After reading this term paper you will learn about the meaning and types of decisions.
Term Paper # 1. Meaning of Decision:
Dictionary defines the term ‘decision’ as “the act of determining in one’s own mind upon an opinion or course of action.” It is choosing one alternative among several alternatives given in a particular situation.
In the words of Terry, it is “the selection of one behaviour alternative from two or more possible alternatives.” In fact, decision is a conclusion to long deliberations. In the words of Weihrich and Koontz, “Decision-making is the selection of a Course of action from among alternatives: it is the core of planning”.
According to Haynes and Massie, “Decision making is a process of selection from a set of alternative courses of actin which is taught to fulfill the objective of the decision problem more satisfactorily than others”.
To quote Terry again:
“A decision is usually made within the guides established by policy. A policy is relatively extensive, affects many problems, and is used again and again. In contrast, a decision applies to a particular problem and has a non-continuous type of usage.”
It may, however, be mentioned that policy itself is the product of a decision. Decision is a means: it is not an end in itself Decisions have to be made and re-made in the light of the ends to be achieved. Decisions are not permanent in so far as they have to take cognizance of the changed circumstances.
Decisions have to be responsive to varying situations. This is illustrated by the defence given to the generalship of U.S. Grant by President Abraham Lincoln before a committee which had met to complain against the General.
The Committee Chairman said, “Why, Mr. President, certainly you know that General Grant is making a lot of decisions. He is making one right after another, and some of them are all wrong.”
Lincoln listened patiently, was silent for a moment and then raised his head and said: “Well, Mr. Chairman, I guess you are correct all right, but I reckon that if he makes a bad decision, he soon finds it out, and changes it without delay. Gentlemen, I propose to keep right on with General Grant.
In decision-making, three aspects of human behaviour are involved:
(i) Cognition, those activities of the mind associated with knowledge,
(ii) Conation, the action of the mind implied by such words as ‘willing’, ‘desire’, and ‘aversion’; and
(iii) Affectation, the aspects of the mind identified with emotion, feeling, mood and temperament.’
Based on these facts, decision-making has been defined as “a conscious and human process, involving both individual and social phenomena, based upon factual and value premises, which concludes with a choice of one behavioural activity from among one or more alternatives with the intention of moving toward some state of affairs.”
Term Paper # 2. Types of Decisions:
Decisions may be of the following different types:
(i) Organizational and Personal Decisions:
A decision made to achieve the interests of an organization is called organizational decision. When an executive acts in his official capacity and formally takes a decision on an official matter it becomes the organizational decision. Such a decision can be taken at subordinate levels also if so authorized.
Personal decisions are made by an executive as an individual and not as a part of organization. An executive who changes job making a personal Decisions to marry, to buy a house, to purchase a car are examples of personal decisions which though concerned with the personal life of an executive, may sometimes affect the organization directly or indirectly.
(ii) Individual and Group Decisions:
When a decision is taken by an individual in the organisation, it is called individual decision. Such decisions are generally of routine nature and taken in smaller organisations. Group decisions are those taken by a group of persons constituted for the purpose.
Decisions by the Board of Directors or a committee are examples of Group decisions. Such decisions involve consultation and opinion seeking and are generally thoughtful more balanced and unbiased.
(iii) Routine and Strategic Decisions:
Routine decisions are made repetitively following prescribed rules, regulations and procedures. Such decisions are generally taken at the middle and lower management levels. Strategic decisions are decisions on important matters and generally taken by the top level executive. Launching new programmes and installation of computerized system in the organization are examples of strategic decisions.
(iv) Programmed and Non-Programmed Decisions:
Programmed decisions are concerned with relatively routine problems on which information is already available. Such decisions have short term impact and are relatively simple and require little thought and imagination.
Non-programmed decisions deal with unique and unusual problems which cannot be tackled in a pre-determined manner. There are no cut and dried solutions to such problems which require a high degree of executive judgement and deliberation. To order firing on a mob, to impose curfew in the city or opening a branch are the examples of non- programmed decisions.
(v) Policy and Operative Decisions:
Policy decisions are taken by the top management. They effect the entire organisation and are concerned with important policy matters, for example, giving bonus to the employees, waiver of loans to the formers, decrease or increase in interest rates, disinvestment in public enterprises, privatisation or industrialisation of transport. Operating decisions are taken at the lower levels in order to implement the policy decisions.