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Decision Making: Meaning, Types, Process and Importance

Decision making can be a difficult one especially if there are many choices to select from. Decision making is as old as mankind. It is a daily task we are faced with which has a direct or indirect effect on us or the people around.

There are different types of decision making. Before delving into that, I will be defining decision making in its simplest form.

What is Decision making?

Decision making is the process of choosing among different options or alternatives based on careful consideration of available information, resources, and goals. It involves identifying a problem, defining goals and objectives, evaluating and analyzing possible courses of action, and selecting the best course of action that will lead to the desired outcome.

The process of decision making can be either rational or intuitive. Rational decision making involves a systematic approach to decision making that is based on objective analysis of available data and information. Intuitive decision making, on the other hand, relies on gut feeling, experience, and judgement to choose the best course of action.

Decision Making: Meaning, Types, Process and Importance 1

Types of Decision Making

There are several types of decision making that can be classified based on various criteria. Below are some common types of decision making:

1. Programmed decision:

Programmed decision making is a type of decision making that involves routine or repetitive decisions that can be easily automated and standardized. These decisions are typically based on established procedures, rules, and policies that have been developed to address specific situations. Programmed decisions are made based on predefined criteria, and they are generally low-risk decisions that do not require a lot of creativity or innovation.

See five (5) Examples of programmed decision making:

  1. Reordering inventory when stock levels fall below a certain threshold
  2. Approving or denying requests for time off based on established policies and criteria
  3. Assigning tasks to employees based on their skills and availability
  4. Processing routine customer requests or complaints using standardized procedures
  5. Screening job applications based on predefined criteria, such as education and experience.

Programmed decision making can be advantageous in that it can save time and effort by providing a clear and consistent framework for making routine decisions. It can also ensure that decisions are made in a fair and consistent manner, and can reduce the risk of errors and mistakes.

This type of decision making can also be disadvantageous in that it can be inflexible and may not account for unique or unexpected situations. It can also limit creativity and innovation by relying on established procedures rather than exploring new approaches or solutions. Therefore, it is important to balance programmed decision making with non-programmed decision making to ensure that all types of decisions are made effectively and efficiently.

2. Non-programmed Decision Making:

This is a type of decision making that involves complex, unstructured problems that require creative and innovative solutions. These decisions are typically made in response to unique situations that require a high degree of judgement and intuition. Non-programmed decisions are not based on established procedures, rules, or policies and require a more flexible and adaptive approach to decision making.

4 Examples of non-programmed decision making can include:

  1. Choosing a new product line to develop based on changing market trends
  2. Selecting a supplier based on unique criteria that are not covered by established policies
  3. Responding to a crisis or emergency situation, such as a natural disaster or major equipment failure
  4. Developing a new marketing strategy to address changing consumer behavior.
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Decisions that are made using the non-programmed decision making can also be disadvantageous in that it can be time-consuming and may require a high degree of expertise and knowledge to evaluate alternative courses of action. It can also be risky and may result in less predictable outcomes compared to programmed decision making. Therefore, it is important to balance non-programmed decision making with programmed decision making to ensure that all types of decisions are made effectively and efficiently.

3. Strategic Decision Making

This is a decision making type that involves decisions that have a significant impact on the long-term success and direction of an organization. Strategic decisions are typically made by top-level executives and are based on a comprehensive analysis of the organization’s strengths, weaknesses, opportunities, and threats.

Examples of strategic decision making can include:

  1. Entering a new market or geographic area
  2. Developing a new product line or service offering
  3. Investing in research and development to drive innovation
  4. Merging or acquiring another company to expand market share
  5. Restructuring the organization to improve efficiency and profitability.

Strategic decision making is typically complex and requires a high degree of judgement and intuition. These decisions are often made in the face of uncertainty and risk, and require careful analysis and evaluation of alternative courses of action.

Just like the other types of decision making stated above, the strategic decision making can be advantageous in that it can set the direction and vision for the organization, and can ensure that resources are allocated in a way that supports long-term growth and success. It can also help to create a competitive advantage by identifying and pursuing opportunities that are aligned with the organization’s strengths and capabilities.

4. Tactical Decision Making

This type of decision making involves decisions that are focused on implementing and executing specific strategies or plans. Tactical decisions are typically made by middle-level managers and are based on the goals and objectives of the organization.

5 Examples of tactical decision making:

  1. Allocating resources to specific projects or initiatives
  2. Selecting suppliers and negotiating contracts
  3. Hiring and training employees to support specific business objectives
  4. Developing marketing campaigns to promote products or services
  5. Identifying and addressing operational inefficiencies to improve productivity.

Tactical decision making is typically less complex than strategic decision making, but still requires careful consideration of available information and resources. Tactical decisions are often made in response to changing market conditions or competitive pressures, and require a high degree of flexibility and adaptability.

5. Operational decision making

Operational decision making is a type of decision making that involves decisions that are made on a day-to-day basis to support the ongoing operations of the organization. Operational decisions are typically made by front-line employees and are based on established procedures and guidelines.

Examples of operational decision making can include:

  1. Scheduling employee shifts to ensure adequate staffing levels
  2. Responding to customer inquiries or complaints using standardized procedures
  3. Managing inventory levels to ensure availability of products or supplies
  4. Prioritizing tasks based on deadlines and urgency
  5. Maintaining equipment and facilities to ensure optimal performance.

Operational decision making is typically routine and repetitive, and is focused on ensuring that the organization’s daily operations are running smoothly. These decisions are often made in response to specific situations or events, and require a high degree of consistency and standardization.

One of the advantages of the operational decision making is its ability to ensure that the organization’s daily operations are efficient and effective. It can also help to ensure that employees are following established procedures and guidelines.

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It can also limit creativity and innovation by relying on established procedures rather than exploring new approaches or solutions. Therefore, it is important to balance operational decision making with non-programmed decision making to ensure that all types of decisions are made effectively and efficiently.

6. Individual decision making

This type of decision making that involves decisions that are made by a single individual without consulting others. These decisions can be based on personal judgement, experience, and intuition.

Examples of individual decision making can include:

  1. Choosing a specific course of action in a personal or professional situation
  2. Deciding on a personal investment or financial decision
  3. Selecting a career path based on personal interests and skills
  4. Deciding on a specific product or service to purchase for personal use.

Individual decision making is usually quick and efficient, and can allow for greater autonomy and independence in decision making. It can also be based on personal values and preferences, and can lead to more personalized decisions that are aligned with individual needs and goals.

7. Group decision making:

Group decision making is a type of decision making that involves decisions that are made by a group of individuals who work together to evaluate and select the best course of action. This approach can lead to more effective decision making by leveraging the diverse perspectives and expertise of the group.

Below is an example of group decision making:

A marketing team is tasked with developing a new advertising campaign for a product. The team consists of a project manager, a creative director, a graphic designer, a copywriter, and a media planner. They meet regularly to discuss ideas and progress on the project.

During one of their meetings, the team begins brainstorming ideas for the advertising campaign. The project manager facilitates the discussion, while the creative director and graphic designer provide creative ideas for the campaign. The copywriter provides suggestions for messaging and taglines, while the media planner considers the most effective channels for reaching the target audience.

The team evaluates the ideas presented and narrows down the options based on feasibility, cost, and potential impact. They discuss the pros and cons of each idea and eventually select the best one based on their collective judgement.

The team then works together to develop the advertising campaign, with each member contributing their expertise and skills. The result is a successful campaign that meets the client’s objectives and receives positive feedback from the target audience.

In this example, the group decision making process leverages the diverse perspectives and expertise of the team members to develop an effective advertising campaign. The process allows for more creative and innovative ideas to be generated, and the team is able to evaluate and select the best option based on a collective analysis.

Steps in Decision Making Process

The decision-making process involves several steps including: identifying the problem, defining the criteria for decision making, evaluating alternative solutions, selecting the best alternative, implementing the decision, and monitoring the results. Effective decision making requires careful consideration of all available information and the potential consequences of each alternative. It also involves an understanding of one’s own values and biases, as well as the ability to communicate decisions clearly and effectively to others who may be affected by them.

Below are the 8 main decision making processes.

The decision-making process is a systematic approach to making decisions that involves several steps. The steps involved in the decision-making process may vary depending on the situation, but generally include the following:

  1. Identify the problem or decision to be made: The first step in the decision-making process is to identify the issue or problem that needs to be addressed. This may involve gathering information or data to fully understand the situation.
  2. Gather information: The next step is to gather relevant information and data that will help inform the decision-making process. This may involve conducting research, analyzing data, or seeking input from others.
  3. Identify criteria: Once the information is gathered, the next step is to identify the criteria that will be used to evaluate potential solutions. This may involve considering factors such as cost, time, risk, and impact.
  4. Generate alternatives: After the criteria are identified, the next step is to generate potential alternatives or solutions. This may involve brainstorming or evaluating existing options.
  5. Evaluate alternatives: The next step is to evaluate the potential alternatives against the criteria identified in step 3. This may involve weighing the pros and cons of each option, considering potential risks or tradeoffs, and identifying any potential barriers or challenges.
  6. Choose the best alternative: Once the alternatives have been evaluated, the next step is to select the best option based on the evaluation process. This may involve making a final decision or further refining and evaluating the options.
  7. Implement the decision: The next step is to implement the chosen option. This may involve developing an action plan, assigning tasks, and allocating resources.
  8. Evaluate the results: The final step is to evaluate the results of the decision and determine if the desired outcome has been achieved. This may involve monitoring progress, making adjustments, and seeking feedback from stakeholders.
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Effective decision making requires careful consideration of all available information and the potential consequences of each alternative. It also involves an understanding of one’s own values and biases, as well as the ability to communicate decisions clearly and effectively to others who may be affected by them.

Importance of Decision Making

Decision making is an essential aspect of personal and professional life. There are many reasons we make decisions however I will give you some reasons why decision making is very important:

  1. Achieving goals: Decision making is crucial to achieving personal and professional goals. It helps individuals and organizations to identify and pursue the most effective course of action to reach their desired outcomes.
  2. Problem-solving: Decision making is essential for problem-solving. It allows individuals and organizations to identify issues or problems and develop solutions that address them.
  3. Risk management: Decision making is important for managing risk. It helps individuals and organizations to identify potential risks, evaluate them, and develop strategies to mitigate or avoid them.
  4. Resource allocation: Decision making is important for allocating resources effectively. It allows individuals and organizations to allocate resources, such as time, money, and personnel, to the most important tasks and projects.
  5. Innovation: Decision making is important for fostering innovation. It allows individuals and organizations to explore new ideas and approaches to solving problems, and to pursue opportunities for growth and development.
  6. Communication: Decision making is important for effective communication. It allows individuals and organizations to communicate decisions clearly and effectively to others who may be affected by them, such as stakeholders, employees, and customers.

In summary, decision making is essential for achieving personal and professional goals, solving problems, managing risks, allocating resources effectively, fostering innovation, and communicating decisions clearly and effectively.