Avoiding Bad Decisions – And Indecision When Action is Warranted

Everything Begins With Questions and a Choice Example What do I want? Why do I want it? How will I achieve it?"

You as Manager in the “Decisional” Role Informational and interpersonal are the other two. (Mintzberg) Problems/challenges arise constantly; it’s tempting to ignore or defer finding answers What makes decision-making difficult?

General Styles of Decision Making Logical – perhaps rank options using a scale Subjective – feelings/instincts Speak to others - seek advice from trusted others

What’s Your Decision Making Style? Write down two important decisions you have made over the last few years.  1. 2. Think about how you made each of these decisions.  What models and styles did you  use?  Did you start with one method and then switch to another?  Write down how your ”process” worked for the each decision. Did you get what you wanted?  How well has the decision held up over  time?  If you didn’t feel you made the right decision, how did the method fail you?

Characteristics of Managerial Decisions

Lack of Structure Non programmed decisions Programmed decisions Decisions encountered and made before, having objectively correct answers solvable by using simple rules, policies, or numerical computations. Non programmed decisions New, novel, complex decisions having no proven answers.

Comparison of Types of Decisions

Uncertainty and Risk Certainty Uncertainty The state that exists when decision makers have accurate and comprehensive information. Uncertainty The state that exists when decision makers have insufficient information.

Uncertainty and Risk Risk The state that exists when the probability of success is less than 100 percent and losses may occur.

Conflict Conflict 2 levels psychological conflict (“mental pressure”) --layoff or hire decisions, for example --implications for company that are immediately uncomfortable --nothing looks good of conflict between individuals or groups/depts.

The Stages of Decision Making A Formal Schema Generating alternative solutions Evaluating alternative solutions Making the choice Implementing the decision Evaluating the decision Identifying and diagnosing the problem

Identifying and Diagnosing the Problem Typically, a manager realizes some discrepancy between the current state (the way things are) and a desired state (the way things ought to be).

Generating Alternative Solutions Ready-made solutions Ideas that have been seen or tried before Custom-made solutions New, creative solutions designed specifically for the problem

Evaluating Alternatives Decide what solution will likely work best. Contingency plans Alternative courses of action that can be implemented based on how the future unfolds.

A decision realizing the best possible outcome Making the Choice Maximizing A decision realizing the best possible outcome

Making the Choice Satisficing Optimizing Choosing an option that is acceptable, although not necessarily the best or perfect…a combo of “satisfying and suffice” Optimizing Achieving the best possible balance among several goals

Implementing the Decision: Manager as “Do-er” Determine how things will look when the decision is fully operational. Order the steps necessary to achieve a fully operational decision. List the resources and activities required to perform each step. Estimate the time needed for each step. Assign responsibility for each step to specific individuals.

Implementing the Decision Monitor, or control, along the way. Assess for problems, opportunities, etc.

Evaluating the Decision Positive feedback suggests the decision is working; continue, apply elsewhere if needed. Negative feedback means that either (1) implementation will require more time, resources, effort, or thought or (2) the decision was a bad one

The Best Decision Vigilance vig·i·lance [ˈvijələns] NOUN A process in which a decision maker carefully executes all stages of decision making vig·i·lance [ˈvijələns] NOUN the action or state of keeping careful watch for possible danger or difficulties.

Barriers to Decision Making Psychological biases (control) Time pressure Social realities

Pros and Cons of Using a Group to Make Decisions

Potential Problems of Using a Group Groupthink A phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus Goal displacement A condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges.

Goal Displacement

Managing Group Decision Making

Constructive Conflict Cognitive conflict Issue-based differences in perspectives or judgments. Affective conflict Emotional disagreement directed toward other people. Example: occurs when feelings and emotions of 2 or more people are incompatible. For example, a boy tells a girl that he loves her, but she tells him that she just considers him as a friend.

Constructive Conflict Devil’s advocate A person who has the job of criticizing ideas to ensure that their downsides are fully explored. Dialectic A structured debate comparing two conflicting courses of action.

Encouraging Creativity Creation Synthesis Modification bring a new thing into being ( creation ) join two previously unrelated things (synthesis) improve something or give it a new application ( modification ).

Brainstorming Brainstorming A process in which group members generate as many ideas about a problem as they can; criticism is withheld until all ideas have been proposed.

Models of Organizational Decision Processes Coalitional model Model of organizational decision making in which groups with differing preferences use power and negotiation to influence decisions. Garbage can model Model of organizational decision making depicting a chaotic process and seemingly random decisions.

Elements of a Crisis Plan “OODA” Observe- Orient – Decide- Act

Decision Making in a Crisis What kinds of crises could your company face? Can your company detect a crisis in its early stages? How will it manage a crisis if one occurs? How can it benefit from a crisis after it has passed?