PROGRAMMED DECISIONS AND NON-PROGRAMMED DECISIONS Programmed decision and Non-

Programmed decision are the two basic types of decisions that managers make. This depends on their
authority, responsibility and position in organizational decision making structure. Programmed Decision
Programmed decisions are those that are traditionally made using standard operating procedures or
other well-defined methods. These are routines that deal with frequently occurring situations, such as
requests for leaves of absence by employees. Features of programmed decisions are: ✔ Programmed
decisions are made using standard operating procedures. ✔ Deals with frequently occurring situations.
(Such as requests for leaves of absence by employees) ✓ Much more appropriate for managers to use
programmed decision for similar and frequent situations. ✔In programmed decisions managers make a
real decision only once and program itself specifies procedures to follow when similar circumstances
arise. ✔ Leads to the formulation of rules, procedures, and policies. Non-Programmed Decision Non-
programmed decisions are unique. They are often ill-structured, one- shot decisions. Traditionally they
have been handled by techniques such as judgment, intuition, and creativity. Features of Non-
programmed decision are: ✓ Situations for Non-programmed decisions are unique, ill-structured. ✔
Non-programmed decisions are one-shot decisions. ✓ Handled by techniques such as judgment,
intuition, and creativity. ✓ A logical approach to deal with extraordinary, unexpected, and unique
problems. ✔ Managers take experimental problem-solving approaches in which logic; common sense
and trial and error are used.

STEPS INVOLVED IN DECISION MAKING A manager is responsible for making decisions on matters falling
within the scope of his authority. Moreover decisions that can be taken at a given level should not be
generally referred to higher levels. A manager should use his skill and intelligence while deciding
something because the quality of decisions made by him indicates the extent of responsibility
discharged by him. Steps taken in decision-making are as follows: ✓ Identifying & diagnosing the real
problem ✓ Discovery of alternatives ✔ Analysis and evaluation of available alternatives ✓ Selection of
alternatives to be followed ✓ Communication of decision and its acceptance by the organisation Step 1:
Identifying & diagnosing the real problem Understanding the problem intelligently is an important
element in decision-making. Predetermined objectives, past acts and decisions and environmental
considerations provide the structure for current decisions. Once this structure is laid, the manager can
proceed to identify and determine the real problem. Diagnosing the real problem implies knowing the
gap between what exists and what is expected to happen, identifying the reasons for the gap, and
understanding the problem in relation to higher objectives of the organisation. However, sometimes
symptoms are mistaken for real problem. Defining a problem is thus not an easy task. Very often it
consumes a lot of time that is worth spending. Step 2: Discovery of alternatives: The next step is to
search for available alternatives and assess their probable consequences. But the number of forces
reacting upon a given situation is so large and varied that management would be wise to follow the
principle of the limiting factor. That is, management should limit itself to the discovery of those key
factors, which are critical or strategic to the decision involved. Thus, while planning for expansion of the
enterprise, availability of finance or of trained staff during a short span of time might be the limiting
factors. Step 3: Analysis and Evaluation of Available Alternatives: Once the alternatives are discovered,
the next stage is to analyse and compare their relative importance. This calls for listing of the pros and
cons of different alternatives in relation to one another. Management should consider the element of
risk involved in each of them and also the resources available for their implementation. Executives
should weigh each of them from the viewpoint of accomplishment of some common goals and in
relation to the effort involved and results expected. Both tangible and intangible factors should be
considered while evaluating different alternatives. Tangible factors, like profits, time, money and rate of
return on capital investment can be expressed numerically. Such factors are usually evaluated and
compared by projecting their effects on income, expense and cost structure of the enterprise. Since such
factors are analyzed for the future, their evaluation is based on forecasts and estimates. It is; therefore,
better if the analyst discovers the extent to which different estimates can be relied upon. Management
can afford to overlook intangible factors in situations where their effect on the course of action is
negligible. However, facts like public relations, reputation, employee morale and personnel relations
prove significant and cannot be ignored inspite of the difficulties to express them numerically. The
analysis should, therefore, identify the relevant intangible factors and ascertain their relative
importance to arrive at a judicious decision. Sometimes, the manager is faced with a situation where
two or more alternatives appear equally good or bad. In that case actual difference will be the deciding
factor. Similarly, where none of the alternatives under consideration is expected to produce desired
results the manager will do well to decide in favour of no action or else trace other undiscovered
alternatives. The evaluation of alternatives may utilize the techniques of marginal analysis, wherein the
additional revenues from additional costs are compared. The real usefulness of marginal approach to
evaluation is that it accentuates the variables in a situation and de-emphasizes averages and constants.
Alternatives can also be evaluated on the basis of cost effectiveness. It is a technique which implies
choosing from among the alternatives and thus identifying a preferred choice when objectives are far
less specific than those expressed by clear quantities. Cost effectiveness criteria can be made more
systematic through the use of models and other techniques. Step 4: Selection of Alternatives to be
Followed: Defining the problem, identifying the alternatives and their analysis and evaluation set the
stage for the manager to determine the best solution. In such matters a manager is frequently guided by
his past experiences. If the present problem is similar to the one faced in the past, the manager may
have a tendency to decide on that very basis. Past experience is an useful guide for taking decisions in
the present. But it should not be followed blindly. Changes in the circumstances and underlying
assumptions of decisions in the past should be carefully examined before deciding on a problem on the
basis of experience. Step 5: Communication of Decision and its Acceptance by the Organisation: Once
decision is made it needs to be implemented. This calls for laying down derivative plans and their
communication to all those responsible for initiating actions on them. It will be better if the manager
takes into account beliefs, attitudes and prejudices of people in the organisation and is also aware of his
own contribution to the implementation of the decision. It is further required that subordinates are
encouraged to participate in decision-making process so that they feel committed and morally bound to
support the decision. At the same time management should establish effective control so that major
deviation can be observed, analysed and incorporated in future decisions.