2. Decision Making
Effective leaders use the decision-making
process to identify possible courses of action
and to analyze each one.
They invite others to participate in identifying
and evaluating alternatives and selecting the
best course of action.
3. The Decision-Making Process
Programmed Decision - a simple, routine matter for
which a manager has an established decision rule
Nonprogrammed Decision - a new, complex decision
that requires a creative solution
4. The Decision-Making Process
Recognize the problem and the need for a decision
Identify the objective of the decision
Gather and evaluate data and diagnose the situation
List and evaluate alternatives
Select the best course of action
Implement the decision
Gather feedback
Follow up
5. Decision making
identifying the problem
generating alternative solutions
selecting a solution
implementing and evaluating the solution
6. Simon’s Normative Model of Decision
Making
Based on the notion of bounded rationality, i.e.
decision makers face a variety of constraints
Decision making is characterized by
* limited information processing
* use of judgmental heuristics (rules, shortcuts)
* satisficing
7. Improving Decision Making Through
Effective Knowledge Management
Systems and practices that increase the sharing of
knowledge and information
Types of knowledge
Tacit knowledge – intuition, experience, natural abilities
Explicit knowledge
Explicit knowledge requires access to large amounts of
information; tacit knowledge is obtained through
observation, mentoring, collaboration, etc.
8. General Decision Making Styles
based on how one perceives and comprehends
stimuli and chooses to respond
Value orientation – task and technical concerns or
people and social concerns
Tolerance for ambiguity – need of structure or
control
10. Group decision-making
Data suggests that innovative groups possessed high levels
of both minority dissent and participation in decision
making
Note four requirements of effective decision making in a
group:
Focus on process
Understand requirements for an effective choice
Assess positive qualities of alternative solutions
Assess negative qualities of alternative solutions
Suggests openness, acceptance of dissent?
11. Rational Model- a logical, step-by-step approach to decision
making, with a thorough analysis of alternatives and their
consequences
1. The outcome will be completely rational
2.The decision maker uses a consistent system
of preferences to choose the best alternative
3. The decision maker is aware of all alternatives
4. The decision maker can calculate the probability of success for each alternative
12. Bounded Rationality Model-a theory that suggests
that there are limits upon how rational a decision
maker can actually be
1. Managers suggest the first satisfactory alternative
2. Managers recognize that their conception of the world is
simple
3. Managers are comfortable making decisions without
determining all the alternatives
4. Managers make decisions by rules of thumb or heuristics
13. Group-Aided Decision Making
+++++++ - - - - - - - - -
Greater pool of knowledge 1. Social pressure
2. Different perspectives 2. Minority domination
3. Greater comprehension 3. Logrolling
4. Increased acceptance 4. Goal displacement
5. Training ground 5. “Groupthink”
14. Garbage Can Model
a theory that contends that decisions in
organizations are random and unsystematic
15. Six Steps in Making an Effective Decision
ANALYZE THE SITUATION
What are the key elements in the situation?
What constraints affect the decision?
What resources are available?
SET OBJECTIVES
Is the problem stated clearly?
Do people understand what they will work on?
By what criteria will decision making be judged?
SEARCH FOR ALTERNATIVES
Do people involved in the problem make the decision?
Have they sought complete information?
Do those with information make the decision?
Do they use diversity to generate ideas?
Are all ideas encouraged?
16. Six Steps in Making an Effective Decision
EVALUATE THE ALTERNATIVES
Do participants know that they are evaluating?
Are criteria for assessment clear and understood?
Are differences of opinion included in evaluation?
Are some alternatives pilot tested?
MAKE THE DECISION
Do employees know that they are making the decision?
Are they aware if they are satisficing or optimizing?
Do action plans fit with the decision?
Are they committed to the decision?
EVALUATE THE DECISION
Are responsibilities for data collection, analysis, and reporting clear?
Is there a comprehensive evaluation plan?
Is there an evaluation schedule?
17. Evaluating Objectives
Do the objectives relate to and support the basic purpose of the organization?
Do the objectives recognize obvious constraints?
Do the objectives provide a challenge for managers at all levels in the
organization?
Can managers quantify the objectives?
Can managers monitor the objectives at interim points to ensure progress?
Do the objectives provide a proper balance on all activities, given
organizational goals?
