1. Decision Making: The Essence of Managers’ Job by Muhammad Iqbal Malik

2. Key Topics Introduction The Decision-making process
Decision-making models
Decision Styles
A discussion on Group Decisions

3. Part I Introduction

4. Organizations Organizations are systems
Involve people, structure and a common purpose
Have limited resources
Need to perform a series of functions to meet its objectives

5. Managers
Managers are responsible for effective and efficient execution of these organizational functions.
A typical manager performs a number of functions that are categorized as:
Interpersonal
Informational
Decisional

6. Managers
One of the key traits that distinguish managers from operatives is the ability to make independent decisions.

7. Part II Decision-making

8. What is decision-making?
The word decision is defined as:
“A choice between two or more alternatives”.
Thus decision-making can be defined as:
“the selection of a course of action from among alternatives ”.

9. Decision-making Process
Identifying a problem
Identifying decision criteria
Allocating weights to criteria
Developing alternatives
Analyzing alternatives
Selecting an alternative
Implementing the alternative
Evaluation (of decision effectiveness)

10. Problem Definition
Problem is a discrepancy (difference) between an existing and a desired state.
Example:
“The manager has resigned, and we need another manager”
Here the phrase “manager has resigned” reflects the current state while “need another manager” represents a desired state.

11. Identifying Decision Criteria
The word criteria, is defined as “a standard by which something can be judged”.
A decision criteria therefore, is the basis of a decision, which outlines the relevant and important factors for a decision. And implicitly, it also defines what is not important.

12. Decision Criteria: Example
In the above-cited scenario, the decision criteria may include the following factors:
Relevant qualifications
Leadership skills
Communication skills
Planning and analytical skills
Professional experience

13. Allocating Weights to Criteria
The next step in the decision making process is prioritization.
Prioritization is achieved by assigning quantitative weights to each criteria element.
The weightage defines the relative significance of each element.

14. Allocating Weights: Example

15. Developing Alternatives
Involves defining the possible alternatives (or choices) that would resolve the problem.
In our case, the alternatives would be a list of candidates or job applicants.

16. Analyzing Alternatives
Alternatives are rated and analyzed on the basis of the criteria
The rating can be based on a specified scale, say 1 – 5 etc.
Rating may be subjective in nature and thus,may depend on the judgment of the individual(s)

17. Criteria Rating: Example

18. Analyzing & Assessment: Example

19. Selecting an alternative
Involves choosing the best alternative, based on the above rating and analysis
Generally implies selecting the alternative with the highest score.

20. Implementing the Alternative
Putting the decision into action
Involves clear communication of the decision to all concerned and obtaining their commitment

21. Evaluation Evaluation forms an integral part of any process
Involves evaluation of the outcome based on the desired goal and criteria
Involves assessing the effectiveness and efficiency of the outcome (or the entire process)
In case of any undesired results, each step of the process is carefully reviewed to trace the root causes

22. Decision-making Models
“A simplified representation or description of a system or complex entity”
Examples
A model of a building
A globe (Earth model)

23. Rational/Bounded Rational
So Rational and Bounded Rational Models are cognitive models that describe how managers make rational decisions

24. The Rational Model 1. Define and diagnose the problem 2. Set goals
7. Follow up and control
External and internal
Environ. forces
3. Search for alternative solutions
6. Implement the solution selected
5. Choose among alternative solutions
4. Compare and evaluate solution

25. Rational Model: Assumptions
Clear and unambiguous problem
Single, well-defined goal
All alternatives are known
Clear preferences (ranking criteria)
Constant/stable preferences
No time or cost constraints
Decision will maximize payoff

26. Rational Model: Criticism
Not all decisions made on rational basis
Most problems, goals and preferences are not clear or well defined
Not practical to know all possible alternatives
Time and cost constraints exist in all practical problems
Result not maximized in most cases

27. Bounded Rational: Assumptions
Limited set of criteria
Self-interest influences ratings
Limited no. of alternatives
Alternatives are assessed one at a time till a satisficing (or good enough) alternative is found
Politics influences acceptance and commitment of decision

28. Intuition
An unconscious process of making decisions on the basis of experience and judgment

29. Intuition Involves gut feeling May also have rational basis
The “feeling” arises from past experience and knowledge
Involves quicker response
Does not involve systematic analysis

30. Decision Types
Effective managers make various kinds of decisions. In general, these decisions are either
Programmed decisions
Non-programmed decisions

31. Programmed Decisions A decision that is repetitive and routine
A definite method for its solution can be established
Does not have to be treated a new each time it occurs
Procedures are often already laid out
Examples: pricing standard customer orders, determining billing dates, recording office supplies etc.

32. Non-programmed Decisions
A decision that is novel (new or unique) or Ill structured
No established methods exist, because it has never occurred before or because
It is too complex

33. Non-programmed Decisions
Organizational Levels
Nature of Problems
Nature of Decision-making
Organizational hierarchy

34. Non-programmed Decisions
Are “tough” decisions that involve risk and uncertainty and
call for entrepreneurial abilities
Such decisions draw heavily on the analytical abilities of the manager
Examples: Moving into a new market, investing in a new unproven technology, changing strategic direction

35. Decision Styles
Decision-making, though a rational process does include some subjective elements
Thus in real organizational settings, the quality of decision does depend on the ability, style and approach of the manager

36. Decision Styles: Directive
Represents low tolerance for ambiguity and uncertainty
Reflects rational thinking of the manager
Such decision styles are more suitable for routine procedural tasks

37. Decision Styles: Analytic
Analytical style is also a rational style of thinking
Involves a very high tolerance for ambiguity and uncertainty
Such managers generally seek detailed information before making a decision

38. Decision Styles: Behavioural
Represents a creative way of thinking
Involves a low tolerance for ambiguity or uncertainty
Managers with a behavioural style introduce “new” ways of doing things

39. Decision Styles: Conceptual
Conceptual style also reflects a creative and intuitive way of thinking
Conceptual style managers have a very broad vision and generally look at numerous alternatives for decision-making
Focused on the long run and often result in creative outcomes or alternatives

40. Vroom and Yetton Model
Vroom and Yetton have identified five decision styles for managers, and are classified as follows:
Autocratic AI
The decision is made individually, using the information available to the individual only

41. Vroom and Yetton Model AII
The manager obtains information from subordinates and himself makes the decision
May or may not share with subordinates, the purpose of questions or the nature of problem
Subordinates do not play any role in problem definition or selection of alternatives

42. Vroom and Yetton Model Consultative CI
The manager shares the problem with relevant subordinates individually
Getting their input individually and not as a group. The manager then makes the decision independently, and may or may not be influenced by the subordinates’ suggestions

43. Vroom and Yetton Model CII
The problem is shared to subordinates in a group
Their ideas and suggestions are sought in a group meeting
The decision is then made by the manager which
May or may not reflect the subordinates’ influence

44. Vroom and Yetton Model Group Consensus GI
The problem is shared to subordinates as a group
Alternatives are generated and evaluated collectively
Effort is made to reach a consensus

45. Vroom and Yetton Model GI (Contd.)
The decision is made collectively and the manager functions as a coordinator
Does not “press” the group in adopting the manager’s “solution”
The manager is willing to accept and implement the decision of the group

46. Group Decision-making
The factors requiring group decisions include:
Involving sensitive issues
High cost alternatives
Involving very high risk factor
Strategic impact

47. Group Decisions: Advantages
Acceptance of group members
Coordination is easier
Communication is easier
Existence of large alternatives
More information can be processed
Diversity of experience and perspectives

48. Group Decisions: Disadvantages
Take longer time
Group can be indecisive
Groups can compromise
Groups can be dominated
Groups can “play games”
Victim to Groupthink

49. Situational Factors for Individual Decision-making
Short time
Unimportant to group
Manager can take decision
Dominate the decision
Destructive conflict
Members hesitant

50. Situational Factors for Individual Decision-making
Confidential data
Incapability of members
Manager’s dominance
Indirect effect on group members

51. Situational Factors for Group Decision-making
Need for innovation and creativity
Data collection
Importance of acceptance
Importance of solution
Complex problem
Democratic process

52. Situational Factors for Group Decision-making
Risk taking solution needed
Better understanding
Whole responsibility
Feedback required

53. Improving Group Decision-making
Brainstorming
Nominal group techniques
Electronic meeting