Types of Decision Making in Management

by Hunkar Ozyasar; Updated September 26, 2017
Businessman looking through window

Different leaders employ different styles when making important management decisions. The decision-making approach depends on the significance of the issue at hand, the experience and skill set of the staff, and the amount of risk that the organization can tolerate. Successful managers can vary their styles as the demands of the situation change, as opposed to adopting a single style for every decision.

Top Down

In a top-down decision making style, also referred to as the command style, the most senior executive in charge makes the decision without consulting the staff much, if at all. While this may sound like a dictatorial way of managing people, in some cases, it is the only feasible solution. In a crisis, for instance, there may simply not be enough time to consult and debate. In other cases, the leader may be the only one sufficiently qualified to understand the intricacies of the decision. There might also be cases when the issue at hand is so simple that it is simply not worth the time and effort to exchange ideas.

Consult

The opposite of a commanding style is one of consultation and collaboration. Here, the final decision may be taken by a single individual, but only after at those involved in the identification of the problem and execution of the solution are consulted. Consulting others is often the best way to arrive at a decision when you are trying to instill a team spirit and encourage people to work closely together when it is time to implement the decision. This style is also necessary when a single person does not know all the details of the situation. For example, when designing a product, the input of engineering, sales and manufacturing staff is needed to ensure that the product meets the needs of customers.

Analytical / Procedural

Some organizations find it best to put rules and procedures in place to simplify the decision-making process. For example, you might adopt a rule to price a product at least 15 percent less than the market leader, but more than 10 percent above the cheapest competitor. Such rules impose discipline in the decision-making process, save time and allow for consistency. While not all decisions can be formalized in this fashion, some frequently-made decisions should be automated to save time and effort.

Democratic

In some instances, organizations find it best to disregard seniority, rank and experience, and instead go with what the majority wants. This is especially true when the decision will influence everyone to the same extent. For example, when deciding where to hold the company's Christmas party, or what foods to serve in the cafeteria, a business may simply take a vote and make its decision based on the results. This way, everyone feels like their input matters. This type of decision-making also eliminates the need to justify the decision to the organization, especially if the voting was held openly.

About the Author

Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. He has been quoted in publications including "Financial Times" and the "Wall Street Journal." His book, "When Time Management Fails," is published in 12 countries while Ozyasar’s finance articles are featured on Nikkei, Japan’s premier financial news service. He holds a Master of Business Administration from Kellogg Graduate School.

Photo Credits

  • Purestock/Purestock/Getty Images