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Decision Making : How To Be Better and Faster
www.humanikaconsulting.com
Contents
• What are some of the current issues in decision making?
• What is the decision-making process in organizations?
• Effective decision making
• When do decisions need to be made?
• Choose the appropriate strategy
• How do intuition, judgment, and creativity affect decision making?
• The decision making process
• Gather the facts
• Identify alternatives
• Assess the alternatives
• Decide
• Helpful hints
• Decision making behaviour
• Decision making approaches
• Consensus decision making
• When to use which decision making method
• How to conduct a consensus decision making session
• Further assistance
What are some of the current issues in decision making?
Workplace trends affecting organizational decision makers.
– Business units are becoming smaller in size.
– New, more flexible, and adaptable organizational forms.
– Multifunctional understanding is increasingly important.
– Workers with both technical knowledge and team skills are increasingly desirable.
– The nature of “work” is in a state of flux.
What are some of the current issues in decision making?
Information technology and decision making.
– Artificial intelligence is the study of how computers
can be programmed to think like human beings.
– Expert systems support decision making by
following “either-or” rules to make deductions.
What are some of the current issues
in decision making?
Information technology and decision making (cont.).
– Fuzzy logic and neural networks reason inductively.
– Computer support for decision making.
– Information technology does not deal with issues raised by the garbage can model.
What are some of the current issues
in decision making?
What are some of the current issues in decision making?
Cultural factors and decision making. – Culture is “the way in which a group of people solves problems.”
– North American culture stresses decisiveness, speed, and the individual selection of alternatives.
– Other cultures place less emphasis on individual choice than on developing implementations that work.
– The most important impact of culture on decision making concerns which issues are elevated to the status of problems solvable within the firm.
What are some of the current
in decision making?
How do you infuse ethics into the decision-making process?
Ways to infuse ethics into decision making. – Develop a code of ethics and follow it. – Establish procedures for reporting violations. – Involve employees in identifying ethical issues. – Monitor ethical performance. – Reward ethical behavior. – Publicize ethical efforts.
How do you infuse ethics into the decision-making process?
Morality is involved in:
– Choosing problems.
– Deciding who should be involved in making decisions.
– Estimating the impacts of decision alternatives.
– Selecting an alternative for implementation.
An effective decision needs to solve a problem as well as match moral values and help others.
What is the decision-making process in organizations?
Decision making is the process of choosing a course of action for dealing with a problem or opportunity.
Steps in systematic decision making.
– Recognize and define the problem or opportunity.
– Identify and analyze alternative courses of action, and estimate their effects on the problem or opportunity.
– Choose a preferred course of action.
– Implement the preferred course of action.
– Evaluate the results and follow up as necessary.
What is the decision-making process in organizations?
Certain decision environments.
– Exist when information is sufficient to predict the results of each
alternative in advance of implementation.
Risk decision environments.
– Exist when decision makers lack complete certainty regarding
the outcomes of various courses of action, but they are aware of
the probabilities associated with their occurrence.
What is the decision-making process in organizations?
Uncertain decision environments.
– Exist when managers have so little information on hand that
they cannot even assign probabilities to various alternatives and
their possible outcomes.
– Described as a rapidly changing setting in terms of:
• External conditions.
• The information technology requirements needed for
analyzing and making decisions.
• The people who influence problem and choice definitions.
What is the decision-making process in organizations?
Uncertain decision environments (cont.).
– Can be described in terms of types of risks encountered by the
organization.
• Strategic risks are threats to overall business success.
• Operational risks are threats inherent in the technologies
used to reach business success.
• Reputation risks are threats to a brand or to the firm’s
reputation
What is the decision-making process in organizations?
Types of decisions.
– Programmed decisions.
• Involve routine problems that arise regularly and can
be addressed through standard responses.
– Nonprogrammed decisions.
• Involve nonroutine problems that require solutions
specifically tailored to the situation at hand.
In decision making
A major activity of management is the making of decisions.
Decisions need to be timely. There are times when a decision has to be made.
Even if it turns out not to be the best decision it can be better than not
making a decision at all.
Decisions often have to be made when there is insufficient information.
Decisions involve taking risks. Effective decision making involves gathering
what information is known, identifying the options, assessing the risks and
making the best decision with the information available in a timely manner.
When do decisions need to be made
• Selecting external suppliers
• Handling disagreements and
conflict resolution
• Scheduling work and allocating
resources to tasks
• Managing meetings
Situations include:
• Determining the project
strategy/approach
• Resolving project issues
• Developing estimates
• Making purchases
• Interviewing and selecting project
team members
Choose the appropriate strategy
High importance
(Risks/Impacts/Costs
are major)
Low importance
(Risks/Impacts/Costs
are minor)
Urgent decision
required
No time for detailed
analysis, so use considered
judgement or consult an
expert.
A quick decision can be
made with minimal
analysis.
No urgency on
making decision Conduct detailed analysis Defer or delegate decision
When making a decision it is useful to determine what type of
decision it is and the appropriate strategy to follow.
Focus time on important decisions, don’t waste time on unimportant
decisions.
How do intuition, judgment, and creativity affect decision making?
Intuition.
– The ability to know or recognize quickly and readily the possibilities of
a given situation.
– A key element of decision making under risk and uncertainty.
How do intuition, judgment, and creativity affect decision making?
Judgmental heuristics.
– Simplifying strategies or “rules of thumb” used to make
decisions.
– Make it easier to to deal with uncertainty and limited
information.
How do intuition, judgment, and creativity affect decision making?
Types of heuristics. – Availability heuristic.
• Bases a decision on similarity to past occurrences that are easily remembered.
– Representativeness heuristic. • Bases a decision on similarities between an event and
stereotypes of similar occurrences. – Anchoring and adjustment heuristic.
• Bases a decision on incremental adjustments to an initial value determined by historical precedent or some reference point.
How do intuition, judgment, and creativity affect decision making?
General judgmental biases in decision making.
– Confirmation trap.
• The tendency to seek confirmation for what is already thought to be true and to not search for disconfirming information.
– Hindsight trap.
• The tendency to overestimate the degree to which an event that has already taken place could have been predicted.
How do intuition, judgment, and creativity affect decision making?
Stages in the creative thinking process.
– Preparation.
– Concentration.
– Incubation.
– Illumination
– Verification.
How do intuition, judgment, and creativity affect decision making?
Ways of fostering creativity.
– Diversifying teams to include members with different backgrounds, training, and perspectives.
– Encouraging analogical reasoning.
– Stressing periods of silent reflection.
– Recording all ideas so that the same ones are not rediscovered.
– Establishing high expectations for creativity.
– Developing a physical space that encourages fun, divergent ideas.
Study Question 3: How do intuition, judgment, and creativity affect decision making?
Creativity is higher when: – Linguistic ability, willingness to engage in
divergent thinking, and intelligence are present.
– Individuals are motivated by and derive satisfaction from task accomplishment.
– There are opportunities for creativity, as many constraints as possible are eliminated, and rewards are provided for creative efforts.
How do intuition, judgment, and creativity affect decision making?
Creativity is higher when (cont.):
– The decision maker emphasizes engagement in the creative process and
counsels individuals to share their ideas with others.
– The decision maker encourages subordinates to recognize ambiguity,
contact others with different views, and be prepared to make
considerable changes.
The decision making process
1. Gather the facts
2. Identify a number of alternatives
3. Assess the alternatives
4. Decide
Four simple steps:
Where quick decisions need to be made, these steps can be done
mentally “on the fly” or by one person. When time allows and the decision
is important, more people can be involved and a more thorough decision
making process used.
Gather the facts
• Write down a statement of what needs to be decided.
• Is the decision statement clear and precise? If not refine the
statement.
• Is the need for the decision a result of an underlying problem,
which also needs to be addressed?
• Are there assumptions underlying the decision that need to be
clarified and possibly challenged?
• Is the decision part of a bigger decision that needs to be made,
or can this decision be decomposed into smaller decisions?
Guidelines
Identify alternatives
• Identify as many alternatives as possible.
• Use brainstorming if appropriate.
• Do not filter out alternative options at this stage
- assume they can all be made to work.
• When you have generated lots of ideas, consider each
one to see if it is a viable alternative.
• Shortlist the viable alternatives.
Guidelines
Assess the alternatives
• Write down the pros and cons of each alternative.
• Identify the risks associated with each alternative.
• Determine the impact of each alternative on other
areas of the organisation. Consider the big picture.
• Review the alternatives to determine if there is clearly
a preferable choice.
Guidelines
Decide
• Select the best alternative from those
available.
• Consider your “gut feel”. Instincts
can often be right.
• If the best alternative is not obvious
draw up a table for the options. List
the attributes that the options are to
be assessed on. Assign points to
each (see example below)
• Make the decision and take action.
Guidelines
AttributeRepair
option
Replace
optionComments
Cost 2 0Repair is a much cheaper
option
Warranty 1 2Full warranty if replace, partial
only if repair
Expected useful
life1 2
Extended by repair, but not as
long as if new
Risk 1 2Repair could damage other
components, new is less risky
Functionality 0 1Replacement has more
features.
Total 5 7 Replace is better option overall.
Helpful hints
• Do:
– Clearly identify the decision
to be made
– Involve people qualified to
help in the decision making
– Identify the context of the
decision (the bigger picture)
– Identify all alternatives
– Assess each alternative
– Assess the risks
– Consider your “gut feel”
– Make the decision
and stick to it
Don’t:
– Make assumptions
– Procrastinate
– Jump to conclusions
– Make uninformed decisions
– Favour one decision prior to
gathering the facts and
evaluating the alternatives
– Allow only technical people to
make the decisions
– Attempt to make a decision in
isolation of the context
– Let emotion override
objectivity
Decision making behaviour People tend to adopt a particular decision making approach as a result of
factors such as:
• their own personality
• their current mood
• the organisational culture
• the personality of the person/people they are dealing with
• the nature of the relationship they have with the people they are
dealing with
• time pressure and perceived level of stress
Being aware of these influences can result in better decision making, by
adopting the best decision making approach for each situation.
Decision making approaches
Approaches* to decision making situations:
*Adapted from D Billows, Project Manager’s KnowledgeBase,
2nd edition, 2004, The Hampton Group.
• Withdrawing: holding off making the decision.
• Smoothing: focusing on areas of agreement and ignoring
areas of difference.
• Compromising: trying to come up with a decision that
provides some degree of satisfaction for all parties.
• Confronting/problem solving: working through the issues.
• Forcing: executing a particular decision knowing agreement
has not been reached.
Decision making approaches
Withdrawing:
• Withdraw to gather more information and perspective
• Only a stop gap measure
• Useful in “cooling down” an overheated situation
• Taking time out (“sleep on it”) before final decision
Smoothing:
• Relationship focused rather than solution focused
• Avoids dealing with the issues
• Can be useful in reducing the emotional tension where the
decision is of low importance.
• Does not provide a long-term solution
Skilled project managers and business analysts
select the best approach appropriate to the situation.
Decision making approaches
Confronting/problem solving:
• Direct approach
• Identifies alternatives and works through the issues
• Time-consuming
• Most likely method to develop the best solution
Forcing: • Used when an urgent decision is required or as a last resort
• Necessary for situations when decision making is blocked
• May result in reluctance in execution of decision if not
handled well.
Compromising:
• Bargaining to get an acceptable agreement
• Falls short of the best decision
• Can be useful in resolving negotiation deadlocks
Consensus decision making
Consensus decision making is the process of involving a group of
stakeholders in the making of a decision such that even though some of
the participants may not agree with the decision that is made, they all
accept the decision.
Consensus decision making is more time-consuming than unilateral
decision making, but does have the added benefit of building
commitment to the decision that is made.
Consensus decision making should make use of the confronting/problem
solving approach and avoid resorting to compromising or forcing.
When to use consensus decision making Unilateral Consensus
• Decision is minor or
urgent
• Does not affect the
overall team
• There are issues of
confidentiality
• Suggestions of alternatives are
needed
• The decision can have a
significant impact on the team
• The team need to action the
decision
• There is sufficient time to
organise a meeting to work
through the decision
How to conduct a consensus decision making session…
1. Provide a brief of what decision needs to be made, and what
information is already available. Gather additional facts.
2. Identify the alternatives.
3. Assess the alternatives, allowing all opinions and concerns to be
raised. Use a round robin* technique.
4. Identify common areas of agreement
5. Identify the differences and work through them
6. Measure consensus**
7. State the final agreed-upon decision.
* Round robin is where each of the participants in a meeting is asked in turn for their opinion. It ensures that the
quieter members of the group have a chance to express their views.
** Consensus can be measured by people raising one hand and showing the number of fingers to indicate
level of agreement, from one finger for low level of consensus through to open hand for full consensus. Do
not hold a vote, because this splits the team into winners and losers.
Further assistance • Guide to Problem Solving
• Guide to Brainstorming
For additional supporting guides see
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