Chapter 10 Decision Making

Learning Outcomes: Decision Making Explain the satisficing model for decision making. Describe the workings of the implicit favorite model for decision making. Outline the maximizing or rational decision making model. Discuss the various group decision techniques.

Decision-Making The key to making a decision is to understand the problem. Decision making would best be described as an exercise in evaluating trade-offs.

Determining the need for a decision 1 Situations in Life 2 Problems 3 Priority Problem 4 Causes for Problem Make A Decision Most Likely Cause 5 6 Alternatives Determining the need for a decision

Decision-Making Understanding the problem Problem-solving and decision-making technique Analyze the facts Determining a course of action

Three Models for Decision-Making Satisficing Model Implicit Favorite Model Maximizing or Rational Decision-Making Model

The Satisficing Model Problem identified Identify alternatives Problem simplified Satisficing criteria set Compare alternatives one at a time against criteria Select first alternative that meets criteria and is considered “good enough” Does alternative meet satisficing Criteria? YES NO Expand on alternatives

The Implicit Favorite Model Select an implicit favorite alternative Establish criteria to match implicit favorite 4 Select implicit favorite Confirm implicit favorite 5 Need for a decision is determined 2 1 3 Compare alternatives with implicit favorite criteria Identify other alternatives

Six Steps to the Rational/Maximizing Decision-Making Model Identify the need for a decision Identify the decision criteria Allocate weights to the criteria Develop the alternatives Evaluate the alternatives Select the best alternative

Determining a Course of Action There are five basic types of action that can be taken in problem-solving and decision-making: corrective action interim action preventive action contingency action adaptive action Which one is the best?

Who makes the decision? The manager makes the decision. The manager sells the decision. The manager presents the ideas and invites questions. The manager presents tentative decisions subject to change.

Who makes the decision? The manager presents the problem, gets suggestions, and makes the decision The manager defines the limits an asks the group to make the decision The manager permits the subordinates to function within the limits defined by the superior.

Decision-Making Other issues to consider are: quality issues time and timing commitment control

Group Decision-Making Interacting technique Brainstorming Nominal group technique Delphi technique Electronic meetings

Summary There are many ways to make decisions and solve problems. This chapter looks at several of the more common ways available to the leader. The implicit favorite model will serve one well if he or she already knows what he or she wants to do. The satisficing model works well if time is a consideration and one only needs to determine the criteria and then selects the first solution that meets the criteria.

Summary The maximizing decision-making model provides a means to prioritize and understand the problem, analyze the facts, and then determine a course of action. There are five basic types of action that can be taken in problem-solving and decision-making: corrective action, interim action, preventive action, contingency action, and adaptive action.