Effective decision-making is the cornerstone of successful organizations all around the world.
In fact, successful decision-making enables a company to avoid managing common challenges, procedures, and activities while helping the organization navigate unique situations and pursue new opportunities for success.
What is decision-making?
Decision-making is a life skill based on selecting between two or more options. Effective decision-making can be viewed as a process, and decisions can be made by a single person or a group of people.
Eight types of decision-making
These are the main types of decision-making.
1. Personal and organizational decision-making
Every day, managers and staff make personal decisions within a company. Such decisions are made individually and not within the professional capacity that their role would demand. In contrast, managers make organizational decisions in a professional capacity. It is worth noting that some of these latter decisions can be delegated to other individuals across the company.
2. Routine decision-making
As the name suggests, routine decision-making is taken around the company’s everyday activities. As a result, these decisions tend not to be challenging as they are usually repetitive. These decisions tend to be made by lower-level managers and typically revolve around daily routine policies and procedures that the company deals with (e.g., purchase orders).
Fundamental decision-making highlights decisions essential for the organization’s existence and for which complete study, analysis, power, and critical thinking are crucial.
3. Policy and operating decision-making
The importance of policy decisions cannot be stressed enough. These relate to basic policies that help structure and organize a company to ensure consistent and trusted approaches are followed. These management-type decisions tend to be taken by top management. On the other hand, operating decisions are usually taken by lower management levels and are designed to operationalize the policy decisions already set forward by senior management.
4. Individual and group decision-making
Individual decisions can also be made by a person within their organizational capacity, especially when these decisions are made in smaller organizations. Group decision-making, on the other hand, is taken by groups (e.g., a committee deciding on how to proceed on a particular organizational initiative).
5. Organizational, departmental, and interdepartmental decision-making
Managers make Organizational decisions as part of their regular day-to-day duties and capacity. Departmental decision-making happens at and will mainly impact only the department in question. In contrast, inter-departmental decision-making can impact more than one department.
6. Programmed and non-programmed decision-making
Programmed decision-making is taken around every day, frequently occurring situations already covered by existing policies and procedures. In contrast, non-programmed decisions are not routine or receptive and tend to be around unique situations (responses to sudden, unexplained, and dramatic market changes), making these decisions more difficult to take.
7. Strategic and tactical decision-making
Strategic decision-making is long-term, complex, and difficult to take by nature and is usually taken by senior managers. A good example is a senior management team offering to be a market leader. Such decisions can have a severe and long-term positive/negative impact on the company, so they are never taken lightly.
In contrast, tactical decision-making is medium-term, less complex, made by middle management, and relatively routine in nature. Such decisions are relatively easy for experienced managers to make.
8. Planned and unplanned decision-making
Planned decisions are always based on the organization’s known and expected activities. In contrast, unplanned decisions are based on unexpected events, but they are necessary and should not be avoided.
