DECISION MAKING
What is decision making?
“It is an ongoing process of evaluating situations or problems, considering
alternatives, making choices, and following them with necessary action.”
Steps to Rational Decision-Making
1.
Define the problem
2.
Identify the decision criteria
3.
Weight the criteria
4.
Generate alternative courses of action
5.
Evaluate each alternative
6.
Make a decision
1. Define the Problem:
A problem is a gap between a desired state and an existing state

To make decision to solve problems, managers must:

Be aware of the gap

Be motivated to reduce the gap

Have the knowledge, skills, abilities, and resources to fix the problem
2. Identify Decision Criteria:
Decision criteria are standards used to guide judgments and decisions

Generally, the more criteria a solution meets, the better that solution will be
3. Weight the Criteria
Which criteria are more or less important?

Absolute comparisons


Each criterion is compared to a standard or ranked on its own merits
Relative Comparisons

Each criterion is compared directly to every other criterion
4. Generate alternatives courses of actions
Successful problem solving requires thorough examination of challenges. Thus
a manager should think through and investigate several alternative solutions to a
single problem
5. Evaluating the alternatives:
S- Strengths
W-Weakness
O- Opportunities
T- Threats
6. Make a decision-Ranking:
Brands
Values
Regina
6.10
Saskatoon
5.40
Saint John
5.35
Finally selecting the best alternative having highest rank
Styles of decision making

Intuitive style

Limited procrastination style

Systematic style

Individualistic style

By consensus style
Intuitive style:
-Making on the spot decision.
- Experience and circumstances support such type of problem solving approach.
Limited Procrastination
It involves the delaying of decision until enough factors have been evaluated/or
enough time has gone for the situation to stabilize.
Systematic style
-It involves identifying and evaluating each possible course of action.
Individualistic style
-It involves research and arrive at decision on their own
By consensus style
-It involves decision making through group discussion.
Methods/ Techniques of decision making

Pareto Analysis

Paired Comparison Analysis

PMI

Force Field Analysis

Six Thinking Hats

Cost/Benefit Analysis
Pareto Analysis
It uses the Pareto principle – the idea that by doing 20% of work you can
generate 80% of the advantage of doing the entire job.
Paired Comparison Analysis
-helps you to work out the importance of a number of options relative to each
other.

It is particularly useful where you do not have objective data to base this on
PMI
PMI stands for 'Plus/Minus/Interesting'. It is a valuable improvement to the
'weighing pros and cons' technique used for centuries.
Force field analysis
Force Field Analysis is a useful technique for looking at all the forces for and
against a decision. In effect, it is a specialized method of weighing pros and
cons.
Six thinking hats
Six Thinking Hats" is a powerful technique that helps you look at important
decisions from a number of different perspectives.
White hat
(With this thinking hat, you focus on the data available)
Red hat
(Wearing the red hat, you look at the decision using intuition, gut reaction, and
emotion.)
Black hat
(When using black hat thinking, look at things pessimistically, cautiously and
defensively)
Yellow hat
(The yellow hat helps you to think positively)
Green hat
(The Green Hat stands for creativity)
Blue hat
(The Blue Hat stands for process control. This is the hat worn by people chairing
meetings)
Cost benefit analysis
Cost Benefit Analysis or CBA is a relatively simple and widely used technique for
deciding whether to make a change. As its name suggests, you simply add up
the value of the benefits of a course of action, and subtract the costs associated
with it.
Quick decisions

Determine the core issue.
Keep in mind the core mission of your business. Any decision that leads the
focus away from the core mission takes you away from what really matters.
Ask, "What will this decision contribute to what we're trying to do here?"

Assemble the facts
Get enough information so you understand the problem or opportunity. Try to
separate the facts from the emotional attachment you or someone else might
have to them. Ask, "How will the facts of the issue help or hinder the outcome
of this decision?"

Take a step back.
You don't make this decision quickly what will happen? Don't let the tyranny of
the immediate rule your thinking. Ask, "What's the worst thing that is likely to
happen if no decision is made? Is there a positive side to making no decision
now?"

Visualize the outcome
Picture the way each alternative might play out. Think about the best case
scenario as well as the most likely outcome. Ask, "What is the best that can
happen, and how likely is it that this decision will make that happen?"

Think about the next steps
A good decision always depends on follow through. Think ahead to the ways the
decision can and should be implemented. Ask, "What action steps will it take to
enforce this decision and see that it is carried out to realize its maximum
benefits?"
Conclusion
Choose always the way that seems the best, however rough it may be.
Custom will soon render it easy and agreeable