Non-Programmed decisions are made in unstructured situations. Unstructured situations reflect new dimensions because these do not happen frequently and they are also complex in nature.
Since these problems rarely happens or have never happened before, they need a lot of brainstorming to have it solved. In these kinds of situations, managers rely on a combination of skill, subjective judgment, a great deal of scientific analysis and a considerable amount of logical reasoning.
Subjective judgment is needed to evaluate the situation. Non-Programmed decisions carry in them a fair degree of uncertainty because while in the view of the manager the decision is meant to address the problem, the outcome is seldom known or is always not known; principally because they are taken in the context of a dynamic business environmental conditions.
By way of example, let us take a situation where a manager takes a decision to increase the advertising expenditure of a business, undertake a coaching in effective salesmanship for his staff, upgrade the technology used in producing his product, yet he notices that profit margins are still falling. A situation of this nature requires immediate action and such decision may be non-programmed.
The various kinds of non-programmed decisions include: Personal decisions, Strategic decisions, Crisis intuitive decisions, and Problem-solving decisions.
We can summarize the main features of non-programmed decision as follows:
- Situations which require that a non-programmed decision be taken are unique and ill-structured or unstructured
- Non-programmed decisions are usually one off decisions.
- They make managers rely on intuition and subjective judgment, personal intuition, and innovativeness.
- A non-programmed decision is taken when there are extraordinary and unexpected problems.
- A non-programmed decision involves a combination of common sense and trial and error.