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
1. What are non-programmed decisions, and what makes them different from programmed decisions?
Non-programmed decisions are unique, unstructured, and novel responses to complex and unpredictable situations. They are typically strategic and made by top-level management. The fundamental difference lies in their nature: programmed decisions are repetitive and routine, handled through established procedures (e.g., reordering office supplies), while non-programmed decisions require creative problem-solving because no pre-existing solution exists (e.g., launching a new product line in a competitive market).
2. What are the key modern techniques used for making non-programmed decisions in a business environment?
Managers use several modern techniques to navigate the uncertainty of non-programmed decisions. Some key examples include:
Decision Trees: A graphical representation of possible solutions, outcomes, and risks, helping to map out the consequences of a decision.
Brainstorming: A group creativity technique designed to generate a large number of ideas for the solution of a problem without initial criticism.
Delphi Technique: A structured communication method that relies on a panel of experts to make decisions through a series of anonymous questionnaires and feedback.
Heuristics: Mental shortcuts or 'rules of thumb' that simplify decision-making, especially when information is incomplete.
3. How does the concept of 'Bounded Rationality' impact the process of making a non-programmed decision?
Bounded Rationality significantly impacts non-programmed decisions by acknowledging that humans are not perfectly rational. Decision-makers are limited by the information they have, their cognitive abilities, and the time available. Consequently, instead of finding the optimal solution, they often 'satisfice'—that is, they search for and choose an alternative that is satisfactory or 'good enough'. This is a realistic approach for complex, non-programmed problems where a perfect solution is often unknowable.
4. Can you provide a real-world example of a non-programmed decision that a company might face?
A classic example of a non-programmed decision is a company deciding whether to invest in a new, unproven technology like artificial intelligence for its customer service operations. This decision is non-routine and has no clear precedent. Managers must weigh uncertain factors such as implementation costs, potential for improving customer satisfaction, risk of technical failures, and competitors' actions. The outcome is not guaranteed, making it a high-stakes, strategic choice.
5. What general steps are involved in making a high-quality non-programmed decision?
While non-programmed decisions are unstructured, following a systematic process can improve their quality. The steps are generally adapted from the rational decision-making model:
Identify and Define the Problem: Clearly understand the unique challenge or opportunity.
Gather Information and Establish Criteria: Collect relevant data and determine the factors for a successful outcome.
Generate Alternatives: Use techniques like brainstorming to develop multiple potential solutions.
Evaluate Alternatives: Assess each option against the established criteria, considering its pros and cons.
Select the Best Alternative: Choose the option with the highest potential for success based on judgment and analysis.
Implement and Monitor: Put the decision into action and track its results to make adjustments as needed.
6. Why is it especially important for senior managers to be skilled in making non-programmed decisions?
It is crucial for senior managers because non-programmed decisions directly shape a company's long-term strategy and competitive advantage. These decisions involve significant resource allocation, risk, and uncertainty—such as entering new markets, acquiring another company, or responding to a major industry disruption. The ability to effectively navigate these unique, high-stakes situations is what defines effective leadership and determines the future success or failure of the organisation.
