Posted by Chester Morton / Thursday 7 December 2017 / No comments
Levels of management decision
DECISION MAKING
Definition
Decision making represents a process of choosing the best
alternative from among many possible options available to the manager of a business unit. A manager at any given moment of making a decision concerning the
business would first of all assess all the different alternative decisions
which the business can take. Each of these alternative decisions will be looked
at in terms of their advantages and disadvantages which are known to the
managers of the business. From this evaluation, a final decision may be arrived
at. Weighing the merits and demerits of each choice or option helps the
managers of the company to make the best decisions.
LEVELS OF MANAGEMENT DECISION
Introduction
Introduction
Managers are required to
make decisions at all level as part of their duties in the company. These
decisions are often organizational in nature. At the various levels of
management, the decision would reflect the general direction of the company. Long-term
decisions which affect the firm as a whole would usually be taken by the highest
levels of management. Those decisions affecting the daily operations are left
for bottom level management. However, in a properly functioning firm, all
decisions are expected to relate (directly or indirectly), to the wider management functions, involving: planning,
organizing, leading, staffing and controlling.
Board or Owner’s Level Management Decision
Management activities are carried out
in line with the firm’s grand mission (the reason why it is created as a
business) This mission is formulated by the board or the owner of the company.
From this mission, a mission statement is written for both those who work
within the company and its external audiences. It may take several years before
a company succeeds in its mission. From this mission statement, the company
derives its vision. The vision describes an ideal state which the firm seeks to
make happen in reality. For example, a
catering business could make becoming the first choice catering service for
wedding occasions its vision. Apart from defining a mission and vision, a
firm’s board or owners are also responsible for stating the firm’s core value.
The company’s core value are those standards on which the business will never
compromise.
Top Management Level Decisions
Translating the company’s vision and mission
into real achievements over time is a decision taken at top management level.
Top management makes strategic or long term plan which must guide the decisions
that will help the company accomplish its mission and realize its vision.
Decisions taken at top management level regarding the firm’s strategy will
affect every aspect of the firm’s operation. Top management level decision
considers what the firm intends to achieve in between 1-5 years. It is
therefore top management’s decision to choose the firm’s grand strategy for
bringing the firm’s vision into reality. Often, these decisions involve planning.
Top management also have power to interfere, terminate, or completely revise
the decisions of middle level management.
Middle Management Decision
The overall direction which the
company must take is dependent of the decision of middle level management. This
is because middle level management must choose the smaller often short term
objectives which when put together will result in achieving the strategic goal
set by top management. Middle level management therefore formulates tactical or
short term plans; which are more detailed than the grand strategic plan decided
by top management. Unlike strategic
plans or visions of the firm, which touches on every aspect of the firm;
tactical plans affect only a department or a section of the business such as
production, purchasing or distribution. At this level, objective could mean
some kind of measurable improvement in efficiency or quality. Middle level plans
are often made for a year or less, (a quarter, a month etc).
Middle level managers also monitor operational managers and other managers at
similar level.
Operational Level Management Decisions
Operational level may also be
referred to as first-line management; operational management is directly
responsible for workers. They make daily, weekly or monthly decision in the
firm’s operation with the sole aim of achieving aims proposed by middle
management level. As noted earlier decision at this level is largely
departmental or sectional (inventory, scheduling or budgeting) in its scope.
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