The Essence of Management Decision

The authors described the concept of management decisions in a business environment . They identify the tendency of research to focus on the decision maker, or even the decision itself, without really understanding the bigger picture. This article distinguished daily operation decision making from big picture decision making. These are broken into “Category I” and “Category II” decisions, with Category II being the bigger picture .

A Category II decision is important in the context of the business itself. It takes into account external factors, including competitors, precedence, and applicable laws. These decisions cannot be delegated, as there is an element of uncertainty, and the stakes are high. Category I decisions, in contrast, can be delegated. These decisions can be duplicated at regular intervals, do not impact the organization as a whole, and have less uncertainty.

In business, it is important to know when to delegate, and when the decision must be made personally, for the good of the firm. This article speaks to this difference, and explains how to tell which decisions are the sole responsibilities of upper management. By allowing the upper management to make the firm-wide decisions, smaller, routine decisions can be delegated to middle and lower managers. This can free valuable time and resources for the critical decisions.

HRO seeks to mitigate risk in the face of uncertainty. This falls into the Category II decisions as described in the article. Understanding the importance of the decisions, and preparing in advance for these decisions is important for an organization. Defining decisions as management decisions helps, but does not address the importance of relying on individuals with knowledge of the situation.

Harrison, E. F., Pelletier, M. A., (2000). The essence of management decision. Management Decision 38(7), pp.462 – 470. doi: 10.1108/00251740010373476

Last Modified on February 16, 2017
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