Management Func. & Behaviour - Decision Making Model

7/30/2019 Management Func. & Behaviour - Decision Making Model

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Managerial DecisionManagerial DecisionMakingMaking

Decision making is not easy

It must be done amid ever-changing factors unclear information conflicting points of view

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ManagerialManagerial

DecisionDecisionMakingMakingDecision Characteristics

Decision-making Models

Steps Executives Take MakingImportant Decisions

Participative Decision Making

Techniques for ImprovingDecision Making in TodaysOrganizations

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Decisions and DecisionDecisions and DecisionMakingMaking

Decision = choice made fromavailable alternatives

Decision Making = process of identifying problems andopportunities and resolving them

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Categories of DecisionsCategories of Decisions

Programmed Decisions Situations occurred often enough

to enable decision rules to bedeveloped and applied in thefuture

Made in response to recurringorganizational problems

Non-programmed Decisions inresponse to unique, poorly defined andlargely unstructured, and have importantconsequences to the organization

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Decisions and DecisionDecisions and DecisionMakingMaking

Many decisions that managers deal

with every day involve at least somedegree of uncertainty and requirenon-programmed decision making

May be difficult to makeMade amid changing factorsInformation may be unclearMay have to deal with conflicting pointsof view

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Certainty, Risk, Uncertainty, AmbiguityCertainty, Risk, Uncertainty, Ambiguity

Certainty all the information the decision maker needs is fully

available Risk

decision has clear-cut goals good information is available future outcomes associated with each alternative are

subject to chance Uncertainty

managers know which goals they wish to achieve information about alternatives and future events is

incomplete managers may have to come up with creative approachesto alternatives

Ambiguity by far the most difficult decision situation goals to be achieved or the problem to be solved is unclear alternatives are difficult to define

information about outcomes is unavailable6


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Conditions that Affect the PossibilityConditions that Affect the Possibility

of Decision Failureof Decision Failure

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OrganizationalProblem

ProblemSolution

Low HighPossibility of Failure

Certainty Risk Uncertainty Ambiguity

ProgrammedDecisions

NonprogrammedDecisions


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Selecting a Decision MakingSelecting a Decision MakingModelModelDepends on the managers personal

preferenceWhether the decision is programmedor non-programmedExtent to which the decision ischaracterized by risk, uncertainty, or

ambiguity

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Three Decision-Making Three Decision-MakingModelsModels

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Classical Model

Administrative Model

Political Model


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Classical ModelClassical ModelAssumptions

Decision maker operates to accomplishgoals that are known and agreed uponDecision maker strives for condition of certainty gathers complete information

Criteria for evaluating alternatives areknownDecision maker is rational and uses logic

Normative = describes how a managershould and provides guidelines for reaching 10

Logical decision in the organizations best economic interests


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AdministrativAdministrativ

eeModelModel Two concepts are instrumental inshaping the administrative modelBounded rationality : people have

limits or boundaries on how rationalthey can be

Satisficing : means that decisionmakers choose the first solutionalternative that satisfies minimaldecision criteria

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Herbert A. SimonHow nonprogrammed decisions are made--uncertainty/ambiguity


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Administrative ModelAdministrative Model Managers actually make decisions in difficult

situations characterized by non-programmed

decisions, uncertainty, and ambiguity Decision goals often are vague, conflicting and lack

consensus among managers; Rational procedures are not always used Managers searches for alternatives are limited Managers settle for a satisficing rather than a maximizingsolution intuition, looks to past experience

Descriptive = how managers actually make decisions--not how they should

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How nonprogrammed decisions are made--uncertainty/ambiguity


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Political ModelPolitical Model

Closely resembles the real environment in

which most managers and decision makersoperate

Useful in making non-programmed decisions

Decisions are complex

Disagreement and conflict over problems andsolutions are normal

Coalition = informal allianceamong manages who support a 13

Closely resembles the real environment


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Characteristics of Classical, Political,Characteristics of Classical, Political,

and Administrative Decision Makingand Administrative Decision MakingModelsModels

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Classical Model Administrative Model Political Model

Clear-cut problem and goals Vague problem and goals Pluralistic; conflicting goals

Condition of certainty Condition of uncertainty Condition of uncertainty/ambiguity

Full information about Limited information about Inconsistent viewpoints; ambiguous

alternatives and their outcomes Alternatives and their outcomes information

Rational choice by individual Satisficing choice for resolving Bargaining and discussion among

for maximizing outcomes problem using intuition coalition members


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Six Steps in the ManagerialSix Steps in the ManagerialDecision-Making ProcessDecision-Making Process

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Evaluationand

Feedback

Diagnosisand Analysis

of Causes

Recognition of Decision

Requirement

Development of Alternatives

Selection of Desired

Alternative

Implementationof ChosenAlternative

Decision-MakingProcess


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Diagnosis and Analysis of Diagnosis and Analysis of CausesCauses

Diagnosis = analyze underlyingcausal factors associated with thedecision situation

Managers make a mistake if they jump into generating alternatives

without first exploring the causeof the problem more deeply

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Underlying Causes - Kepner /TregoeUnderlying Causes - Kepner /Tregoe

What is the state of disequilibrium affectingus?

When did it occur?

Where did it occur?

How did it occur?

To whom did it occur?

What is the urgency of the problem?

What is the interconnectedness of events?

What result came from which activity? 17


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Selection of DesiredSelection of DesiredAlternativesAlternatives

Risk Propensity = willingness toundertake risk with theopportunity of gaining an

increased payoff

Implementation = using

managerial, administrative, andpersuasive abilities to translatethe chosen alternative into action

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Decision StylesDecision Styles

Differences among people with

respect to how they perceiveproblems and make decisions

Not all managers make decisionsthe same Directive style Analytical style Conceptual style 19


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Personal DecisionPersonal DecisionFrameworkFramework

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Situation: Programmed/non-programmed

Classical, administrative,political

Decision steps

Decision Choice:Best Solution toProblem

Personal DecisionStyle:DirectiveAnalyticalConceptualBehavioral


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Directive StyleDirective Style

People who prefer simple, clear-cut solutions to problemsMake decisions quicklyMay consider only one or twoalternativesEfficient and rationalPrefer rules or procedures

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Analytical StyleAnalytical Style

Complex solutions based on asmuch data as they can gatherCarefully consider alternatives

Base decision on objective,rational data from managementcontrol systems and othersourcesSearch for best possible decisionbased on information available

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Conceptual StyleConceptual StyleConsider a broad amount of informationMore socially oriented than analytical style

Like to talk to others about the problem andpossible solutions

Consider many broad alternatives

Relay on information from people andsystems

Solve problems creatively

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Behavioral StyleBehavioral Style

Have a deep concern for others as individuals

Like to talk to people one-on-oneUnderstand their feelings about the problemand the effect of a given decision upon them

Concerned with the personal development of others

May make decisions to help others achievetheir goals

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Participation inParticipation in

Decision MakingDecision Making

Helps gauge the appropriate amount

of participation for subordinates inprocess

Leader Participation StylesFive levels of subordinate participation in decisionmaking ranging from highly autocratic to highlydemocratic

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Vroom-Jago

Model


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Participation inParticipation in

Decision MakingDecision MakingDiagnostic QuestionsDecision participation depends onthe responses to seven diagnostic

questions about

the problem the required level of decision quality the importance of having

subordinates commit to the decision

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Vroom-Jago

Model


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Seven Leader DiagnosticSeven Leader Diagnostic

QuestionsQuestionsHow significant is the decision?How important is subordinate commitment?What is the level of the leaders expertise?

If the leader were to make the decision alone atwhat level would subordinates be committed to thedecision?What level is the subordinates support for the teamor organizations objectives?What is the members level of knowledge orexpertise relative to the problem?How skilled or committed are group members toworking together?

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NewDecision

Approachesfor Turbulent

Times

L e a r n , D o n t P u n i s h

K n o w W h e n t o B a i l

P r a c t i c e t h e

F i v e W h y s

E n g a g e

i n R i g o r o u

s D e b a

t e

Br a i n s t o r m i n g

New Decision Approaches

for Turbulent Times

Documents

Management Func. & Behaviour - Decision Making Model