What are the three different levels found in a company what types of decisions are made at each level?

In traditional business structures, the managerial function is usually split into three different levels with each level enjoying a different degree of power and control. Generally, senior managers will develop the business strategy, middle managers will execute the strategy and line managers will supervise staff as they perform their duties on the ground. All managers have a certain amount of decision-making responsibility, but the nature of those decisions changes markedly as you move down the ranks.

Strategic Levels of Decision-Making Authority

At the top of the corporate tree, the C-suite (chief executive officer, chief operating officer, chief financial officer, presidents) are responsible for strategic planning. This involves making long-term, big-picture decisions and establishing policies that will impact the organization for at least the next five years. Examples include:

• Launching new products.
• Becoming a market leader.
• Gaining market share.
• Diversifying revenue streams.
• Going international.
• Improving customer satisfaction.
• Reducing financial waste.
• Developing the company's reputation as an ethical business.

Strategic decisions give direction to the growth and development of a business and are thus critical to its success or failure. There's a level of risk associated with these decisions, and senior leaders will do a lot of financial modelling and situational analysis to assess the risk based on predictions about future trading conditions.

Tactical Decision Making

Middle managers are largely responsible for tactical decision making. Their job is to translate the company's strategic goals into action plans – for example, by specifying work processes, cash levels, price points, inventory levels and manpower requirements. The focus is on using resources and creating performance standards to achieve the objectives set out in the strategic plan.

Tactical decisions cover a much shorter time frame than strategic decisions – somewhere in the region of 12 to 36 months is normal – and are associated with less uncertainty and risk. Examples of managerial-level decision making at the tactical level include:

• Allocating budgets and resources.
• Manpower planning.
• Designing jobs and work processes, including the automation of tasks.
  
• Specifying technology to improve production efficiency.
• Pricing decisions.
• "Make or buy" decisions.
• Developing preventive maintenance plans to ensure that production runs smoothly.

Operational-Level Planning

The bottom layers of management are responsible for making operational decisions. These decisions are routine in nature and involve the day-to-day operations of the business, such as: Who should do this job? What machines or resources should we use? How many items of stock shall we reorder?

On any given day, a business may make hundreds or even thousands of operational decisions without even realizing it. These decisions tend to be administrative in nature and much smaller in scope and scale than tactical or strategic decisions. They can usually be spelled out quantitatively in terms of time and targets. For example, a line manager might decide how many units of production are needed to satisfy a work order or how many labor hours to allocate to a job.

While generally seen as low risk, operational decisions are the decisions that employees experience on the ground. If decisions are regarded as oppressive or unethical, or if too many constraints are placed on decisions made at this level, then employees are likely to feel frustrated. Suppose, for example, an engineer spots a fault and knows exactly how to make it right. If she has to wait several days for authorization from a higher up in order to fix the problem, then she may feel restricted in her job, underused, undervalued and distrustful of the decisions made by management.

The business environment has in recent times changed from being predictable to being unpredictable and from being simple to being complex. Hence, we require a transformation in how decisions are made, both individually and within organizations. As it redefines its role in society, business must restore trust with its employees and its customers. Personally, professionally, and organizationally, it’s time to gain access to all your creative resources and intelligences so that you can make the decisions you need to, to prime your company for success in this ever-changing world.

Decision making has received increasing attention in recent years and some authorities have argued that management and decision making are synonymous terms. Indeed, there is very little managerial activity which does not involve decision making, in some form. Since, the quality of information available is crucial to the quality of decision-making, an efficient and adequate information system is a prerequisite of managerial success. The hallmark of efficient management may thus be seen in the ability to specify accurately the information needed, and this ability is in itself a function of clear definition of objectives, sound planning and control capability and satisfactory organizational arrangements.

A decision is a choice between a variety of alternatives, and a decision-maker is whoever makes such a choice. A decision can be made instantly but more often involves decision-maker in a process of identification, analysis, assessment, choice and planning. To arrive at a decision, a manager must define the purpose of the action, list the options available, choose between the options, and then turn that choice into action. Decisions and the process of decision-making are fundamental to all management processes, just as they are to everyday life.

Types of Decision Making

Decision making are usually made at three levels in an organization ie strategic, tactical and operational levels. Hence, we have three types of decisions based on these three levels.

Strategic decisions

Strategic decisions are executive-level decisions. Strategic decisions are made in every area, from IT (information technology), HR (human resources), finance, and CRM (customer relations), for example. Strategic decisions look ahead to the longer term and direct the company to its destiny. They tend to be high risk and high stakes. They are complex and rely on intuition supported by information based on analysis and experience. When you face a strategic decision, you may have time to consider options reinforced by the gathered information, or you may have moments to decide.

To make good strategic-level decisions, you need to be comfortable working with a lot of information and have the ability to see the interrelationships among the company and its employees, clients, suppliers, and the communities it reaches. You need to be collaborative, in touch with what is going on, open-minded, and flexible without being wishy-washy. Jones(2015) opines that Yahoo’s CEO Marissa Mayer created a strategic plan to foster the company’s renewal: Knowing that each was interrelated, Mayer focused on people, then product, then site traffic, and then revenue. She began by hiring great people and taking steps to stop talented Yahoo employees from going to other companies.

She then bought companies to strengthen the Yahoo product, knowing that a strong product keeps employees, builds traffic, and generates revenue. This is what it takes to make strategic decisions.

Tactical decisions

Tactical decisions translate strategic decisions into action. Tactical decisions are more straightforward and less complex than strategic-level decisions. They are decisions taken by middle level management that are usually semi-structured. When they are in alignment with your company’s core values or its overall mission, tactical decisions add even more value to the outcomes of the implementation.

Conversely, if tactical decisions become detached from the company’s direction, you and your employees end up expending a lot of effort on tasks that don’t help the company achieve its goals or vision.

Tactical decisions fall in the scope of middle management. Middle managers are the proverbial meat in the sandwich; they make things happen. In vertically organized hierarchies, middle managers translate top-level decisions into goals that can be operationalized.

Operational and frontline decisions are made daily. Many operational decisions are guided by company procedures and processes, which help new employees get up to speed and serve as a backdrop for more experienced employees, who, having mastered the current procedures and processes, can detect and rapidly collate additional information, like cues, patterns, and sensory data, that aren’t covered by the procedures. Take mechanics, for example: A master mechanic is able to apply procedures and specifications to fix a problem, and his accumulated experiences (and intuition) strengthen his troubleshooting abilities. Detecting subtleties is an intuitive intelligence. The effect is faster and more accurate diagnosis or assessment of a particular situation.

Because conditions are more concrete and predictable, operational and frontline decisions as a rule hold less risk strategically and tend to follow a more routine pattern. But therein lies the danger: They can hold more risk for health and safety for the simple reason that complacency sets in, and people become less alert.

Types of Problems found at different Levels of Management

Hicks et al(2010) opine that information system is a system which manages organization. They are designed to aid management in decision making and facilitate provision of solutions to solving structured, semi-structured and unstructured problems at different levels of management in an organization(Computer in Business MBA module,2000).

Metiboba(1998) gave the following as examples of structured, semi-structured and unstructured problems;

·       At top management level, the structured problem is selecting warehouse facilities, semi-structured problem is decision to embark on mergers/acquisition while unstructured problems are new product line, Research and Development(R&D).

·       At the middle level of management, structured problems are budget management and budgeting, semi-structured problems are sales forecasting and product pricing while unstructured problem is personnel management.

·       At operational levels, the structured problems are sales order processing and approving customer credit, semi-structured problem is product scheduling while unstructured problem is selecting media devices for advertising. Decision Support Systems(DSSs) usually aid executives in solving unstructured problems that exist at top level of management.

The following is a list of decision-making styles, which were drawn from the work of Kenneth

Brousseau, CEO of Decision Dynamics:

Decisive: With decisive decision-makers, time is of the essence. Their mantra is “Get things done quickly and consistently, and stick to the plan.” This decision-making style applies one course of action, using relatively little information. Being decisive comes in handy in emergency situations or when you have to clearly communicate operational-level health and safety decisions.

 Flexible: Flexible decision-makers are focused on speed and adaptability. They acquire just enough data to decide what to do next and are willing to change course if needed. This decision-making style works with several options that can change or be replaced as new information becomes available. Being flexible comes in handy when you have to make decisions in dynamic, uncertain situations. Flexible decision-making is relevant to all levels of decision-making.

 Hierarchic: Hierarchic decision-makers analyze a lot of information and seek input from others. They like to challenge differing views or approaches and value making decisions that will withstand scrutiny.

Once their minds are made up, their decisions are final. This decision making style incorporates lots of information to produce one option.

This characteristic can be handy, depending on the application; financial forecasting and capital procurement decisions come to mind.

 Integrative: Integrative decision-makers take into account multiple elements and work with lots of input. They cultivate a wider perspective of the situation and invite a wide range of views (even ones they don’t agree with). They flex as changes arise until time is up and a decision must be made. This decision-making style uses lots of information and produces lots of options. It’s handy for executive-level or managerial decision-making in fast-moving, dynamic conditions where the decision has a big impact on people or resources.

If you don’t feel like you fit into any one of the decision-making characteristics I list here, rest assured. First, you bring more than what is described here to the business decision-making process. Second, these styles are not exclusive: You may use characteristics of more than one style, or you may use different styles in different situations(Jones,2015).

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