Principles o
MANAGEME
LESSON FOUR
Abiud Moronge Mach
LESSON FOUR
Managing Decision
Making
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Chapter Outline
• The Nature of Decision Making
–Decision Making Defined
–Types of Decisions
–Decision-Making Conditions
• Rational Perspectives on Decision Making
–The Classical Model of Decision Making
–Steps in Rational Decision Making
• Behavioral Aspects of Decision Making
–The Administrative Model
–Political Forces in Decision Making
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Chapter Outline (cont’d)
• Behavioral Aspects of Decision Making (cont’d)
–Intuition and Escalation of Commitment
–Risk Propensity and Decision Making
–Ethics and Decision Making
• Group and Team Decision Making in
Organizations
–Forms of Group and Team Decision Making
–Advantages of Group and Team Decision Making
–Disadvantages of Group and Team Decision Making
–Managing Group and Team Decision-Making
Processes
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Learning Objectives
• After studying this chapter, you should be able
to:
–Define decision making and discuss types of decisions
and decision-making conditions.
–Discuss rational perspectives on decision making,
including the steps in decision making.
–Describe the behavioral nature of decision making.
–Discuss group and team decision making, including its
advantages and disadvantages, and how it can be
managed more effectively.
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The Nature of Decision Making
• A decision is a choice made from among
available alternatives
• Decision making is the process of identifying
and choosing alternative course of action
• Decision Making
–The act of choosing one alternative from among a set
of alternatives.
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Types of Decisions
1. Programmed
2. Non Programmed
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Types of Decisions
• Programmed Decisions
–A decision that is a fairly structured decision or recurs
with some frequency or both.
–They are repetitive and routine
• Example: Starting your car in the morning.
For programmed decisions A definite procedure has been
worked out-decisions do not have to be handled as if they were
new. Fairly simple and straight forward
Techniques for Making the Decision:
 Habit
 Standard Operating Procedures
 Organizational structures
 Electronic data processing
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 Operations research
• Non programmed decisions
–A decision that is relatively unstructured
and occurs much less often than a
programmed decision.
–Occur under non routine, unfamiliar circumstances
• Example: Choosing a vacation destination.
Unstructured, and unusually consequential. Deal with
complex issues that demand data gathering, forecasting,
and strategic planning
Techniques for Making the Decision:
 Judgment, intuition, and creative thought
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• Top
Management Level
Top
Middle
Lower
Frequent, structured,
repetitive, routine, much
certainty
Programmed
decisions
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Non Programmed
decisions
Broad, unstructured,
infrequent, much uncertainty
Both structured and
unstructured
Decision-Making Conditions
The decision
maker faces
conditions of...
Certainty
Risk
Uncertainty
Level of ambiguity and chances of making a bad decision
Lower
Moderate
Higher
Figure 4.1
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Distinguishing Between
Decision Making Conditions
Source: Barney, Jay B. and Ricky W. Griffin. The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions.
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Decision-Making Conditions (cont’d)
• Decision Making Under Certainty
–A condition in which the decision maker knows with
reasonable certainty what the alternatives are and
what conditions are associated with each alternative.
• Decision Making Under Risk
–A condition in which the availability of each alternative
and its potential payoffs and costs are all associated
with risks.
• Decision Making Under Uncertainty
–A condition in which the decision maker does not
know all the alternatives, the risks associated with
each, or the consequences of each alternative.
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General decision Making styles
1. Directive
2. Analytical
3. Conceptual
4. Behavioral
• A decision making style reflects the combination
of how an individual perceives and responds to
information
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1. Directive
• People with directive style are oriented towards
tasks and technical concerns in making
decisions
• They are efficient, logical, practical and
systematic in their approach to solving problems
• Action oriented
• Focuses on facts
• Tend to be autocratic/dictatorial, exercises
power and control
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2. Analytical
• Tendency to overanalyze a situation
• Like to consider more information and
alternatives
• Careful decision makers who take longer to
make decisions but they also respond well to
new or uncertain situations
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3. Conceptual
• Tend to focus on the people or social aspects of
the work situation.
• Considers many options and future possibilities
• Adopt a long term perspective and rely on
intuition and discussions with others to acquire
information
• Willing to take risks and are good in finding
creative solutions to problems.
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• People with a conceptual style have a high
tolerance for uncertainty and tend to focus on
the people or social aspects of a work situation.
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4. Behavioral
• Focuses on people more, its people more than
the other styles
• People with this style work well with others and
enjoy social interactions in which opinions are
openly exchanged.
• Have a tendency to avoid conflict.
• Behavioral types are supportive, receptive to
suggestions, show warmth and prefer verbal to
written information
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Decision-Making Process
• Whether a decision is programmed or non programmed,
rational or non rational typically there are four stages
associated with making practical decisions.
Stage 1
Identify the
problem or
opportunity
Stage 2
Think up
alternative
solutions
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Stage 3
Stage 4
Evaluate
alternatives &
select a
solution
Implement &
evaluate the
solution
chosen
Stage 1: Identify the problem or Opportunity
Determining the actual versus the desirable
• The first decisional task for the manager is to
recognize that a decision is needed.
• When production equipment fails, the manager must
make a decision as to whether the equipment is to
be repaired, replaced or simply removed from
service.
• A problem may be seen as the difference between
the desired situation and the actual situation. The
manger must recognize the gap between what a
situation should be and what it is.
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• Such discrepancies in an organization or
unit performance may be detected by
comparing the current performance
against:
1.Past performance
2.The current performance of other
organizations or units
3.Future expected performance as
determined by plans and forecasts
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• Useful questions to ask at this stage:
1.Is there a difference between what is actually
happening and what should be happening.
2.How can the deviation be described
3.What is/are causes of the deviation?
4.What specific goals should be met?
5.Which of these goals are absolutely critical to
the success of the decisions?
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Stage 2: Identifying alternative Solutions
• Once you identify the problem or opportunity
and diagnosed its causes you need to come
up with alternative solutions.
• For programmed decisions, the alternatives
will probably be easy and obvious
• For non programmed decisions, the more
creative and innovative the alternatives, the
better.
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• Solutions range from ready made to custom
made:
1.Ready-made solutions: ideas that have been
tried before or follow others who have faced
similar problems
2.Custom-made solutions: designed for specific
problems.
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Stage 3: Evaluate alternatives & select a
solution-Ethics, Feasibility, & Effectiveness
• Evaluate each alternative not only according to
cost and quality but also according to ethics,
feasibility and effectiveness.
No
Eliminate from
consideration
Is the alternative feasible?
No
Is the alternative
satisfactory?
Are alternatives
consequences affordable?
Retain for further
consideration
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Eliminate from
consideration
No
Eliminate from
consideration
Stage 4: Implement & Evaluate the solution chosen
• With programmed decisions, implementation is usually
straightforward- though not necessarily easy.
• With non programmed decisions, implementation can be quite
difficult.
• For implementation to be successful you need to:1. Plan carefully
2. Be sensitive to those affected
3. Give it more time
4. Determine how things will look when the decision is
fully operational
5. Chronologically order, perhaps with a flow diagram, the
steps necessary to achieve a fully operational decision
6. List the resources and activities required to implement
each step
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7. Estimate the time needed for each step
8. Change it slightly: may be the action was
ok but it needs some slight change
9. Try another alternative: If plan A doesn’t
work you may scrap it for another
alternative
10.Start over: if no alternative seems
workable, you need to go back to the
drawing board- to stage 1 of the decision
making process
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Group Decisions
The group decision making process calls for the
manager
1.To seek informational inputs from the
groups
2.To get the group to participate in the
decision-making process itself
This participative approach is designed to secure
creative decisions and to improve human
relations at the same time.
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• Effective management of group decision
making has three requirements:
1. An appropriate leadership style
2. Constructive use of disagreement
and conflict
3. The enhancement of creativity
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Leadership
1.
2.
3.
4.
Constructive Conflict
Avoid domination
Encourage input
Alert on group think
dangers
Remember goals
1.
2.
3.
4.
Effective group
decision making
Creativity
1.
2.
3.
4.
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Brainstorm
Avoid criticizing
Exhaust ideas
Combine ideas
Air legitimate differences
Stay task-related
Be impersonal
Play devils advocate
Leadership style
• The leader of the decision making body must attempt to
minimize process related problems.
• Avoid dominating the discussion or allowing another
individual to dominate.
• Less vocal groups members should be encouraged to
air their opinions and suggestions.
• All members should be asked for rebellious view points
• The leader should not allow the group to pressure
people into conforming
• The leader should be alert to dangers of groupthink
• Should be attuned to indications that group members
are losing sight of the primary objective
• Should not loose sight of the problem and the goals
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Constructive Conflict
• Total and consistent agreement among
group members can be destructive.
• It can lead to groupthink, uncreative
solutions and a waste of the knowledge
and diverse viewpoints that individuals
bring into the group
• Types of constructive conflict:
1. Cognitive conflict
2. Affective conflict
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Cognitive conflict
• Issue based differences in perspectives or
judgments
• Airs legitimate differences of opinion and
develop better ideas and problem
solutions
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Encouraging Creativity
Affective conflict
• Emotional and directed towards other
people
• Its likely to be destructive to the group
because it can lead to anger, bitterness,
goal displacement, and lower-quality
decisions.
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Brainstorming
• A technique used to generate as many ideas as
possible to solve a problem.
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Managing Group and Team
Decision-Making Processes
Promoting the Effectiveness of Group and Team
Decision Making:
• Be aware of the pros and
cons of having a group or
team make a decision.
• Set deadlines for when
decisions must be made.
• Avoid problems with
dominance by managing
group membership.
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• Have each group member
individually and critically
evaluate all alternatives.
• As a manager, do not
make your position known
too early.
• Appoint a group member
to be a “devil’s advocate.”
• Hold a follow-up meeting
to recheck the decision.
Advantages and Disadvantages of Group decision making
Advantages
1.A greater sum total of
knowledge information
2.A greater number of
approaches to the problem are
generated
3.Broader perspective for
problem definition
4.Discussion clarifies ambiguous
problems and reduces
uncertainty.
5.More alternatives are identified
6.Decisions tend to have higher
quality
7.Decisions tend to be more
creative
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Disadvantages
1.The process tend to be time
consuming and costly
2.Unwanted compromise decisions
are often produced
3.Individual expertise may be
ignored
4.Certain personality tend to
dominate
5.Groups tend to achieve speed
premature decisions
6.Riskier decisions are apt to be
made
7.Disagreements may result in
disruptive behaviors
8.
Participation
increases
understanding of the problem
9. Improved communication will
result
10. Participation
increases
satisfaction with the process
11. Subordinates improve their
decision making capacity
12. Intellectual stimulation
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8.
There are distortions caused by
the win-lose dynamics of in-group
loyalty
9. A few people dominate or
intimidate
10. Group think: Group think occurs
when group members strive to
agree for the sake of unanimity
and thus avoid accurately
assessing the decision situation.
END
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• 1. What is a decision
• 2. what are the two types of decisions
• 3. what are the conditions of making decisions
• 4 . List the 4 styles of decision making
• 5 . List 3 advantages of group decision making
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