Decision Making: Definition, Types Examples, Characteristics of Decision Making

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The process of planning involves decision-making. The planner is faced with a situation where the decision making structure in form of power and authority, significantly influences his effectiveness. The power structure obviously influences the planners work. The methods he adopts, the channels he adopts in presentation of his proposals for adoption and even the recommendations he makes depend largely on the existing structure. This is indeed part of the politics of planning.

Planning is a type of decision-making, which fills the gaps left by other types of decision-making, it is a type of decision-making that involves the full knowledge of a situation, the overall political, social, economic and physical environment in which the decision-making is taking place. With such knowledge, informed decision is made that reduces waste and produces the greatest return from allocation and utilization of resources. Planners are increasingly playing vital roles in decision-making. With decentralization of government and emphasis on peoples participation in decision-making, local planning authorities and the state planning agencies are being strengthened to be more responsive in decision-making.

What is Decision-Making?

A decision is a choice made between two or more available alternatives.

Decision-making includes all organizational processes that enable the organization to make a qualified choice between different options regarding operational and organizational decisions.Decision-making means selecting a course of action. Decision making function has been defined as a conscious choice between two or more alternatives. Decisions can be made:

  • By reference to norms
  • By reference to rational analysis on technical or judgemental basis.
  • Initially without reference to any process.

Making decisions actually involves choosing between alternatives by assessing likely outcomes. This is a conscious action; conscious actions are rational. As more information on the alternatives becomes available, decisions become more rational in terms of the appropriate means to desire ends. The final decision is then the outcome of a compromise between conscious choice of the decision-maker and the alternatives available to him.

Three Characteristics (levels) of Decision-Making

  • Intelligence: this means locating problems or issues that require attention.
  • Design: this means developing methods of determining possible course of action.
  • Choices: that is, deciding among the courses of action.

Two Major Categories of Decision Making

  1. Normative Decision Making: Norms are the standards which prescribe the range of acceptable behaviour within a social system. Norms influence the range of choices and govern the selection and application of means to achieve the goals. Normative decision-making deals with the quality of the decision as an act and tends to be subjective in focus. The assumption of normative approach is that the planner knows the value system, therefore, the normative decision should be the best possible choice among other alternative that deviate from the norm. The comprehensive rational model of decision-making follows the normative approach.
  2. Behavioural decision-Making: Behavioural decision-making deals with what actually occurs and the action context as well as the location of the actor in the system. In other words, it deals with what we actually do as opposed to what we should do. It tends to be objective in focus. The assumption in behavioural decision-making is that the knowledge is not perfect and decision-makers operate in an environment that they perceive according to their own knowledge and experiences. In such an environment, decisions tend to be based on result of past decision and outcome. Future decisions are adapted to the socio-political culture in which they are made.

Types of Decision-Making

  • Programmed and non-programmed decisions
  • Organizational and personal decisions
  • Routine and strategic decisions
  • Individual and group decisions
  • Major and minor decisions
  • Tactical (Policy) and operational decisions
  1. Programmed and non-programmed decisions: Programmed decisions deals with the problems of repetitive nature or regular type matters. In this type of decision, a particular step is used for solving the problems. The managers take these types of decisions generally at the lower level of the organization. Examples of this decision type may include the purchase of raw material, granting monthly leave to an employee and supply of goods and implements to the employees, etc. Non-programmed decisions refer to difficult situations for where there is no easy solution. These situations are very important for the organisation. Lets take for example, opening of a new branch of the company or a large number of employees absenting from the organisation or introducing of new products in the market, etc., these type of decisions are normally taken at the higher level of organization.
  2. Organizational and personal decisions: When an individual takes decision as an executive in the official capacity, it is referred to as organizational decision. On the other hand, when the decision is taken by the executive in the personal capacity (such decision that affects his personal life), it is referred to as personal decision. Sometimes these decisions may negative effect on the function of the organization for instance, if an executive moves out the organization, his leaving may affect the organization. The authority of taking organizational decisions may be represented by another, while personal decisions cannot.
  3. Routine and strategic decisions: The general functions of the organisation are related to routine decision-making or the regular decision. These types of decision do not need much evaluation and analysis and can be taken immediately. Ample powers are delegated to lower ranks to take these decisions within the broad policy structure of the organisation. Strategic decisions are important which affect objectives, organisational goals and other important policy matters. These decisions usually involve huge investments or funds. These are non-repetitive in nature and are taken after careful analysis and evaluation of many alternatives. These decisions are taken at the higher level of management.
  4. Individual and group decisions Major and minor decisions: Individual decision(s) are decisions made by a single individual; however group decisions are regular routine type of decisions taken by people within the organizations broad policy framework. Group decisions are carried out by a group of individuals constituted in the form of a standing committee. The main reason for taking group decisions is to include a maximum number of individuals in the process of decision- making.
  5. Major and minor decisions: Decisions are also classified into major and minor. Purchasing of new factory premises is an example of a major decision; however, top management makes major decisions. While purchasing of office stationery is an example of a minor decision, office superintendent can take this decision.
  6. Tactical (Policy) and operational decisions: Policy decisions are decisions that pertain to various policy matters of the organization. These are usually taken by the top management usually with long-term impact on the functioning of the concern. Examples of policy decisions include decisions pertaining location of plant, tone of production and channels of distribution (Tactical) policies. Operating decisions on the hand has to do with day-to-day activity carried out in business. Middle and lower level managers can take these decisions in an organization. To further differentiate between these two decisions, here are specific examples: Decisions pertaining payment of allowances to employees is an example of a policy decision. However, if the allowance is to be given to the employees, calculation of allowance in respect of each employee is an operating decision.

Decision-Making and Power Structure:

The two schools of thought who make decisions are Elitism and Pluralism.

Elitism

This has basic assumptions, which are stated as: 1) Power is a constant factor: 2) Sources of power are wealth and social class

The underlying theory is that in all societies, two classes of people appear i.e. a class that is ruled and a class that rules. Elitism is therefore explained by the nature of social organisation resulting in the concentration of power in the hands of a few. The ruling class possess those attribute, real or apparent which are highly esteemed or very influential in the society or community. The elitist view therefore holds that:

  1. There is a reasonably clear distinction over time between those who exercise power (elite) and those who do not (masses).
  2. The distinction in power is based upon the unequal distribution of control over economic resources. Men of wealth and social position will be men of power.
  3. Power is structured i.e. it tends to persist over time. Elections and appointment of government officials will come and go but the same men will continue to exercise power in the community.
  4. The elite constitute a very small proportion of the people in the community and are not typical or representative of the people in terms of income, education or occupation.
  5. There is a considerable convergence of power at the top with the masses below depicting a pyramidal structure.

Pluralism

The pluralist model of community power structure agrees that there is no pure democracy where all citizens participate directly in decision-making. Powerful individuals and financial strong organizations tend to dominate but there is always strong government protection against such dominance. Through interest groups and various community organizations, individuals gain access to decision-making process. Besides, competition between groups makes it difficult to have power in any one group. The pluralist model sees interest and activism rather than economic resources as the key decision making power. Competition, access and equity characterize community power and decision-making. The pluralist views therefore holds:

  1. Pluralist views power as participation in decision-making where many individuals have opportunities to exercise power.
  2. Power relations do not persist over time; they may be tied to issues and can be fleeting to be replaced by a different set of power relationships when another decision is made.
  3. Levels of interest in a particular decision issue determines who participates in decision making i.e. by the individual or interest group becoming active or inactive,
  4. There is considerable competition among leaders and groups and issues are sorted out in bargains and compromises.
  5. There are multiple centres and bases of power within a community as individuals who exercise power in some kind of decision do not exercise to others. Wealth is an attribute of power but not the only attribute.

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