2. What is management?
• Act of getting people together to accomplish
desired goals.
• An art and science as well.
• Encompasses an array of different functions.
• ‘Getting things done.’
2
3. Decision Making in Management
• A major concern in
management.
• Sound and rational
decision -making.
• Key part of manager’s
activities.
3
4. Characteristics of Decision-Making
• Decision making implies choice.
• Continuous activity/process.
• Intellectual activity.
• Based on reliable information/
feedback.
• Goal oriented process.
• A ‘means’ and not the end.
4
5. Characteristics of
Decision-Making (..ctd)
• Related to specific problem.
• Time consuming activity.
• Needs effective communication.
• Pervasive process.
• Responsible job.
5
6. Decision-Making process
• Defining / Identifying
the managerial problem.
• Analyzing the problem
• Developing alternative solutions.
• Selecting the best solution out of the available
alternatives.
• Converting the decision into action
• Ensuring feedback for follow-up.
6
8. Approaches to Decision Making
• Approaches by psychologists:
– Divide and Conquer strategy (problem
decomposition) – Benjamin Franklin.
– Normative Analyses.
– Descriptive Analyses.
8
9. Normative Analyses
• Certain Outcomes
– Multi-atribute utility.
– Linear models.
• Uncertain Outcomes
– Decision Tree Analysis.
– Bayesian Networks.
9
10. Normative Analyses (..ctd)
• Certain Outcomes
– Multi-atribute utility.
• Decisions made with more or less
certain outcomes.
– Linear models
• Weights assigned to the cue.
10
11. Normative Analyses (..ctd)
• Uncertain Outcomes
– Decision Tree Analysis.
• Sequence of decisions.
– Bayesian Networks.
• Bayesian probability theory+ artificial
intelligence+graphical analysis
11
12. DescriptiveAnalyses
• Social Judgement Theory (SJT).
• Information Integration Theory (IIT).
• Image Theory.
• Heuristics and Biases.
• Fast and Frugal Heuristics.
• Naturalistic Decision Making.
• Expert Decision Making.
12
13. DescriptiveAnalyses (..ctd)
• Social Judgement Theory (SJT)
– Elements of normative + descriptive
analyses.
• Information Integration Theory (IIT)
– Averaging rule.
• Image Theory
– Views decision maker as processing
value image+tragectory image+strategic
image.
13
14. DescriptiveAnalyses (..ctd)
• Heuristic and Biases
– Physiological shortcuts or “heuristics”.
• Fast and Frugal Heuristics
– Bounded rationality.
• Naturalistic Decision Making
– Online decision making.
• Expert Decision Making
– Need for research for better decisions.
14
15. Three Decision Making Models
Political Model
Political Model
Administrative Model
Administrative Model
Classical Model
Classical Model
15
16. Political Model
Closely resembles the real environment in
which most managers and decision
makers operate.
Decisions are complex.
Disagreement and conflict over problems
and solutions are normal.
Coalition building is important.
16
17. Administrative Model
• How managers actually make decisions in situations
characterized by non-programmed decisions, uncertainty, and
ambiguity.
• Focuses on organizational, rather than economic.
• Two concepts are instrumental in shaping the administrative
model.
• bounded rationality: means that people have limits or
boundaries on how rational they can be.
• satisficing: means that decision makers choose the first
solution alternative that satisfies minimal decision criteria.
• Is considered to be descriptive.
• It is considered intuitive.
17
18. Classical Model
Accomplishes goals that are known and agreed
upon.
Strives for certainty by gathering complete
information.
Criteria for evaluating alternatives are known.
Decision maker is rational and uses logic.
18
20. Diagnosis Questions
(Kepner & Tregoe)
What is the state of disequilibrium affecting us?
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 what activity?
20
21. 7 Popular Methods
for Making Decisions
• Decision by running out of time.
• Decision by chos.
• Decision by fiat.
• Decision by coercion.
• Decision by competition.
• Decision by voting.
• Decision by inertia.
21
22. Advantages of Decision Making
• Primary function of management.
• Facilitates the entire management process.
• Continuous managerial function.
• Essential to face new problems and challenges.
• Delicate and responsible job.
22
23. Techniques for improving Decision Making
Brainstorming – idea generation for decision
making.
Nominal group technique (NGT)- problem
outlined, presentation of solution in written form,
discussion over written solutions, and final
decision.
Delphi technique- decision made on the basis of
questionnaire filled by the respondents.
Consensus mapping- decision made on the basis
of the report presented by the representative of each
group after 23
24. Guideline for making decision
more effective
Categorical interpretation- the problem should be defined
properly.
Application of limiting factor- limiting factor should be
taken into account in order to analyze the external S & W.
Adequate information- more quantity of reliable
information leads to effective decision making.
Considering other views- various views at the same point
are taken into account for quality decision.
Timeliness- decision should be ,made at proper time to meet
the competitive advantages.
24
26. Suppose that you are a manager
& running your organization.
Few questions will be asked.
Think & answer the questions
as though you are the manager!
The default choices (to all questions) will be:
a) Not at all b)Rarely c)Sometimes d)Often e)Very often
26
28. Practice
1. I evaluate the risks associated with each alternative
before making a decision.
2. After I make a decision, it's final – because I know
my process is strong.
3. I try to determine the real issue before starting a
decision-making process.
4. I rely on my own experience to find potential
solutions to a problem.
5. I tend to have a strong "gut instinct" about problems,
and I rely on it in decision-making.
6. I am sometimes surprised by the actual
consequences of my decisions.
28
29. Practice
7. I think that involving many stakeholders to generate
solutions can make the process more complicated than it
needs to be.
8. If I have doubts about my decision, I go back and
recheck my assumptions and my process.
9. I take the time needed to choose the best decision-
making tool for each specific decision.
10. I consider a variety of potential solutions before I make
my decision.
11. Before I communicate my decision, I create an
implementation plan.
12. In a group decision-making process, I tend to support
my friends' proposals and try to find ways to make them
work.
29
30. Practice
13. I use a well-defined process to structure my
decisions.
14. When communicating my decision, I include my
rationale and justification.
15. Some of the options I've chosen have been much
more difficult to implement than I had expected.
16. I prefer to make decisions on my own, and then let
other people know what I've decided.
17. I determine the factors most important to the
decision, and then use those factors to evaluate my
choices.
18. I emphasize how confident I am in my decision as a
way to gain support for my plans.
30
31. How to calculate your score???
Evaluation :
Not at all -1
Rarely -2
Sometimes -3
Often -4
Very Often -5
31
33. If your score is between 18-42
• Your decision-making hasn't fully matured. You
aren't objective enough, and you rely too much on
luck, instinct or timing to make reliable decisions.
• Start to improve your decision-making skills by
focusing more on the process that leads to the
decision, rather than on the decision itself. With a
solid process, you can face any decision with
confidence.
33
34. If your score is between 43-66
• Your decision-making process is OK. You have a
good understanding of the basics, but now you
need to improve your process and be more
proactive.
• Concentrate on finding lots of options and
discovering as many risks and consequences as
you can. The better your analysis, the better your
decision will be in the long term.
• Focus specifically on the areas where you lost
points, and develop a system that will work for
you across a wide variety of situations.
34
35. If your score is between 67-90
• You have an excellent approach to decision-making!
You know how to set up the process and generate
lots of potential solutions.
• From there, you analyze the options carefully, and
you make the best decisions possible based on what
you know.
• As you gain more and more experience, use that
information to evaluate your decisions, and continue
to build on your decision-making success.
• Think about the areas where you lost points, and
decide how you can include those areas in your
process.
35
36. Six essential steps in the decision-
making process
• Establishing a positive decision-making
environment.
• Generating potential solutions.
• Evaluating the solutions.
• Deciding.
• Checking the decision.
• Communicating and implementing.
36