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Page 1 of 20 Course: Principles of Management Unit-7: Functions of Management - Decision Making

UNIT 7 Decision Making SLM

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  • Page 1 of 20

    Course:

    Principles of Management

    Unit-7:

    Functions of Management

    - Decision Making

  • Page 2 of 20

    Table of Contents

    7.1. Learning Objectives ........................................................................................................... 4

    7.2. Introduction ........................................................................................................................ 5

    7.2.1. Definitions .....................................................................................................................5

    7.3. Characteristics of Managerial Decisions ......................................................................... 6

    7.4. Methods of Decision Making ............................................................................................. 6

    7.4.1. Intuition .........................................................................................................................6

    7.4.2. Facts ..............................................................................................................................7

    7.4.3. Experience .....................................................................................................................8

    7.4.4. Considered Opinion ......................................................................................................8

    7.5. Types of Decision-Making ................................................................................................. 8

    7.5.1. Basic and Routine Decisions .........................................................................................8

    7.5.2. Programmed and Non-programmed Decisions .............................................................8

    7.5.3. Decision Making Conditions.........................................................................................9

    7.6. Decision Making Models ................................................................................................. 10

    7.6.1. Classical Model ...........................................................................................................10

    7.6.2. Administrative Model .................................................................................................10

    7.6.3. Political Model ............................................................................................................11

    7.6.4. Decision Making Model: Kepner-Tregoe ...................................................................12

    7.7. Steps in Decision Making ................................................................................................ 12

    7.8. Decision Making Techniques .......................................................................................... 14

    7.8.1. Increased Participation ................................................................................................14

    7.8.2. Nominal Group Technique ..........................................................................................15

    7.8.3. Synetics .......................................................................................................................15

    7.8.4. Brainstorming ..............................................................................................................16

    7.8.5. The Delphi Method .....................................................................................................16

    7.9. Who Should Make Decisions? ......................................................................................... 16

    7.9.1. Individual Decision Making ........................................................................................16

    7.9.2. Group Decision Making ..............................................................................................17

    7.10. Decision Guides .............................................................................................................. 19

  • Page 3 of 20

    7.11. Summary ......................................................................................................................... 20

    7.12. References/Additional Resources ................................................................................. 20

    7.12.1. Textbook References .................................................................................................20

  • Page 4 of 20

    7.1. Learning Objectives

    By the end of this unit, you should be able to:

    Define the term decision-making

    Summarise the characteristics of managerial decisions

    Explain the types of decisions and the steps involved in decision- making

    Describe some of the approaches to decision making

    Describe the decision-making techniques

    Apply the guidelines for effective decision making

    In one of the greatest marketing stories of all times, Jordan rescued Nike from six consecutive quarters of declining earnings. He changed the game completely remarked Parham, Nikes Director of Investment Relations, He changed basketball and he changed the endorsement game.

    Nike expected to sell 100,000 pairs of Air Jordan basketball shoes in the first year they were

    introduced; actual sales reached closer to three or four million pairs!

    Decision-making is a process that managers conduct in relationship with other decision

    makers. It is never made in isolation. Managers at Nike were making their decision at the

    same time that Michael Jordan was making his own decision!

    Source: Adapted from the book Management by Stoner, Freeman and Gilbert, 6th edition, PHI

    publications.

  • Page 5 of 20

    7.2. Introduction

    Procrastination is my sin

    It brings me naught but sorrow

    I know that I must stop it

    In fact I will ---tomorrow!

    - Pitzer, Gloria

    Procrastination is the bane of decision-making. By sweeping problems under the carpet,

    managers have often made problems worse or may have missed out on great opportunities.

    Managers are, in essence, decision makers. They have to make both short term and long-term

    decisions. They have to make decisions involving all functions of the organisation: planning,

    organising, leading and controlling. Decisions could involve a few thousand rupees or a few

    crores. Good management is synonymous with good decision-making. Decisions can make or

    break a company.

    Decision-making draws on the past and selects alternative courses of action which will propel

    the company into the future. Again, decisions are not made in a vacuum. Managers must be

    alert to the fact that their decisions will be affected by the decisions of others: competitors,

    governments, and others.

    7.2.1. Definitions

    Some of the definitions of term decision making are:

    Decision making is the selection based on certain criteria of one behavior alternative from two or more alternatives- Terry and Franklin

    The process of identifying problems and opportunities and then resolving them is called decision- making - Richard Daft

    The process of identifying and selecting a course of action to solve a specific problem is called decision making. Stoner

  • Page 6 of 20

    7.3. Characteristics of Managerial Decisions

    For decision making to exist, there must be two or more alternatives. If there is no choice, there is no decision making or, we can say that if we have a

    Hobsons choice, there can be no decision.

    While making a decision, as many alternatives as possible should be determined, so that the best decision may be made.

    None of the alternatives may be entirely satisfactory, but the best --under the circumstances-- is to be considered.

    A decision is seldom a black or white matter, it is mostly grey.

    Decision-making is goal oriented, it is made to achieve a desired goal.

    It is a process; it uses various inputs like past experience, intelligence, emotions, instincts, and judgment.

    It is present in all spheres of management.

    It involves commitment of resources: time, money, effort.

    It is value agnostic, that is, a decision can be for a value of a few thousand rupees or for many crores of rupees.

    7.4. Methods of Decision Making

    There is no best technique of decision-making. The choice will depend on the circumstances.

    Not all problems can be painted with the same brush. Managers knowledge and experience will play a major role. Some of the methods of decision-making are discussed below:

    7.4.1. Intuition

    Uses hunches, inner feelings, gut feeling to arrive at a decision. The decision-maker who uses

    intuition, normally falls back on various inputs like suggestions, past experience and

    influences, training and of course his on his own temperament. It is said that the person who

    uses intuition has a high degree of precognitive ability, that is, he or she can anticipate the future more clearly.

    My intuition tells me that it will rain this evening; so, we shall postpone our outdoor shoot proclaims a manager. Should we accept his verdict? Should we even study intuition in a class

    in management?

  • Page 7 of 20

    Before we write off this approach completely, let us look at some research findings:

    Eighty percent of top-level managers who are very successful have superior intuitive skills

    They have developed the ability to see the solution to business problems that defied computer logic

    Let us also examine the case of Ray Kroc. In 1960, Ray Kroc paid $ 2.7 million for the

    McDonalds name. His attorney considered it a bad deal. Krocs decision was based on Intuition.

    I closed my office door, cussed up and down, threw things out of the window, called my lawyer and said: Take it! I felt in my funny bone it was a sure thing. Today, McDonald is one of the most successful companies in the world.

    So, with the evidence given above, it is recommended that we study this approach and try to

    hone our intuitive skills. After all, when the facts are just not available how do you decide,

    intuition could be the answer.

    But how do we develop intuitive skills? Here are some suggestions.

    Develop faith in intuition: intuition works, you tell yourself.

    Practice intuition first on small issues; keep a score on how you fared, gain confidence before graduating to major decisions.

    Research the area of the decision, gather facts and figures, sleep on the decision and let your intuition juices flow.

    7.4.2. Facts

    If all the facts are available, the best decision results. Unfortunately all the facts are not always

    available. Also, getting all the facts may be expensive and may take too much time. Also, facts

    must be analysed, diagnosed, classified and interpreted. Often subjectivity creeps in, in

    extracting essential information for which training and skill are required. But facts help the

    decision maker gain confidence in making his decision when other factors seem right.

  • Page 8 of 20

    7.4.3. Experience

    Past experiences and events often act as aids to decision making. Familiarity breeds

    confidence. Nothing succeeds like success. But in a fast changing world, past success in

    decision making does not ensure future success.

    What to do in a particular situation is based on past experience. For example, when your TV

    stopped transmitting, you had slapped it in disgust and it had started working! But past

    experience may not be amenable to generalisations. The next time your TV develops a snag,

    no amount of slapping may make it work. In fact, you may land up damaging it further!

    SOP (Standard Operating Procedure) is popular in the army. It is developed based on past

    experience. Routine, repetitive issues can be decided based on the SOP. Experience, if too

    narrow, may not work. Also, it must be current, not outmoded. One must not use experience

    blindly.

    7.4.4. Considered Opinion

    Considered opinion relies on quantified data as well as the opinions of group members to

    arrive at decisions. Sometimes, statistics may not reveal the whole truth. The manager wants

    to involve his team members and seek out their views, before taking a decision. It is a popular

    method of decision making as more attention is given to the group and its acceptance of the

    decisions.

    7.5. Types of Decision-Making

    7.5.1. Basic and Routine Decisions

    Basic decisions are those that are one-time and relate to large investments and, therefore,

    require critical thought. An example is acquisition of capital assets. Routine decisions are

    repetitive in nature, require less time and effort and are normally of short-term implication.

    Lower level managers are normally responsible for routine decisions. Standard operating

    procedures (SOP) are prepared to handle such decisions. For example, granting of casual

    leave to an employee is decided by the supervisor based on policy guidelines contained in the

    SOP.

    7.5.2. Programmed and Non-programmed Decisions

    A programmed decision refers to a routine and repetitive decision which is governed by rules

    and regulations. For example, admission to a college is based on certain eligibility norms.

    Non-programmed decisions refer to those that do not have any precedents, are more complex

    in nature which cannot be effectively covered by standard rules and regulations.

  • Page 9 of 20

    Programmed decisions are made by lower level managers/supervisors whereas non-

    programmed decisions are the responsibility of higher-level managers. A programmed

    decision is one that is fairly structured or is repetitive or both. They do not affect the

    organisation significantly.

    Non-programmed decisions are those that are made in response to a unique situation, are

    poorly defined and largely unstructured and are of significance to the organisation. For

    example, the decision to divest a non-performing strategic business unit is a non-programmed

    decision. It involves a unique situation, does not have an exact precedent, is complex and has

    great significance to the organisation.

    7.5.3. Decision Making Conditions

    The degree of uncertainty is different in programmed and non-programmed decisions. In a

    programmed decision, the degree of uncertainty is much less, whereas, it is much more in a

    non-programmed decision.

    a) Certainty: When the decision maker has all the necessary information, he can be certain of the outcome of his decision. For example, if machine As output is 10% more than that of machine B, and other parameters are equal, it is easy to decide on

    machine A. However, most decisions are not that straight forward and many other

    variables have to be considered.

    b) Risk: There is always an element of risk in a decision. The outcome of the decision is not guaranteedit is subject to chance. The decision may not be successful. Of course, it may be possible to determine the probability of success or failure through

    statistical methods or simulation techniques, which serve as aids to decision

    making.

    c) Uncertainty: When a manager has to make decisions with sketchy information, at best, he is operating in a realm of uncertainty. Creativity and managerial judgment

    come into play.

    d) Ambiguity: The most difficult decision condition is ambiguity. Here even the objectives that are sought to be attained by the decision are not clear. As such, it is

    not easy to define the alternatives and information to arrive at a decision is not

    available to the manager. For example, in the case of political and economical

    turbulence in a country, an organisation may not be able to arrive at its growth and

    profit objectives. The way they get around it is by building scenarios with different

    assumptions of GDP, interest rates, etc.

  • Page 10 of 20

    7.6. Decision Making Models

    7.6.1. Classical Model

    A classical decision-making model is based on the assumption that managers should make

    logical decisions that will be in the best economic interests of the organisation. The model

    makes the following assumptions:

    The goals or objectives of the decision are clear to the decision maker;

    The condition of certainty is sought to be developed by the decision maker by collecting complete information, examining all alternatives and their possible

    consequences;

    The decision is based on sound logic and is directed at achieving organisational goals to the fullest; and

    The decision maker is fully aware of the yardsticks to evaluate the alternatives.

    This model follows a normative approach that defines how a decision should be made and lays

    down guidelines to obtain the best results for the firm. It does not spell how a manager should

    make decisions, but only provides the guidelines to obtain best results.

    It is difficult to gather all information pertaining to the decision, develop all alternatives and

    determine all possible outcomes, which this model advocates. Therefore, it does not work in

    the real world, especially for non-programmed decisions. It has limited utility for programmed

    decisions and for conditions of certainty and risk (where probabilities can be determined).

    However, with the advent of quantitative decision-making techniques, managers who use

    intuition in a major way can take heart from the findings from such techniques to support their

    intuition.

    7.6.2. Administrative Model

    It is a decision-making model that describes how managers actually make decisions in difficult

    situations like uncertainty and ambiguity. It is relevant for non-programmed decisions. This

    model has its root in two concepts developed by Herbert A. Simon, namely, bounded

    rationality and satisficing. Bounded rationality means that people have limited time boundaries and ability to make rational decisions. A managers job is complex which often exceeds his or her bounded rationality. This, perforce, makes a manager compromise and

    resort to satisficing. Satisficing, derived from the words satisfy and suffice, means to select the

    first alternative solution that meets the minimum decision objective. A manager then stops

    examining other alternatives and thus may miss out on the possibility of a better solution to the

    problem.

  • Page 11 of 20

    The administrative model differs from the classical model in the following ways:

    The administrative model considers the realities of the situation, unlike the classical model which harps on an ideal situation. It is therefore considered to be descriptive

    in that it describes how managers actually make decisions in the corporate world

    rather than how they should make decisions in an ideal situation.

    It caters to non-programmed decisions, unlike the classical model which is suitable for programmed decisions.

    It acknowledges the limitation of managers in the time at their disposal and in their ability to process a mass of complex information.

    7.6.3. Political Model

    The political model functions in a situation of ambiguity. When there is no clarity on the

    objectives of the decision, when information is ambiguous, when alternatives are difficult to

    define, when decisions are of the non-programmed type, or, in other words, when the situation

    is most difficult, the political model comes into play. The basic assumptions of this political

    model are:

    There is lack of clarity about organisational objectives leading to conflicts amongst managers

    Information is limited and ambiguous

    The concepts of bounded rationality and satisficing are at work

    Coalition-building is a powerful force which results in compromises amongst managers

    Coalition-building means forming common bonds among managers with diverse view points

    to arrive at specific goals through discussions and negotiations. The political model relies on

    coalition building to come to terms with the realities of the situations.

  • Page 12 of 20

    7.6.4. Decision Making Model: Kepner-Tregoe

    Drs Charles Kepner and Benjamin Tregoe conducted training programs on a systematic,

    scientific approach to decision-making which were attended by thousands of managers.

    Kepner-Tregoe proposed the following seven steps for decision making:

    1. The objectives of the decision must be established first

    2. The objectives are classified according to importance

    3. Alternative actions are developed

    4. Alternatives are evaluated against established objectives

    5. The choice of alternative best able to achieve the objectives reflects the tentative decision

    6. The tentative decision explored for future possible adverse consequences

    7. The effects of the final decision are controlled by taking other actions to prevent possible adverse consequences and by making sure that the actions decided are

    carried out

    The Model emphasises foresee and forestall the adverse consequences that decisions often produce.

    7.7. Steps in Decision Making

    Decision-making follows seven steps. They are:

    1. Recognition or awareness of the problem or an opportunity: A problem is a deviation from an established goal. The manager must be able to recognise that a problem exists

    and that it requires a managerial decision. Likewise, a manager must be able to spot an

    opportunity potential accomplishments to exceed current goalsfor which a decision needs to be taken. To assess the existence of a problem or an opportunity, the manager

    needs to continually scan the environment, study company reports, and have

    discussions with other managers before focusing on the problem or the opportunity.

    2. Diagnosis of the problem/opportunity: Managers analyse possible causes of the decision situation to arrive at the most likely cause. Symptoms must not be confused

    with the cause. For example, if a child has fever, it is a symptom, not a cause. The

    cause could be a virus or other such infection. Again, high employee turnover could be

    due to several factors: low pay, stressful jobs, poor hygiene conditions, lack of

    motivators, etc. Having located the problem, it needs to be defined properly.

  • Page 13 of 20

    The manager needs to assess its impact on the organisation, try to quantify the problem,

    compare it with past data/other companies and define it accordingly. A problem well

    defined is half solved!

    3. Develop alternatives: For programmed decisions, the task may be simple and may be available in the organisations manual of rules and regulations. For non-programmed decisions, the task is more difficult. The temptation is to accept the first alternative that

    one generates. Instead, managers should use their creativity in generating alternatives

    so that the best solution to the problem can be found. Remember, if there is no choice,

    there is no decision.

    4. Evaluate the alternatives: The outcome of each alternative is evaluated. An alternative may have a combination of some positive and some negative effects. The net impact of

    the proposal has to be determined. Once all the alternatives have been evaluated, we are

    in a position to make the final selection.

    5. Selection of desired alternative: The alternative that meets the objectives and values best is selected. Peter Drucker has offered the following four criteria for making the

    right choice among available alternatives:

    The risk: The manager has to assess the risks of each alternative against the expected gains. The alternative that has the least risk while meeting the

    objectives of the decision is selected. But when each alternative has a fair

    amount of risk, he must decide how much risk he can assumehis propensity for riskand select the alternative that yields the best results while maintaining the risk level he is comfortable with. It is not always possible to assess

    accurately the amount of risk involved in an alternative. A manager may need to

    use his intuition to gauge the extent of risk in a decision alternative. The

    example of Johnson & Johnson is a case in point. When Johnson & Johnson

    decided to recall Tylenol from the market after cyanide was discovered in some

    capsules, it was fraught with risk. How will the consumers react? Will they lose

    faith with the product and the company? Johnson & Johnson spent $100 million

    in this reverse logistics exercise but it helped to reinforce consumers faith in the company and Tylenol survived despite this adversity.

    Timing: In case of great urgency, the decision that can be implemented quickest and yields the fastest results is favored. If the situation is not urgent, the best

    alternative per se, without considering the time element, is favored.

    Economy of effort: The alternative that will yield the maximum output with the minimum inputs is obviously the best alternative.

    Limitation of resources: A companys resources may impose a limitation on the selection of an alternative.

  • Page 14 of 20

    6. Implementation of chosen alternative: Selection is not the end of the decision-making process. The manager must ensure its proper implementation. To do that, he must live

    with the implementation of the decision, using his energy and persuasive powers to win

    over obstacles. Effective communication, motivational and leadership skills come into

    play.

    7. Evaluation and feedback: The manager must track the implementation and effectiveness of the decision. If the feedback indicates that something is amiss, it should

    be remedied pronto. Often a number of alternatives have to be tried out and abandoned

    before a final, acceptable alternative emerges.

    7.8. Decision Making Techniques

    7.8.1. Increased Participation

    Often, the best decisions arise when a manager involves the right people in the right ways in

    the decisionmaking process. Committees, coalitions, task groups are formed to arrive at decisions. But what is the right extent of participation a manager should embrace? The

    Vroom-Jago model tries to answer this question. It has three basic components:

    a) Leader participation styles: A leader can adopt a style ranging from a highly autocratic one to a highly democratic one, depending upon what the situation warrants.

    b) Diagnostic questions: The appropriate degree of decision participation will depend on responses to eight diagnostic questions given below:

    How important is the quality of the decision?

    How important is subordinate commitment to the decision?

    Do I have sufficient information to make a high quality decision?

    Is the decision problem well-structured?

    If I were to decide by myself, is it reasonably certain that my subordinates would be committed to it?

    Do subordinates share the organisational goals to be attained in solving the problem?

    Is conflict over the preferred solution likely to occur among subordinates?

    Do subordinates have enough information to make a high-quality decision?

  • Page 15 of 20

    c) Selecting a decision style: These questions help to narrow down the options and arrive at the right level of group participation. The Vroom-Jago model uses a decision tree to

    arrive at the answer. However, please remember that several decision styles may be

    equally acceptable in many situations.

    7.8.2. Nominal Group Technique

    This technique was developed by two researchers at the University of Wisconsin, Andre

    Delbecq and Andrew Van de Ven. The technique follows the steps given below:

    The leader explains the problem to the members of the target group

    Each member writes down his/her ideas silently and independently

    Each member then presents a single idea at a time to the group, usually starting with his best idea, by writing it on a board

    A discussion is held to explain and evaluate the ideas

    A vote is conducted to determine the best idea

    The central idea of the nominal group technique is to encourage inter-personal communication

    and to enhance deliberations and contributions of individual members. It follows a highly

    structured process and tries to integrate creative thinking through group interaction in order to

    solve organisational problems.

    7.8.3. Synetics

    Synetics is a Greek word which means fitting together of diverse elements. William Gordon developed this technique to stimulate creative solutions by piecing together distinct, novel

    and, sometimes, irrelevant ideas. A synetics group consists of members from diverse

    backgrounds and training. The leaders role is vital in making members break away from the traditional way of thinking. He states the problem and asks the members to review it

    thoroughly. The group begins to offer possible solutions after much critical thought. The

    leader then steps in and encourages members to break away from the traditional and come out

    with novel ideas. Methods like role-playing, analogies, paradoxes are used to develop creative

    ideas. An expert assists members to determine the feasibility of the ideas. This technique takes

    time and is costly, but some very good results have been reported using this technique.

  • Page 16 of 20

    7.8.4. Brainstorming

    Brainstorming is a process designed to stimulate creative thinking. It works in this manner. A

    group of people meet for the purpose of generating ideas useful in solving a particular

    problem. Emphasis is placed on the free-wheeling generation of ideas, which are recorded as soon as they are made. During this period no one in the group evaluates any ideas, since the

    objective at this point is to develop spontaneous and positive ideas. The theory underlying this

    approach recognises that many ideas spontaneously generated are completely infeasible.

    However, the theory holds that these ideas act as springboards that trigger thoughts from

    others in the group that lead to different and often highly feasible ideas. Throughout a period

    of thirty to sixty minutes as many as several hundred ideas are sometimes recorded. If only

    several workable ideas emerge from the session, a good chance often exists, that one or two

    can be developed into a satisfactory decision.

    7.8.5. The Delphi Method

    In this method, experts in the field are interrogated by a sequence of questionnaires. Any

    information that is available with any one member of the panel is passed on to others as well,

    enabling all the members of the panel to have access to all the available information. This

    technique eliminates the bandwagon effect of majority opinion. The panel members are asked to react to a checklist of questions which are significant to the decision that is attempted.

    Their opinions and reactions are analysed and where there is a sharp difference on an issue,

    interchanges are permitted and the final decision is presented issue by issue.

    7.9. Who Should Make Decisions?

    Who should make decisions an individual or groups? For taking easy decisions, individual decision-making is better. Also, where group members have little or no knowledge of

    background of the subject, the individual method is recommended. Group decision helps

    develop members and gives them a chance to voice their opinions concerning matters that

    affect their work.

    7.9.1. Individual Decision Making

    While starting a company, owners tend to make decisions at the individual level. As the

    companies grow, the tendency for the owner to continue making all decisions also tends to

    continue out of habit or from fear about others capabilities, fear that others decisions might prove costly, or fear of loss of prestige or power.

  • Page 17 of 20

    In an emergency, individual decisions may be required as there might be no time to talk/

    discuss, seek opinions. However, managers should communicate such decisions with those to

    be affected by those decisions as early as possible. In such cases, it is important for the

    manager to:

    Tell them why the decision was made without giving them prior notice

    Relate expectations from them in the execution of the decision

    Discuss the extent to which particular activities or interests were considered before taking decision

    Tell them the flexibility they have in carrying out the decision

    Be sure they understand that (a) an emergency came up, (b) a decision had to be made quickly,

    (c) their cooperation is needed to make the decision effective.

    7.9.2. Group Decision Making

    Group decision is:

    Being fair to all members

    A means of getting together different attitudes

    Obtaining opinions from others

    Maintaining group discipline through social pressure

    Problem solving cooperatively

    Group decision is not:

    Giving each individual what she/he wants

    Manipulating group members

    Selling the idea of the superior manager to the members

    Throwing discipline to the winds

    Seeking mere advice through consultative supervision

  • Page 18 of 20

    Two critical factors in a decision are quality and acceptance. Group decisions result in

    improvements in both the factors. Research data also show better results through group

    decisions.

    Benefits of group decisions are:

    Greater accuracy

    Greater acceptance

    Improved output

    More job satisfaction

    Better cooperation in implementation

    Better communication

    Less absenteeism

    More commitment

    Improved motivation

    Reduced turnover

    More alternatives are generated

    Potential liabilities of group decision-making are:

    Takes more time

    Possibility of individual domination

    Social pressure to conform to groupgroupthink

    Tendency to compromise

    Tendency for no leader to emerge leading to indecision

    Argumentation stifles creativity

    Game playing among members

    Loss of managerial authority

    Responsibility is not fixed: everyones responsibility is no ones responsibility!

  • Page 19 of 20

    7.10. Decision Guides

    Some of the decision making guidelines are:

    Every decision must contribute towards the companys goals

    Use creativity

    Have a trial/dry run, if possible. It throws up problem areas which may not have been considered earlier. Also, avoids full commitment, with retreat

    being possible.

    Follow up each decision to see if it is being carried out correctly; appraise results.

    Correct poor decisions as quickly as possible

    Dont be afraid of mistakesfailures are the pillars of success.

    Take special care of the wounded animalanyone adversely affected by the decision

    After taking a decision, take the trouble of explaining it to others and try to win enthusiastic cooperation of the group.

    Be alert to signs indicating the need for a decision

    Make available quiet and uninterrupted time for thinking about the decision

    Set priorities

    Ask yourself: How would your boss have decided?

    Ask yourself: Is the decision honorable and right?

    Have a back-up decision

    Take adequate time to reach decision and not be impulsive especially for major decisions

  • Page 20 of 20

    7.11. Summary

    7.12. References/Additional Resources

    7.12.1. Textbook References

    The process of identifying problems and opportunities and then resolving them is called decision- making - Richard Daft.

    There is no best technique of decision-making. The choice will depend on the

    circumstances. The different methods used for decision making are intuition, facts, experience and considered opinion.

    Decision making can be categorised into:

    (i) Basic and Routine Decisions (ii) Programmed and Non-programmed decisions

    The different decision models developed over the years are: the classical model, the

    administrative model, the political model and the Kepner-Tregoe decision-making model.

    Decision-making follows seven steps recognition of problem, diagnosis of problem, development of alternative solutions, evaluation of alternatives, selection of best

    alternative, implementation of alternative and finally evaluation and feedback.

    The different decision making techniques in vogue are: Increased participation, nominal

    group technique, synetics, brainstorming and the Delphi technique.

    Decisions can be taken individually or at a group level, based on the circumstances.

    1. James A. F. Stoner, R. Edward Freeman and Daniel R. Gilbert, Jr., Management, Prentice-Hall, Sixth Edition, July 2002.

    2. VSP Rao and V Hari Krishna, Management: Text and Cases, Excel Books, 2008