Decision Making

Dr Vasuprada Kartic

NAC Batch IX PGDCPM

What is decision-making?

The word decision is defined as:

“A choice between two or more alternatives”.

Thus decision-making can be defined as:

“the selection of a course of action from among alternatives ”.

Decision-making Process Identifying a problem Identifying decision criteria Allocating weights to criteria (prioritizing) Developing alternatives Analyzing alternatives Selecting an alternative Implementing the alternative Evaluation (of decision effectiveness)

Identifying Decision Criteria

The word criteria, is defined as “a standard by which something can be judged”.

A decision criteria therefore, is the basis of a decision, which outlines the relevant and important factors for a decision. And implicitly, it also defines what is not important.

Decision Criteria: Example

In the above-cited scenario, the decision criteria may include the following factors: Relevant qualifications Leadership skills Communication skills Planning and analytical skills Professional experience

Allocating Weights to Criteria

The next step in the decision making process is prioritization.

Prioritization is achieved by assigning quantitative weights to each criteria element.

The weightage defines the relative significance of each element.

An area of higher importance and significance to the desired state is given a higher weight

Developing Alternatives

Involves defining the possible alternatives (or choices) that would resolve the problem.

In our case, the alternatives would be a list of candidates or job applicants.

Analyzing Alternatives Alternatives are rated and analyzed

on the basis of the criteria

The rating can be based on a specified scale, say 1 – 5 etc.

Rating may be subjective in nature and thus,may depend on the judgment of the individual(s)

Selecting an alternative Involves choosing the best alternative,

based on the above rating and analysis

Generally implies selecting the alternative with the highest score.

Implementing the Alternative

Putting the decision into action

Involves clear communication of the decision to all concerned and obtaining their commitment

Evaluation Evaluation forms an integral part of any

process Involves a rational and practical study of the

outcome based on the desired goal and criteria

Involves assessing the effectiveness and efficiency of the outcome (or the entire process)

In case of any undesired results, each step of the process is carefully reviewed to trace the root causes

Decision-making Models

Model

“A simplified representation or description of a system or complex entity”

Examples

A model of a building

A globe (Earth model)

Rational/Bounded Rational

So Rational and Bounded Rational Models are cognitive models that describe how managers make rational decisions

Intuition

An unconscious process of making decisions on the basis of experience and judgment

Involves gut feeling

May also have rational basis

The “feeling” arises from past experience and knowledge

Involves quicker response

Does not involve systematic analysis

Decision Types

In general, there are two kinds of decisions. these are either

Programmed decisions

Non-programmed decisions

Programmed Decisions A decision that is repetitive and

routine A definite method for its solution can

be established Does not have to be treated a new

each time it occurs Procedures are often already laid

out Examples:

Non-programmed Decisions

A decision that is novel (new or unique) or Ill structured

No established methods exist, because it has never occurred before or because

It is too complex

It is based on individual’s ability.

Non-programmed Decisions

Organizational Levels

Nature ofProblems

Nature ofDecision-making

Decision Styles Decision-making, though a rational

process does include some subjective elements

Thus in real organizational settings, the quality of decision does depend on the ability, style and approach of the manager

Decision Styles: Directive

Directive

Represents low tolerance for ambiguity and uncertainty

Reflects rational thinking of the manager

Such decision styles are more suitable for routine procedural tasks

Decision Styles: Analytic

Analytic

Analytical style is also a rational style of thinking

Involves a very high tolerance for ambiguity and uncertainty

Such managers generally seek detailed information before making a decision

Decision Styles: Behavioural

Behavioural

Represents a creative way of thinking

Involves a low tolerance for ambiguity or uncertainty

Managers with a behavioural style introduce “new” ways of doing things

Decision Styles: Conceptual

Conceptual Conceptual style also reflects a

creative and intuitive way of thinking Conceptual style managers have a very

broad vision and generally look at numerous alternatives for decision-making

Focused on the long run and often result in creative outcomes or alternatives

Vroom and Yetton Model

Vroom and Yetton have identified five decision styles for managers, and are classified as follows:

Autocratic

AI

The decision is made individually, using the information available to the individual only

Vroom and Yetton ModelAII The manager obtains information from

subordinates and himself makes the decision

May or may not share with subordinates, the purpose of questions or the nature of problem

Subordinates do not play any role in problem definition or selection of alternatives

Vroom and Yetton Model

Consultative

CI The manager shares the problem with

relevant subordinates individually Getting their input individually and

not as a group. The manager then makes the decision independently, and may or may not be influenced by the subordinates’ suggestions

Vroom and Yetton Model

The problem is shared to subordinates in a group

Their ideas and suggestions are sought in a group meeting

The decision is then made by the manager which

May or may not reflect the subordinates’ influence

Group decision

The problem is shared to subordinates as a group

Alternatives are generated and evaluated collectively

Effort is made to reach a consensus

GI (Contd.)

The decision is made collectively and the manager functions as a coordinator

Does not “press” the group in adopting the manager’s “solution”

The manager is willing to accept and implement the decision of the group

Group Decision-making

The factors requiring group decisions include:

Involving sensitive issues

High cost alternatives

Involving very high risk factor

Strategic impact

Group Decisions: Advantages

Acceptance of group members Coordination is easier Communication is easier Existence of large alternatives More information can be processed Diversity of experience and

perspectives

Group Decisions: Disadvantages

Take longer time

Group can be indecisive

Groups can compromise

Groups can be dominated

Groups can “play games”

Victim to Groupthink

Situational Factors for Individual Decision-making

Short time

Unimportant to group

Dominate the decision

Destructive conflict

Members hesitant

Situational Factors for Individual Decision-making

Confidential data

Incapability of members

Manager’s dominance

Indirect effect on group members

Situational Factors for Group Decision-making

Need for innovation and creativity

Data collection

Importance of acceptance

Importance of solution

Complex problem

Democratic process

Improving Group Decision-making

Brainstorming

Nominal group techniques

Electronic meeting

Dr Vasuprada Kartic

THANKS YOU!!!