MGT 563
OPERATIONS STRATEGIES
Dr. Aneel SALMAN
Department of Management Sciences
COMSATS Institute of Information Technology,
Islamabad
Recap Lecture 28
• Strategic Human Resource Management
Managerial Decision Making
Programmed Decisions
• Routine situations
• Decision rules can be developed and applied
• Managers formulate decision rules so
subordinates can make decisions
Nonprogrammed Decisions
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•
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•
Poorly defined situations
Decisions are complex
Routine decision rules do not apply
Trend is toward subordinates making more
nonprogrammed decisions
Degrees of Outcome Predictability
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Certainty
Risk
Uncertainty
Ambiguity
Certainty
• Full knowledge of available alternatives
• Full knowledge of what outcome will result
from each alternative
• Few certain decisions in the real world.
Risk
• Knowledge of what the alternatives are
• Know the probabilities of outcomes resulting
from each alternative.
Uncertainty
• Goals are known, but information about
alternatives and future outcomes is
incomplete (probabilities unknown)
Ambiguity
• Objectives to be achieved are unclear
• Little, if any, knowledge of alternatives
Classical Model
1. Goals are known and agreed upon.
Problems are precisely defined
2. All alternatives and outcomes are calculated
3. Criteria evaluated and decision made
maximizing return (expected value)
4. Uses rationality and logic.
Classical Model
Assumes:
• Knowledge of Persons and Environ.
• Stability of Persons and Environment
• Memory and Reasoning Capabilities
• Absence of Emotion
• Resources (Time & Money)
Administrative Model
• Describes how managers actually make
decisions including those that are:
– Nonprogrammed
– Uncertain
– Ambiguous
– Not Quantitative
• Used due to “Bounded Rationality”
Bounded Rationality
People have limits on the information they
can process in making a decision, so their use
of rationality is limited.
Satisficing
• (Satisfactory + Sacrifice)
• Choosing the first alternative satisfying
minimum decision criteria (i.e., the
optimal solution is often not needed)
• Often cannot afford time and expense of
complete information, even if possible.
Intuition
• Based on years of practice and hands-on
experience (i.e., not naive guessing)
• Facilitates Satisficing
Decision Making Steps
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Recognition of Decision Requirement
Diagnosis and Analysis of Causes
Development of Alternatives
Selection of Desired Alternative
Implementation of Chosen Alternative
Evaluation and Feedback.
Comments on
Decision Making Steps
• The Classical Model focuses on the
Selection of Desired Alternative
• Nonprogrammed problems require more
attention to the earlier steps.
• Evaluation and Feedback can lead to
reverting back to any prior stage to make a
correction.
Personal Decision Framework
Situation:
· Programmed/non-programmed
· Classical, administrative,
political
· Decision steps
Personal Decision Style:
·Directive
·Analytical
·Conceptual
·Behavioral
Decision Choice:
·Solution to Problem
Directive Style: used by people who prefer simple, clear-cut solutions. They are
efficient and rational.
Analytical Style: used by managers who like to consider complex solutions based on as
much data as they can gather. They are objective and rational and like optimal
solutions.
Conceptual Style: used by people who like to consider a broad amount of information,
and are more creative and socially oriented. They consult with others for
information and ideas.
Behavioral Style: often the style adopted by managers having a deep concern for
others. They consult with others to determine the feelings of the others.
Decision Styles
• Differences among people with respect to
how they perceive problems and make
decisions
• Not all managers make decisions the same
– Directive style
– Analytical style
– Conceptual style
– Behavioral style
20
Personal Decision Framework
Situation:
· Programmed/nonprogrammed
· Classical, administrative,
political
· Decision steps
21
Personal Decision Style:
·Directive
·Analytical
·Conceptual
·Behavioral
Decision Choice:
·Best Solution to
Problem
Directive Style
• People who prefer simple, clear-cut solutions
to problems
• Make decisions quickly
• May consider only one or two alternatives
• Efficient and rational
• Prefer rules or procedures
22
Analytical Style
• Complex solutions based on as much data as
they can gather
• Carefully consider alternatives
• Base decision on objective, rational data from
management control systems and other
sources
• Search for best possible decision based on
information available
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Conceptual Style
• Consider a broad amount of information
• More socially oriented than analytical style
• Like to talk to others about the problem and possible
solutions
• Consider many broad alternatives
• Relay on information from people and systems
• Solve problems creatively
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Behavioral Style
• Have a deep concern for others as individuals
• Like to talk to people one-on-one
• Understand their feelings about the problem
and the effect of a given decision upon them
• Concerned with the personal development of
others
• May make decisions to help others achieve
their goals
25
Participation in Decision
Making
Vroom-Jago Model
• Helps gauge the appropriate amount of
participation for subordinates in process
• Leader Participation Styles
• Five levels of subordinate participation in
decision making ranging from highly
autocratic to highly democratic
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Participation in Decision Making
Vroom-Jago
Model
• Diagnostic Questions
• Decision participation depends on the
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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Seven Leader Diagnostic Questions
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
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How significant is the decision?
How important is subordinate commitment?
What is the level of the leader’s expertise?
If the leader were to make the decision alone at what level
would subordinates be committed to the decision?
 What level is the subordinate’s support for the team or
organization’s objectives?
 What is the member’s level of knowledge or expertise relative to
the problem?
 How skilled or committed are group members to working
together?
28
New Decision Approaches
for Turbulent Times
New Decision
Approaches for
Turbulent
Times
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Advantages of Group Decision Making
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More background knowledge
More alternatives generated
More understanding of the decision
More support for decision
Helps fulfill social needs
Disadvantages of Group Decision
Making
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Time consuming, inefficient
Ineffective Compromise decisions
Groupthink, social pressure, conflict
Lack of clear responsibility
Conditions for Groupthink
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Team leader’s opinion is known
Team is highly cohesive
Team is isolated from outside influences
Team has recent decision failures
Escalation of Commitment
British government
funded the Concorde supersonic
jet long after its lack of
commercial viability was
apparent.
Today, some scholars
refer to escalation of
commitment, in general, as the
“Concorde Fallacy.”
© Corel Corp. With permission
Causes of Escalation of
Commitment
• Ego Defense
• Sunk Costs
• Gambler’s Fallacy
© Corel Corp. With permission
An Interactive Group
Members meet face-to-face and have a
specific agenda and decision objectives.
(the “typical” meeting)
Improving Interactive Groups
• To Combat “Groupthink”:
– Devil's Advocate
– Multiple Advocacy
– Dialectic Inquiry
Improving Interactive Groups
• Brainstorming
Improving Interactive Groups
• Brainstorming
– More ideas
– “Synergy”
Alternatives to Interactive Groups
• Nominal Groups
– Ideas in writing before discussion to help equalize
participation
• Delphi Groups
– No face-to-face interaction - even more equal
participation
Improving Decision-Making
Effectiveness
• Learn from past decisions, but don’t waste time
regretting past
• Distinguish between idea getting and evaluating (Don’t
be too critical when generating ideas.)
• Seek advice, when practical
• As a group leader, don’t dominate
the discussion
• When possible, “sleep on” decisions,
but don’t wait too long.