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The Decision Making Process

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Roy Teeh

on 17 September 2015

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Transcript of The Decision Making Process

The Decision Making Process
What is a decision?
Step 1
Step 2
Step 3
Step 4
Step 5
Identifying a Problem
Step 1: Identify a Problem
- A problem could be considered as a discrepancy between an existing and a desired state of affairs

- To identify a problem, you should recognize and understand the three characteristics of problems:
Step 2: Identify Decision Criteria
Decision Criteria: Criteria that define what is important or relevant to resolving a problem

Step 6: Select an Alternative
Choose the best alternative or the one that generated the highest total in Step 5

Step 7: Implement the Alternative
Put the chosen alternative in action

Step 8: Evaluating Decision Effectiveness
Evaluate the outcomes or result of the decision to see whether the problem was resolved

Apply the decision-making process in the purchase of basketball.

3. Decide on a preferred course of action
Where an actual decision is made to select a preferred course of action
In Management Theory-
there are two differences between classical and behavioural models of decision making
decision making with complete information
Chooses the alternative giving the absolute best solution to a problem
*Herbert Simon, recognized limits to our human information processing capabilities.

Bounded Rationality
: Decision making that is rational, but limited by an individual’s ability to process information

: Accept solutions that are “good enough”

Escalation of Commitment
: An increased commitment to a previous decision despite evidence it may have been wrong

When interviewing candidates for the position of receptionist in a clubhouse, is intuitive decision making useful to help you to make your hiring decision? How?
5. Evaluate results
Decision making process is NOT complete until
results are evaluated.
If desired results are not achieved, corrective
action should be taken.
*Evaluation is a form of managerial control
Problem solving becomes a dynamic and outgoing activity within the management process
Evaluation: Clears goals, measures targets and timetables
A decision is a choice among two or more alternatives
Decision making is part of every manager's job, at whatever level he or she operates and in whatever industry or service

Decision Making Process
Roy Teh
therefore managers as decision maker
Problems and decisions Decision Making

Structured Problems: Straightforward, familiar, and easily defined problems

Unstructured Problems: Problems that are new or unusual and for which information is ambiguous or incomplete

Programmed Decision
: A repetitive decision that can be handled by a routine approach, including the following:

Procedure: A series of sequential steps used to respond to a well-structured problem
Rule: An explicit statement that tells managers what can or cannot be done
Policy: A guideline for making decisions
Step 6
Step 7
Identifying Decision Criteria
Allocating Weights to the Criteria
Developing Alternatives
Analyzing Alternatives
Selecting an Alternative
Implementing the Alternative
Evaluating Decision Effectiveness
Step 8
Awareness of the problem — Identify the actual problem

Under pressure to act — You must have a priority, in which
an important or true problem puts pressure on the
manager to take action and a problem without pressure
can be postponed

You need to have the authority or resources to act or be
able to mobilize resources

Step 3: Allocate Weights to the Criteria
If the relevant criteria are not equally important, the decision maker must weight the items in order to give them the correct priority in the decision
Step 4: Developing Alternatives
List viable alternatives that could resolve the problem

Step 5: Analyze Alternatives
Appraise each alternative’s strengths and weaknesses

Rational Decision Making
: Describe choices that are logical and consistent and maximize value

Assumption of rationality
- Goals are clear and alternatives limited
- Time pressures are minimal and the cost of finding and evaluating alternatives is low
- The organizational culture supports innovation and risk taking
- Outcomes are concrete and measurable

Decision-making Process

Intuitive Decision Making: Making decisions on the basis of experience, feelings, and accumulated judgment

Decision-making Process

Nonprogrammed Decision
: Unique and nonrecurring decisions that requires a custom-made solution

Provide examples of the two types of problems in a gym and the problem-solving decisions for these problems.

When making decisions, managers may face 3 different conditions:

Certainty: A situation in which an manager can make accurate decisions because all outcomes are known

Risk: A situation in which the decision maker is able to estimate the likelihood of certain outcomes

Uncertainty: A situation in which a decision make has neither certainty nor reasonable probability estimates available

Analyzing Decision Alternatives

Linear Thinking Style: Think in a rational, logical, and analytical manner

Non-linear Thinking Style: Think in an intuitive, creative, and insightful manner

Decision-making Styles

Impossible for a manager to perform all the work, thus managers should allow subordinates to take over certain tasks.

Advantages of delegation:

Time - Increase the work time of manager
Development - Develop knowledge and capabilities
Trust - Demonstrates trust and confidence
Commitment - Increase commitment
Information - Improves decision making with better information
Efficiency - Improve efficiency and timeliness of decisions
Coordination - Better work integration by manager coordination

Questions to be considered:
How should we delegate?
Decide when to delegate:
- Do subordinates have the necessary information or expertise?
- Is the commitment of subordinates important to successful implementation?
- Do subordinates share with management and each other common values and perspectives?
- Is there sufficient time to do an effective job of delegating?

Decide to whom to delegate
Decide how to delegate effectively
- Begin with the end in mind
- Delegate completely
- Allow participation in the delegation of assignments
- Establish balance between authority and responsibility
- Work within organizational structure
- Provide enough support
- Focus accountability on results
- Delegate consistently
- Avoid upward delegation
- Clarify consequences
Full transcript