Types of Decisions

1. Strategic Decisions and Routine Decisions

Routine decisions are those that the manager makes in the daily functioning of the organization. Such decisions do not require a lot of evaluation, analysis or in-depth study. In fact, high-level managers usually delegate these decisions to their subordinates.

Strategic decisions are the important decisions of the firm. These are usually taken by upper and middle-level management. They usually relate to the policies of the firm or the strategic plan for the future. Such decisions require analysis and careful study.

2. Programmed Decisions and Non-Programmed Decisions

Programmed decisions relate to those functions that are repetitive in nature. These decisions are dealt with by following a specific standard procedure. These decisions are usually taken by lower management. For example, granting leave to employees, purchasing spare parts etc. are programmed decisions where a specific procedure is followed.

Non-programmed decisions arise out of unstructured problems, i.e., these are not routine or daily occurrences. There is no standard procedure or process to deal with such issues. Usually, such decisions are left to upper management. For example, opening a new branch office will be a non-programmed decision.

3. Policy Decisions and Operating Decisions

Tactical decisions pertaining to the policy and planning of the firm are known as policy decisions. Such decisions are usually reserved for the firm’s top management officials. They have a long-term impact on the firm and require a great deal of analysis.

Operating decisions are the decisions necessary to put the policy decisions into action. These decisions help implement the plans and policies taken by the high-level managers. Such decisions are usually taken by middle and lower management. Say the company announces a bonus issue. This is a policy decision. However, the calculation and implementation of such bonus issue is an operating decision.

4. Organizational Decisions and Personal Decisions

When an executive takes a decision in an official capacity, on behalf of the organization, this is an organizational decision. Such decisions can be delegated to subordinates.

However, if the executive takes a decision in a personal capacity, that does not relate to the organization in any way this is a personal decision. Obviously, these decisions cannot be delegated.

5. Individual Decisions and Group Decisions

When talking about types of decisions, let us see individual and group decisions. Any decision taken by an individual in an official capacity it is an individual decision. Organizations that are smaller and have an autocratic style of management rely on such decisions.

Group decisions are taken by a group or a collective of the firm’s employees and management. For example, decisions taken by the board of directors are a group decision.