Management
Fifth Canadian Edition
John R. Schermerhorn, Bachrach, Jr. Barry Wright
Chapter 7
Data and Decision-Making
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Copyright ©2021 John Wiley & Sons Canada, Ltd.
Learning Objectives
7.1 Discuss the role of information, data, and analytics in
management.
7.2 Identify different ways managers approach and deal with
problems.
7.3 Explain the six steps in the decision-making process.
7.4 Describe the potential pitfalls and sources of creativity in
managerial decision making.
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Managerial competencies
Managers must have
•
Technological competency
o
•
Information competency
o
•
Ability to understand new technologies and to use them to
their best advantage
Ability to locate, gather, organize, and display information
for decision-making and problem solving
Analytical competency
o
Ability to evaluate and analyze information to make actual
decisions and solve real problems
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Information, Technology, & Management (1 of 6)
What is useful information?
•
Data
o
•
Information
o
•
Raw facts and observations
Data made useful and meaningful for decision-making
Information drives management decision-making
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Information, Technology, & Management (2 of 6)
Characteristics of useful information:
•
Timely
•
High quality
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Complete
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Relevant
•
Understandable
Management Information System:
•
Using the latest technologies to collect, organize, and
distribute data
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Information, Technology, & Management (3 of 6)
Data Mining and Analytics
•
Data mining is the process of analyzing data to produce
useful information for decision-makers.
•
Big data exist in huge quantities and are difficult to
process without sophisticated mathematical and analytical
techniques.
•
Management analytics involves the systematic evaluation
and analysis of data to make informed decisions.
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Information, Technology, & Management (4 of 6)
Business Intelligence and Data Visualization
•
Business Intelligence
o
•
Taps information systems to extract and report data in
organized ways that are useful to decision-makers
Data Visualization
o
Visually update and display key performance metrics and
information on a real-time basis through executive
dashboards
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Information, Technology, & Management (5 of 6)
Information needs in organizations
•
•
Information exchanges with the external environment:
o
Gather intelligence information
o
Provide public information
Information exchanges within the organization:
o
Facilitate decision- making
o
Facilitate problem- solving
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Information, Technology, & Management (6 of 6)
Internal and external information needs in organizations
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Problem Solving and Managerial Decisions
(1 of 16)
Problem Solving and Managerial Decisions
•
Managers as Information Processors
o
Continually gather, share, and receive information
o
Today, as much electronic as it is face to face
o
Always on, always connected
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Problem Solving and Managerial Decisions
(2 of 16)
The manager as an information processor and nerve centre for planning,
organizing, leading, and controlling
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Problem Solving and Managerial Decisions
(3 of 16)
Problem solving
•
The process of identifying a discrepancy between actual
and desired performance and taking action to resolve it.
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Problem Solving and Managerial Decisions
(4 of 16)
Problem solving
•
Decision
o
•
Performance threat
o
•
A choice among possible alternative courses of action
Something is wrong or has the potential to go wrong
Performance opportunity
o
Situation offers the chance for a better future if the right
steps are taken
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Problem Solving and Managerial Decisions
(5 of 16)
Problem solving approaches or styles:
Problem avoiders
•
Inactive in information gathering and solving problems
Problem solvers
•
Reactive in gathering information and solving problems
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Problem Solving and Managerial Decisions
(6 of 16)
Problem solving approaches or styles:
Problem seekers
•
Proactive in anticipating problems and opportunities and
taking appropriate action to gain an advantage
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Problem Solving and Managerial Decisions
(7 of 16)
Systematic versus intuitive thinking:
•
Systematic thinking
o
•
approaches problems in a rational, step-by-step, and
analytical fashion
Intuitive thinking
o
approaches problems in a flexible and spontaneous fashion
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Problem Solving and Managerial Decisions
(8 of 16)
Multi-dimensional thinking applies both intuitive and
systematic thinking
•
Effective multi-dimensional thinking requires skill at
strategic opportunism
o
Remaining focused on long-term objectives
o
Being flexible to resolve short-term problems
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Problem Solving and Managerial Decisions
(9 of 16)
Managers use different cognitive styles
The four different types of cognitive thinkers
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Problem Solving and Managerial Decisions
(10 of 16)
Types of problems
•
Structured problems are ones that are familiar,
straightforward, and clear with respect to information
needs
•
Programmed decisions apply solutions that are readily
available from past experiences to solve structured
problems
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Problem Solving and Managerial Decisions
(11 of 16)
Types of problems
•
Unstructured problems are ones that are full of
ambiguities and information deficiencies
•
Non-programmed decisions apply a specific solution to
meet the demands of a unique problem
•
Commonly faced by higher-level management
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Problem Solving and Managerial Decisions
(12 of 16)
Crisis decision-making
•
A crisis involves an unexpected problem that can lead to
disaster if not resolved quickly and appropriately.
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Problem Solving and Managerial Decisions
(13 of 16)
Rules for crisis management:
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Figure out what is going on
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Remember that speed matters
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Remember that slow counts too
•
Respect the danger of the unfamiliar
•
Value the skeptic
•
Be ready to “fight fire with fire ”
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Problem Solving and Managerial Decisions
(14 of 16)
Managers make decisions with various amounts of
information
•
Certain environment
o
•
offers complete factual information on possible action
alternatives and their consequences
Risk environment
o
lacks complete information but offers probabilities of the
likely outcomes for possible action alternatives
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Problem Solving and Managerial Decisions
(15 of 16)
Managers make decisions with various amounts of
information
•
Uncertain environment
o
lacks so much information that it is difficult to assign
probabilities to the likely outcomes of alternatives
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Problem Solving and Managerial Decisions
(16 of 16)
Three environments for problem solving and decision-making
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The Decision-Making Process (1 of 11)
Steps in the decision-making process
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The Decision-Making Process (2 of 11)
Step 1 — Identify and define the problem
•
Focuses on information gathering, information processing,
and deliberation
•
Decision objectives should be established
•
Common mistakes in defining problems:
o
Defining the problem too broadly or too narrowly
o
Focusing on symptoms instead of causes
o
Choosing the wrong problem to deal with
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The Decision-Making Process (3 of 11)
Step 2 — Generate and Evaluate Alternative Courses of Action
•
Potential solutions are formulated and more information is
gathered, data are analyzed, the advantages and
disadvantages of alternative solutions are identified
•
Approaches for evaluating alternatives:
o
Stakeholder analysis
o
Cost-benefit analysis
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The Decision-Making Process (4 of 11)
Step 2 — Generate and Evaluate Possible Courses of Action
•
Criteria for evaluating alternatives:
o
Benefits
o
Costs
o
Timeliness
o
Acceptability
o
Ethical soundness
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The Decision-Making Process (5 of 11)
Step 2 — Generate and Evaluate Possible Courses of Action
•
Common mistakes:
o
Abandoning the search for alternatives too quickly
o
Lack of self-confidence and commitment
o
Unanticipated positive or negative side effects
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The Decision-Making Process (6 of 11)
Step 3 — Decide on a Preferred Course of Action
•
Two different approaches
o
Classical model leads to optimizing decisions
o
Behavioural model leads to satisficing decisions
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The Decision-Making Process (7 of 11)
Differences in the classical and behavioural decision-making models
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The Decision-Making Process (8 of 11)
Step 4 — Implement the Decision
•
Involves taking action to make sure the solution decided
upon becomes a reality
•
Managers need to have willingness and ability to
implement action plans.
•
Lack-of-participation error should be avoided.
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The Decision-Making Process (9 of 11)
Step 5 — Evaluate Results
•
Involves comparing actual and desired results
•
Positive and negative consequences of chosen course of
action should be examined.
•
If actual results fall short of desired results, the manager
returns to earlier steps in the decision-making process.
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The Decision-Making Process (10 of 11)
At all steps, check ethical reasoning! Ask these spotlight
questions:
•
Utility
o
•
Does the decision satisfy all constituents or stakeholders?
Rights
o
Does the decision respect the rights and duties of
everyone?
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The Decision-Making Process (11 of 11)
At all steps, check ethical reasoning! Ask these spotlight
questions:
•
Justice
o
•
is the decision consistent with the canons of justice?
Caring
o
is the decision consistent with my responsibilities to care?
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Issues in Managerial Decision-Making (1 of 6)
Issues in decision-making
•
Why do decision errors happen?
•
How do we frame the problem?
•
Heuristics are strategies for simplifying decision-making.
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Issues in Managerial Decision-Making (2 of 6)
Availability Bias
•
bases a decision on recent information or events
Representativeness Bias
•
bases a decision on similarity to other situations
Anchoring and Adjustment Bias
•
bases a decision on incremental adjustment from a prior
decision point
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Issues in Managerial Decision-Making (3 of 6)
Framing Error
•
trying to solve a problem in the context perceived, positive
or negative
Confirmation Error
•
focusing on information that confirms a decision already
made
Escalating Commitment
•
continuing a course of action even though it is not working
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Issues in Managerial Decision-Making (4 of 6)
Creative Decision-Making:
•
Creativity is the generation of a novel idea or unique
approach that solves a problem or exploits an opportunity
o
Big-C creativity occurs when extraordinary things are done
by exceptional people.
o
Little-C creativity occurs when average people come up with
unique ways to deal with daily events and situations.
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Issues in Managerial Decision-Making (5 of 6)
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Issues in Managerial Decision-Making (6 of 6)
The three types of situational creativity drivers
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Copyright
Copyright © 2021 John Wiley & Sons Canada, Ltd.
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