Modern management and decision-making are integral to each other in nature. Managers in today’s age and time are always pressed for time hence it is imperative for them to use their time wisely in deciding whether a decision making process can be structured with a routine applied to it (programmed decision) or decisions that require thought and focus as they are novel (nonprogrammed decisions). Every manager is constantly taking such decisions all through their working hours, either consciously or subconsciously.
This article will go through definitions of programmed and nonprogrammed decision making process along with examples of programmed and unprogrammed decisions. You will also be able to find out the difference between programmed and non programmed decisions.
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Programmed and Non-Programmed Decisions
In management, there are mainly two types of decision making programmed and nonprogrammed.
Programmed decisions can be taken when something is repeated over time, and a set of rules can be devised to guide the process of such decisions. Programmed decisions can be simple or fairly complex, but the main thing about such decisions is that the criteria for making such decisions are either completely known or can be estimated with a fair degree of accuracy. Few examples of programmed decision are listed below:
The decision to buy raw materials for producing goods is based on the amount to be produced, items in stock, time of delivery, etc.
The weekly work schedule of part-time workers in a retail store can be worked out based on how busy the store is in that time period, how many regular employees are available or applied for vacations, etc. Though establishing a schedule is a complex decision, yet it falls under programmed decision since a structure can be applied to the process.
The main technique that managers use for making programmed decisions is developing a mental shortcut or heuristics to help them reach a decision.
On the contrary, a non programmed decision making process lacks structure and routine. This is the primary difference between programmed decision and non programmed decision. A nonprogrammed decision definition is a decision that does not follow a set procedure, and the criteria for such decisions is not well-defined. The main characteristics of an unprogrammed decision are:
Information on which decision is based is generally incomplete or ambiguous.
The decision-maker needs to use his/her creative thinking and judgment while dealing with a non programmed decision making process.
Non-programmed decision making is also referred to as high-involvement decisions or nonroutine decisions since they need a high level of involvement on the part of the decision-maker.
The table below depicts the key differences between a Programmed and a non-programmed decision:
Difference Between Programmed Decision and Non Programmed Decision
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Example of Non Programmed Decision In Business
In business, non programmed decisions are taken mostly by high-level management where crucial decisions are taken that involve a lot of unknowns. Few examples of an unprogrammed decision are:
Whether a company must acquire another organization or not.
Whether a new technology must be adopted or not.
In which global market, the business has the highest potential.
Modern Techniques for Non Programmed Decisions
One needs subjective judgment for badly-defined problems that are non-recurring, novel, and unstructured. Though a standard procedure can not be applied when it comes to non programmed decision making, there are a few techniques that managers take for making non programmed decisions as described below:
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Brainstorming Technique
Alex Faickney Osborn (also called the “father of brainstorm”) developed this technique of non-programmed decisions. He was an advertising executive in the United States. This method aims to improve problem-solving by devising new and creative solutions. A typical brainstorming session has 5 to 10 people in a group where the leader of the group presents the team with the problem in hand. Members are supposed to come out with all possible ideas, and each idea is then discussed and analyzed. The best idea, as per the consensus, is then selected after the session is over.
Delphi Technique
In a Delphi technique, a similar process as brainstorming is performed except for the fact that the members of the group do not meet each other face to face. Group members could be spread across the city, state, or even belong to different countries. Group members use modern tools like video conferencing to interact with each other. People can even use a questionnaire, which is a list of questions about the problem, to gather information from the members of the group. Delphi technique is a very effective method for non programmed decision making since in this, members do not see each other hence they are not affected or influenced by views and opinions of each other about the problem. This technique is also quick since the group uses modern tools and technologies to interact with each other.
Nominal Group Technique
In this technique, each group member thinks and comes up with ideas and solutions in isolation. There is no interaction between the group members in the initial stages of the decision making process. Group members start interacting once all of them have come up with an idea.
Quality Circles
This was started in the 1960s in Japan where a small group of employees from the same department would voluntarily meet regularly to identify, analyze, and solve various types of problems related to their work.
Heuristic Technique
This technique applies various aspects like the rule of thumb, experience, common sense, etc. An example of such an approach is enabling payments in installments for a product as the company feels that people would be more inclined to buy the product if they do not have to pay a lump sum amount but can break it into installments.
FAQs on Modern Techniques for Non-Programmed Decisions
Q1: What is a Rational Decision-making Model and What are the Steps Involved in it?
Ans: A rational decision making process is made up of careful and methodical steps. The rationality of the process is determined by the degree of carefulness and strict application of steps. The 6 steps of a rational decision making process are:
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Identify the problems - Though it seems obvious, identifying the problem might require some serious thinking to boil down to the central issue. Wrong identification of the problem might derail the whole decision-making process.
Establish decision criteria - This step brings in the interests. Values, and preferences of all the stakeholders of this process into the picture since one has to determine what is relevant for making the decision.
Weigh decision criteria - From all the decision criteria collected, one needs to then prioritize them.
Generate alternatives - Now is the time to decide what needs to be done. It is helpful to name creative and unusual solutions apart from the obvious ones.
Evaluate alternatives - From the full list of all the alternatives, you then have to evaluate to find out the most desirable choice. The merits and challenges of each of the solutions have to be evaluated at this stage.
Select the best alternative - The decision of the best alternative is then clearly stated to avoid any confusion or ambiguity. The solution could be directly picked up from the full list or could be an adaptation of any of the options listed.
Q2: What is Bounded Rationality?
Ans: As per the idea of bounded rationality, human beings make rational decisions, but they are limited by our mental capabilities and the information that is at our disposal. This notion takes into consideration that decision-makers can not handle all the aspects of a problem and information related to it. This is why they choose to tackle a meaningful subset of it.
