The Different Kinds of Decisions
The kinds of decisions you face fall anywhere on a spectrum from strategic to operational/frontline. If you’re a small business owner — until you add staff and distribute responsibility, that is — you make decisions across the full spectrum.
If you’re in a medium-sized to large company, the kinds of decisions you face depend on how your organization distributes decision-making authority and responsibility: centralized at the top or decentralized through all levels, for example. In addition, the type of decisions you’re responsible for depends on your role in the company. Each kind of decision calls for a different kind of thinking and decision-making style.
Traditionally, big companies are organized hierarchically, with authority allocated at each level of management down to the front line. In theory, direction comes from the top and moves down through the company for implementation. The speed and complexity of the business environment challenges this way of assigning decision-making power because it is slow.
Still, this is the prevalent organizational style; even medium-sized companies lean toward using the combination of hierarchy and authority. Different organizational structures and sources may use different terminology.
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.
Tactical decisions translate strategic decisions into action. Tactical decisions are more straightforward and less complex than strategic-level decisions. 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
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.