Decision-Making

Decision Making ▪Decision Making - is choosing among two or more alternatives (choices) ▪Begins with identification of a problem and ends with evaluation of implemented solutions.

Steps in managerial decision making and problem solving.

Decision-Making Process Model 1. Find and define the problem ▪What is the situation or problem? Common Mistakes: 1.Defining the problem too broadly or narrowly 2.Focus on symptoms rather than causes 3.Choosing the wrong problem to deal with

Decision-Making Model 2. Generate and evaluate alternative courses of action ▪Describe and collect needed information ▪Develop alternatives (choices)

Decision-Making Model Cost – Benefit Analysis ▪Benefits – to using the alternative. ▪Costs – of implementing the alternative. ▪Timeliness – The speed at which a positive impact is achieved. ▪Acceptability – The support of the alternative to those who will work with it. ▪Ethical Soundness – to various stakeholders

Decision-Making Model Allow participation of those involved ▪Your decisions will affect others ▪Make sure that you discuss your alternatives with those affected

Decision-Making Model 3. Decide which alternative is best ▪Optimizing decision – chooses the best solution based on perfect information available ▪Satisficing decision – the first alternative that appears to give a satisfactory resolution to the problem is chosen

Decision-Making Model 4. Implement the decision ▪Do what is necessary to implement the decision ▪Problems occur usually when there is a lack of participation in Step 2

Decision-Making Model 5. Evaluate results ▪When and how will you know if your decision was effective? ▪Does corrective action need to be taken? ▪Measure performance results against goals

Decision-Making Errors and Traps ▪Availability – use information readily available from memory ▪Representativeness – the likelihood of something happening based on similar set of occurrences ▪Spinning the data – to either a negative or positive by a presenter in order to influence the decision making ▪Escalating commitment – apply more resources to a course of action that is not working.

Individual versus Group Decision making ▪Advantages of group decision making ▸ Greater amounts of knowledge and expertise available ▸ Expands the number of alternatives ▸ Increases the understanding and acceptance of outcomes by members ▸ Increases the commitment of members to work hard to implement final plans ▪Disadvantages of group decision making ▸ Social pressure to conform ▸ Group think – cohesion and unanimity overrides ▸ Time required

Activity ▪In groups of 4 brainstorm some personal decisions that need to be made ▪Select 1 decision ▪Use the Decision-Making Model to make the best decision ▪Record all information on Chart Paper ▪Present to the class