Decision Making Although we all have experience in making decisions intuitively, it is important to examine the process of decision making in a systematic way so that decision making performance may be improved. By separating the decision making process into a series of steps, it is possible to see if and how decision making efforts might be better directed.

Decision Making What is decision making? –According to Wicks et al. (2004), decision making is the allocation of scarce resources by individuals or groups to achieve goals under conditions of uncertainty and risk. To better understand this definition, Wicks et al. (2004) specify what each of the underscored words mean in terms of decision making.

Decision Making 1.Allocation: the distribution of resources among alternatives. This term is essential to a definition of decision making because it calls attention to the task of selecting between or among two or more alternatives. Often bad decisions are the result of the decision maker being uninformed of all potential alternatives.

Decision Making 2.Scarce (resources): A lack of time and/or money. With an infinite pool of resources, almost any problem can be solved and this would make decision making (insofar as it involves prioritizing) unnecessary. Therefore, it is the scarcity of resources which necessitates the careful consideration of all potential alternatives and their consequences in the decision making process.

Decision Making 3.Individuals or Groups: Calls attention to the fact that decisions can be arrived at through both individual and group processes. The process of making a decision as an individual differs from the process of making a decision as a group, and each has benefits and disadvantages.

Decision Making 4.Goals: Decision making is a goal- oriented task. Both the immediate goals of the individual decision and the overall goals of the organization must be considered when making a decision.

Decision Making 5.Uncertainty: All decisions involve uncertainty in the sense the outcome of any particular decision cannot be fully known until the decision is actually made. Carefully considered decisions should be made on the basis of probability.

Decision Making Types of decisions: –Programmed vs. Nonprogrammed decisions: A programmed decision establishes a rule designed to facilitate the quick and efficient making of routine decisions. A programmed decision might be referred to as a “rubber stamp” decision. A nonprogrammed decision is too complex and, usually, too important to be made by an overall policy and calls for a more sophisticated method such as a cost/benefit analysis.

Decision Making Types of decisions: –Proactive vs. Reactive decisions: “Proactive decisions are made in anticipation of external changes, whereas reactive decisions are made as a result of external changes” (Wicks et al, 2000, p. 5).

Decision Making The decision making process (Wicks et al. 2004) 1.Define the problem (collect/analyze info.) 2.Specify goals (collect/analyze info.) 3.Develop alternative solutions (collect/analyze info.) 4.Select solution and prioritize alternatives (collect/analyze info.) 5.Implement solution (collect/analyze info.) 6.Monitor solution (collect/analyze info.)

Decision Making A note concerning the development of solutions: –Two question should be considered when developing and prioritizing solutions to problems. First, how likely is the solution to accomplish the goal? Second, what is the cost of the solution?

Decision Making General attributes of Group vs. Individual decision making: 1.Groups tend to take more time to arrive at a decision. 2.Groups tend to be more proficient at developing alternative solutions. 3.Groups may be unable to reach consensus. 4.Groups tend to be more accurate and thorough. 5.Groups are susceptible to the dynamic of “groupthink” (“Groupthink occurs when group members are so set on sustaining unanimity that they fail to properly appraise the alternative solutions”)

Decision Making General attributes of Group vs. Individual decision making: 1.Individuals tend to arrive at solutions faster. 2.Individuals tend to generate fewer potential alternatives. 3.Individuals tend to be more reliable in terms of being able to arrive at a decision because consensus is not an issue. 4.Individuals tend to be less accurate and thorough.

Decision Making Group vs. Individual decision making styles: See pages 14 & 15 in Media Management: A Casebook Approach

Decision Making Sources of information on which decisions may be based: 1.Personal experience of the decision maker. 2.Research performed by the decision maker. 3.The experience of advisors. 4.Other available research.

Decision Making Three brief aspects of evaluating information (Wicks et al., 2004): 1.“Decide whether the material under consideration is information or opinion.” 2.“Know accepted procedure for creating information” (e.g. scientific methods). 3.“Know who created the information you use.”