A decision is a choice made between two or more available alternatives. Decision making is the process of choosing the best alternative for reaching objectives. Decision making is covered in the planning section of this text, but because m anagers must also make decisions when performing the other three managerial functions—organizing, influencing, and controlling—the subject requires a separate chapter.

We all face decision situations every day. A decision situation may involve simply choosing whether to spend the day studying, swimming, or golfing. It does not matter which alternative is chosen, only that a choice is made.²

Managers make decisions affecting the organization daily and communicate those decisions to other organization members.³ Not all managerial decisions are of equal significance to the organization. Some affect a large number of organization members, cost a great deal of money to carry out, and have a long-term effect on the organization. Such significant decisions can have a major impact not only on the management system itself but also on the career of the manager who makes them. Other decisions are fairly insignificant, affecting only a small number of organization members, costing little to carry out, and producing only a short-term effect on the organization.

Decisions can be categorized according to how much time a manager must spend making them, what proportion of the organization must be involved in making them, or the organizational functions on which they focus. Probably the most generally accepted method of categorizing decisions, however, is based on computer language; it divides all decisions into two basic types: programmed and nonprogrammed.⁴

A programmed decision is routine and repetitive, and the organization typically develops specific ways to handle such decisions. A programmed decision might involve determining how products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard-arrangement decisions are typically made according to established management guidelines.

In contrast, a nonprogrammed decision is typically a one-shot decision that is usually less structured than programmed decisions. An example of the type of nonprogrammed decision that more and more managers are having to make is whether to expand operations into the “forgotten continent” of Africa.⁵ Another example is deciding whether a supermarket should carry an additional type of bread. The manager making this decision must consider whether the new bread will merely stabilize bread sales by competing with existing bread carried in the store or actually increase bread sales by offering a desired brand of bread to customers who have never before bought bread in the store. These types of issues must be dealt with before the manager can finally decide whether to offer the new bread. Table 6.1 shows traditional and modern ways of handling programmed and nonprogrammed decisions.

Programmed and nonprogrammed decisions should be thought of as being at opposite ends of the decision programming continuum, as illustrated in Figure 6.1. As the figure indicates, however, some decisions are neither programmed nor nonprogrammed, but fall somewhere between the two. One of the key distinctions between programmed versus nonprogrammed decisions is that programmed decisions typically require less time and effort compared to nonprogrammed decisions.

Many different kinds of decisions must be made within an organization—such as how to manufacture a product, how to maintain the machines, how to ensure product quality, and how to establish advantageous relationships with customers. Because organizational decisions can be so varied, some type of rationale must be developed to stipulate who within the organization has the responsibility for making which decisions.

One such rationale is based primarily on two factors: the scope of the decision to be made and the levels of management. The scope of the decision is the proportion of the total management system that the decision will affect. The greater this proportion, the broader the scope of the decision is said to be. Levels of management are simply lower-level management, middle-level management, and upper-level management. The rationale for designating who makes which decisions is that the broader the scope of the decision, the higher the level of the manager responsible for making that decision. Figure 6.2 illustrates this rationale.

To better understand the role of delegation in different contexts, consider the decisions facing sisters Heather Castagna and Holly Rand, the owners of Lubbock, Texas–based Green Queens, a recycling company. An uptick in residential business and several new commercial contracts required Castagna and Rand to make major decisions about their firm’s future, including a possible location change and the need to hire additional employees. As small-business owners, Castagna and Rand are responsible for making such decisions; they cannot delegate them to others.⁶

It is important to point out that the manager who is responsible for making a particular decision can seek the advice of other managers or subordinates before settling on an alternative. In his article “Moon Shots for Management,” business thinker Gary Hamel observes that senior-level decision making is often marked by “executive hubris, unstated biases, and incomplete data.” Hamel suggests that employees closest to a situation are often in the best position to evaluate alternatives or weigh in on the issues that will affect the decision.⁸ Consistent with this idea, some managers prefer to use groups and input from other employees to make certain decisions.

Consensus is one method a manager can use in getting a group to arrive at a particular decision. Consensus is an agreement on a decision by all the individuals involved in making that decision. It usually is reached after lengthy deliberation and discussion by members of the decision group, who may be either all managers or a mixture of managers and subordinates.⁹

The manager who asks a group to produce a consensus decision must bear in mind that groups will sometimes be unable to arrive at a decision. Lack of technical skills or poor interpersonal relations may prove insurmountable barriers to arriving at a consensus. When a group is stalemated, a manager needs to offer assistance in making the decision or simply make it herself.

Decisions arrived at through consensus have both advantages and disadvantages. One advantage of this method is that it focuses “several heads” on the decision. Another is that employees are more likely to be committed to implementing a decision if they helped make it. The main disadvantage of this method is that it often involves time-consuming discussions relating to the decision, which can be costly to the organization.

Wilson and Alexis isolate several basic elements of the decision situation.¹⁰ Five of these elements are defined and discussed in this section.

The Decision Makers

Decision makers, the first element of the decision situation, are the individuals or groups who actually make the choice among the alternatives. According to Ernest Dale, weak decision makers usually have one of four orientations: receptive, exploitative, hoarding, or marketing.¹¹

Decision makers who have a receptive orientation believe that the source of all good is outside themselves, and therefore they rely heavily on suggestions from other organization members. Basically, they want others to make their decisions for them.

Decision makers with an exploitative orientation also believe that the source of all good is outside themselves, and they are willing to steal ideas as necessary to make good decisions. They build their organizations on others’ ideas and typically hog all the credit, extending little or none to the originators of the ideas.

The hoarding orientation is characterized by the desire to preserve the status quo as much as possible. Decision makers with this orientation accept little outside help, isolate themselves from others, and are extremely self-reliant. They are obsessed with maintaining their present position and status.

Marketing-oriented decision makers view themselves as commodities that are only as valuable as the decisions they make. Thus, they try to make decisions that will enhance their value, and they are highly conscious of what others think of their decisions.

The ideal decision-making orientation emphasizes realizing the organization’s potential as well as that of the decision maker. Ideal decision makers try to use all of their talents when making a decision and are characterized by reason and sound judgment. They are largely free of the qualities of the four undesirable decision-making orientations just described.¹²

For an example of an ideal decision maker, consider Jeff Brown, whose chain of ShopRite supermarkets operates in economically depressed communities in Pennsylvania and New Jersey—communities that other grocery chains view as too risky. Brown, whose company was named one of the region’s top employers, entrusts his employees with the authority to make major store decisions and the freedom to learn from their mistakes without fear of reprisal. Union leaders say Brown encourages their union members—his employees—to think creatively and try new ideas. In their many years of dealing with Brown, the union claims, no case has ever gone to arbitration.¹³