Risk – occurs when the outcome of management decision is uncertain  Risk has positive and negative aspects  Decision environments for risk vary depending upon company culture and size Conflict – occurs when there are opposing goals, scares resources, or differences in priorities Crisis – a situation that involves small amounts of time to make a decision that can impact the survival of the organization

Decision Scope – the effect and time horizon of a decision Strategic Decisions – long term perspective of 2-5 years. affect on the organization Tactical Decisions – short term perspective of 1 year or less. focus on subunits Operational Decisions – shortest time perspective, generally less than a year, often measured on a daily or weekly basis Characteristics of Management Decision Making

Identifying and diagnose the problem Generate alternative solutions Evaluate alternatives Selecting the best alternative Implementing the decision Evaluating the decision

Decision criteria should be related to the performance goals of the organization and its subunits. Decision criteria can include:  Costs  Profits  Timeliness  Whether the decision will work  Fairness

One needs to consider:  Decision quality – aspect of decision making based on such facts as costs, revenues, and product design specifications.  Decision acceptance – aspect of decision making based on people’s feelings.

1. The problem is clear and unambiguous. 2. There is a single, well-defined goal that all parties agree to. 3. Full information is available about criteria. 4. All the alternatives and their consequences are known. 5. The decision preferences are clear. 6. The decision preferences are constant and stable over time. 7. There are no time and cost constraints affecting the decision. 8. The decision solution will maximize the economic payoff

Organization Politics Emotions and Personal Preferences Illusion of Control Limit Rational Decision making

Providing resources (staff, budgets, office space) that will be needed for the activities that are required for successful implementation. Exercising leadership to persuade others to move the implementation forward. Developing communication and information systems that enable management to know if the decision alternative is meeting its planned objectives. Recognition and rewards for individuals and teams that are successful with implementation.

Administrative Model Bounded rationality – the ability of a manager to be perfectly rational is limited by factors such as cognitive capacity and time constraints Heuristics : or decision rules, quickly eliminate alternatives. Applied by decision makers Availability heuristic: readily available information is used. Representativeness heuristic: information for dealing with similar situations is used.. Anchoring and adjustment heuristic: people try to adjust to previously help position or standpoint..

Garbage Can Model Managers have a set of pre-established solutions to problems located in “garbage cans.” used when decision makers are undisciplined and have no clear immediate goals. Lacks structure- Can lead to serious difficulties

Every decision should meet “ethics double check.” How would I feel if my family found out about this decision? How would I feel if this decision were published in the local newspaper? Any discomfort in answering these questions indicates the decision has ethical shortcomings.

Advantages Increased acceptance Greater pool of knowledge Different perspectives Greater comprehension Training ground Disadvantages Social pressure Minority domination Goal displacement “Groupthink”

Decide and persuade Discover facts and decide Consult and decide Consult with group and decide Group decision One needs to keep in mind: the style of leadership Stimulate Creativity Devil’s Advocate

Time management skills: To make good decisions, managers need time to understand the problem and develop creative solutions. Delegation skills: Managers who know how to delegate are able to accomplish more than those who feel the need to be involved in every decision, no matter how trivial. Determine the task Match the desired task with the most appropriate employee. Communication skills