customer returns a purchase to a store, when a supplier is late with an important delivery, anews team’s response to a fast-breaking event, or a college’s handling of a student wantingto drop a class. Such situations are called structured problems because they’re straightforward,familiar, and easily defined. For instance, a server spills a drink on a customer’scoat. The customer is upset and the manager needs to do something. Because it’s not anunusual occurrence, there’s probably some standardized routine for handling it. For example,the manager offers to have the coat cleaned at the restaurant’s expense. This is what wecall a programmed decision, a repetitive decision that can be handled by a routineapproach. Because the problem is structured, the manager doesn’t have to go to the troubleand expense of going through an involved decision process. The “develop-the-alternatives”stage of the decision-making process either doesn’t exist or is given little attention. Why?Because once the structured problem is defined, the solution is usually self-evident or atleast reduced to a few alternatives that are familiar and have proved successful in the past.The spilled drink on the customer’s coat doesn’t require the restaurant manager to identifyand weight decision criteria or to develop a long list of possible solutions. Instead, the managerrelies on one of three types of programmed decisions: procedure, rule, or policy.A procedure is a series of sequential steps a manager uses to respond to a structuredproblem. The only difficulty is identifying the problem. Once it’s clear, so is the procedure.For instance, a purchasing manager receives a request from a warehouse manager for 15PDA handhelds for the inventory clerks. The purchasing manager knows how to make thisdecision by following the established purchasing procedure.A rule is an explicit statement that tells a manager what can or cannot be done. Rulesare frequently used because they’re simple to follow and ensure consistency. For example,rules about lateness and absenteeism permit supervisors to make disciplinary decisions rapidlyand fairly.The third type of programmed decisions is a policy, which is a guideline for making adecision. In contrast to a rule, a policy establishes general parameters for the decision makerrather than specifically stating what should or should not be done. Policies typically containan ambiguous term that leaves interpretation up to the decision maker. Here are some samplepolicy statements: The customer always comes first and should always be satisfied. We promote from within, whenever possible. Employee wages shall be competitive within community standards.Notice that the terms satisfied, whenever possible, and competitive require interpretation. Forinstance, the policy of paying competitive wages doesn’t tell a company’s human resourcesmanager the exact amount he or she should pay, but it does guide them in making the decision.UNSTRUCTURED PROBLEMS AND NONPROGRAMMED DECISIONS. Not all the problemsmanagers face can be solved using programmed decisions. Many organizational situationsinvolve unstructured problems, which are problems that are new or unusual and for whichinformation is ambiguous or incomplete. Whether to build a new manufacturing facility inChina is an example of an unstructured problem. So, too, is the problem facing restaurantmanagers in New York City who must decide how to modify their businesses to comply withthe new law. When problems are unstructured, managers must rely on nonprogrammed decisionmaking in order to develop unique solutions. Nonprogrammed decisions are uniqueand nonrecurring and involve custom-made solutions.Exhibit 7-7 describes the differences between programmed and nonprogrammed decisions.Lower-level managers mostly rely on programmed decisions (procedures, rules, andpolicies) because they confront familiar and repetitive problems. As managers move up theorganizational hierarchy, the problems they confront become more unstructured. Why?Because lower-level managers handle the routine decisions and let upper-level managersdeal with the unusual or difficult decisions. Also, upper-level managers delegate routinedecisions to their subordinates so they can deal with more difficult issues.20 Thus, few managerialdecisions in the real world are either fully programmed or nonprogrammed. Most fallsomewhere in between.CHAPTER 7 | MANAGERS AS
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