What is a Nonroutine Decision?

A nonroutine decision is a choice made to deal with a non-repetitive, tactical situation. These decisions typically involve situations that fall outside of the normal operating procedures of a business. When such a situation arises, the operating procedures mandate that the decision be bumped out of the normal operating flow and sent to a manager for resolution.

Dealing with Nonroutine Decisions

There are several best practices associated with nonroutine decisions, which are as follows:

Monitor by type and construct procedures as needed. When a business has a comprehensive suite of standard operating procedures, there should be relatively few nonroutine decisions, since most decisions have been accounted for by the procedures. In a well-run business, management might track how many of these situations arise and devise procedures for the most common of them, so that lower-level staff can deal with them in a routine manner.
Assign responsibility. Some nonroutine decisions cannot be standardized. Instead, someone must make a decision regarding which tactical alternative to take. For example, a manager must decide whether to stop selling a product, or whether to make a product in-house or have it produced by a third party. Who should take responsibility can be set up in a standardized format, even if there is no associated procedure for how to deal with these decisions.
Identify analyses to be conducted. Even if there is no procedure for dealing with a nonroutine decision, you can identify the types of analyses for various clusters of decisions. Identifying these tasks in advance assists with the decision-making process. These decisions typically involve some analysis of the costs and margins involved, as well as future projections.

Types of Nonroutine Decisions

Some of the more common nonroutine decisions are as follows:

Make-or-buy decisions. These decisions involve choosing between manufacturing a product in-house or purchasing it from an external supplier. They require analysis of cost, quality, capacity, and strategic control considerations.
Special order decisions. Special order decisions arise when a company receives a one-time order at a price lower than usual. Managers must assess whether accepting the order will still cover variable costs and contribute to fixed costs or profits.
Product line elimination. This decision evaluates whether to discontinue a product, department, or business segment that appears unprofitable. It involves analyzing the impact on overall profitability, fixed costs, and interdependencies with other operations.
Equipment replacement decisions. These decisions determine whether it is more cost-effective to replace existing equipment or continue using it. They involve comparing future savings from new equipment against the cost and remaining value of current assets.
Outsourcing decisions. Outsourcing decisions assess whether to delegate a business function or service to an external provider. These decisions weigh cost savings against potential risks like loss of control or reduced quality.
Pricing decisions in competitive bids. This type involves setting a price for a bid in a highly competitive environment, often to win a contract. Managers must consider cost coverage, competitor behavior, and strategic positioning.
Accept or reject a project. This decision evaluates the financial and strategic benefits of initiating a new project or investment. Tools like net present value (NPV) and internal rate of return (IRR) are commonly used in the assessment.
Lease or buy decisions. Companies decide whether to lease an asset or purchase it outright based on cost, tax, and cash flow implications. This involves comparing total long-term costs and evaluating flexibility needs.
Entering new markets. This decision explores expanding operations into new geographic or customer markets. It requires analysis of demand, competition, regulatory factors, and resource requirements.
Crisis decisions. These decisions are made in response to unexpected events such as natural disasters, legal issues, or supply chain disruptions. They often require rapid action with limited data and focus on minimizing damage.