Attaining Sustainable Organizational Growth and Profitability
In any business enterprise decisions can be made at varying levels in the organization. Managers at all levels in the organization must make decisions on behalf of a company. Those decisions range from simple selection and approval decisions, of which there are a lot of research, to very difficult decisions - strategic decisions. The term decision is used when a grocery store customer encounters an entire aisle of breakfast cereals, we say he has a decision to make. When a high school senior considers which college to attend, we say she is facing a decision. When a poker player weighs whether to raise or fold, that's a decision, too. And when a company faces an opportunity - to enter a new market, acquire another company, or launch a new product - what is required of its management? A decision. The same term is applied to routine as well as complex deliberations, to both small-stakes bets and high-stakes commitments, and to exploratory steps as well as irreversible moves.
All these decisions have one property in common, the fact that people have to make up their minds in a great variety of circumstances. The use of the same word "decision" for deliberations in all these very dissimilar situations is a source of confusion, and makes it very difficult for people to apply any lessons learned or research knowledge in one situation to another situation.
Categorizing Decisions To Guide Decision-Making
These different types of decisions require different approaches - a framework - that provide a consistent process to help decision makers improve their decision-making. One approach is a model of decision-making based on two (2) factors that influence decision-making, namely: level of control on outcomes, and whether performance is absolute of relative. These factors define two (2) dimensions that can be organized into four categories. These categories define a structure/framework useful in categorizing decisions that lead to finding useful approaches to improve decision-making. They include the following:
Decision-makers (managers) can improve the quality of their decisions substantially, if before making any decisions they make an assessment of the type of decision(s) required for the situation at hand.
Management Decisions Types
Managers face in the course of their daily responsibilities a range of decisions that are consistent with their positions and roles in the organization. The difference between decisions at the various levels, typically, lies in the type and scope of the decision or choices made. From the point of view of management, managerial decisions can be broadly classified into these categories, namely, strategic, tactical, operational and administrative
These decisions concern making choices from alternatives courses of action based on facts, information, and value premises with the intention of moving towards a desired state of affairs.
Levels of Management Decisions
All management decisions can be related directly or indirectly to broader management functions: planning, organizing and staffing, leading, and controlling; with different management levels spending more time on certain functions than on others. The management based on positions, roles and responsibilities may be defined as follows:
The management decision levels defined in terms of positions, roles and responsibilities may have designated decision rights including decision authority associated to each position. An organization’s ability to execute well rests on its ability to make and implement the decisions that matter most.
Decision Rights and Authority
Many organizations struggle with timeliness and clarity of decision making, hampered by a broad range of factors: unclear priorities, consensus decision making, ambiguous decision roles, poor decision and meeting disciplines, siloed behaviors, or organizational structures that thwart collaboration and accountability.
Decision rights are a component of organization design, that help identify and establish "what" business decisions need to be made, both to drive the business and to drive alignment to strategy. And "who" is involved in making them and "how" the decisions will be made through operating processes.
Decision authority is the, power or obligation to make a decision and the duty to answer for its success or failure. There are six (6) common types of Decision Authority, including:
Identifying and defining decision rights helps companies to organize their decision making and execution processes by setting clear roles and accountability, and by giving those involved a sense of ownership of decisions.
I am a computer scientist by education and training. My interests are in modeling complex business and social systems to foster better strategic and operations management processes in delivering value to customers while meeting the expectations of stakeholders.