Businesses are built on decisions. Business leaders need to be able to make the right decisions at the right times, leveraging the right data and tools. It’s important to remember that not all problems demand identical decision-making strategies. By understanding different types of decisions, a leader who might be called on to make certain decisions, can better handle the situation and better prepare for the problems they will face in their leadership roles.
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Programmed vs. Non-Programmed
Programmed decisions involve a routine or some repetitive process that a person knows relatively well. Because the person is familiar with all the criteria involved, the decision comes easily — as though it were programmed. In contrast, non-programmed decisions lack clear guidelines; they involve new variables that a person has not likely encountered before, and thus, they require more time and energy to resolve.
Business leaders should strive to reduce the number of non-programmed decisions facing their workforce, turning as many of them into programmed decisions. Increasing the rate of programmed decision-making is likely to improve productivity, increase consistency across an organization and bring up confidence and morale across the workforce.
Routine vs. Strategic
When decisions are simple, do not require much evaluation and are related to the general functioning of the organization, they are considered routine decisions. Routine decisions are often delegated to lower levels of leadership or members of the workforce, as long as these decision-makers can stay within the bounds of an organization’s existing policy structure.
When decisions are more complex and involve broader organizational goals, objectives or policy matters, they are strategic decisions. Strategic decisions tend to be much more significant, both in their effects and in their investments. Business leaders at higher levels of management tend to take careful analysis before making strategic decisions. As a leader begins making more strategic decisions, it might be wise for them to enroll in a decision making biases online course to ensure that they aren’t unduly swayed by frivolous details or logical fallacies.
Operational vs. Tactical
Operational decisions are those pertaining to day-to-day operations. Often, these decisions do not require complex or sensitive information, and their time horizon is relatively short. Meanwhile, tactical decisions are related to the implementation of strategic decisions, which is to say that they tend to involve larger-scale organizational change. As with routine and strategic decisions, operational and tactical decisions are best divided within the workforce between lower-level and higher-level leaders, respectively.
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Organizational vs. Personal
Decisions that affect businesses and are made by a person in their official capacity within the business, tend to be organizational decisions. Yet, when a person makes personal decisions, which are decisions made in the personal capacity that affect their personal life, they still have the potential to affect the organization.
Business leaders should be aware of how their personal decisions might impact their work and the business as a whole. For example, if a leader chooses to take a family vacation during a particularly busy season for their market, their business might suffer for it. Personal decisions cannot be delegated like organizational decisions can, but personal issues can be discussed with other leaders, who might have valuable insight into a personal decision’s effects.
Minor vs. Major
As the name suggests, minor decisions are small and quite inconsequential. An example of a minor decision in a business environment might be purchasing stationary for the office. In contrast, major decisions have broader ramifications on the function and future of the business.
Usually, business leaders don’t need to devote time to minor decisions, but they should put effort into understanding and researching major decisions. Of course, this isn’t to say that minor decisions are unimportant; in fact, minor decisions are critical to the functioning of a business. Yet, minor decisions should never interrupt productivity the way major decisions might.
Individual vs. Group
An individual decision is one that is made by one person without the input of others. Individuals can usually make programmed, routine, minor and personal decisions without worrying about involving another party. However, group decisions are those that should require contributions from a number of individuals. Businesses typically have committees for certain types of decisions, to ensure that important issues are appropriately analyzed by the right group members before decisions are reached.
Considering the number of decisions that a business leader will make during their career, it might be helpful to understand the categories of business decisions to help make the process go more smoothly. By sorting different decisions into these groups, leaders can become better at delegation, giving them more time to devote to the most important issues affecting their business.
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