Decision-Making

Decision Making

▪Decision Making - is choosing among two or more alternatives (choices)

▪Begins with identification of a problem and ends with evaluation of implemented solutions.

Steps in managerial decision making and problem solving.

Decision-Making Process Model

1. Find and define the problem

▪What is the situation or problem?

Common Mistakes:

1.Defining the problem too broadly or narrowly

2.Focus on symptoms rather than causes

3.Choosing the wrong problem to deal with

Decision-Making Model

2. Generate and evaluate alternative courses of action

▪Describe and collect needed information

▪Develop alternatives (choices)

Decision-Making Model

Cost – Benefit Analysis

▪Benefits – to using the alternative.

▪Costs – of implementing the alternative.

▪Timeliness – The speed at which a positive impact is achieved.

▪Acceptability – The support of the alternative to those who will work with it.

▪Ethical Soundness – to various stakeholders

Decision-Making Model

Allow participation of those involved

▪Your decisions will affect others

▪Make sure that you discuss your alternatives with those affected

Decision-Making Model

3. Decide which alternative is best

▪Optimizing decision – chooses the best solution based on perfect information available

▪Satisficing decision – the first alternative that appears to give a satisfactory resolution to the problem is chosen

Decision-Making Model

4. Implement the decision

▪Do what is necessary to implement the decision

▪Problems occur usually when there is a lack of participation in Step 2

Decision-Making Model

5. Evaluate results

▪When and how will you know if your decision was effective?

▪Does corrective action need to be taken?

▪Measure performance results against goals

Decision-Making Errors and Traps

▪Availability – use information readily available from memory

▪Representativeness – the likelihood of something happening based on similar set of occurrences

▪Spinning the data – to either a negative or positive by a presenter in order to influence the decision making

▪Escalating commitment – apply more resources to a course of action that is not working.

Individual versus Group Decision making

▪Advantages of group decision making▸Greater amounts of knowledge and expertise available▸Expands the number of alternatives▸Increases the understanding and acceptance of outcomes

by members▸Increases the commitment of members to work hard to

implement final plans

▪Disadvantages of group decision making▸Social pressure to conform▸Group think – cohesion and unanimity overrides▸Time required

Activity

▪In groups of 4 brainstorm some personal decisions that need to be made

▪Select 1 decision

▪Use the Decision-Making Model to make the best decision

▪Record all information on Chart Paper

▪Present to the class