1. 3 Decision Making CHAPTER
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2. Chapter Objectives After studying this chapter and the case exercises at the end, you should be able to:
Spell out what triggered the problem.
List at least four ways to define the problem, and choose the best definition.
Propose at least five objectives for the person making the decision.
Recommend at least four possible alternative solutions.
Develop a Consequences Matrix for the decision.
Develop a Decision Matrix for the decision.
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3. Understanding Decision Making
A choice made between available alternatives.
Decision Making
The process of developing and analyzing alternatives and choosing from among them.
Problem
A discrepancy between a desirable and an actual situation.
Judgment
The cognitive, or “thinking,” aspects of the decision-making process.
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4. Types of Decisions Programmed Decision Nonprogrammed Decision
A decision that is repetitive and routine and can be made by using a definite, systematic procedure.
Nonprogrammed Decision
A decision that is unique and novel.
The Principle of Exception
“Only bring exceptions to the way things should be to the manager’s attention. Handle routine matters yourself.”
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5. Procedure and Form to Use for Developing a Workplace Rule
FIGURE 3–1
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Source: Copyright Gary Dessler, Ph.D.

6. Decision-Making Models
The Classical Approach
Have complete or “perfect” information about the situation.
Distinguish perfectly between the problem and its symptoms.
Identify all criteria and accurately weigh all the criteria according to preferences.
Know all alternatives and can assess each one against each criterion.
Accurately calculate and choose the alternative with the highest perceived value.
Make an “optimal” choice without being confused by “irrational” thought processes.
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7. Decision-Making Models (cont’d)
The Administrative Approach
Bounded Rationality (Herbert Simon)
The boundaries on rational decision making imposed by one’s values, abilities, and limited capacity for processing information.
Satisfice
To stop the decision-making process when satisfactory alternatives are found, rather than to review solutions until an optimal alternative is discovered.
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8. Checklist 3.1 The Decision-Making Process
Define the problem.
Clarify your objectives.
Identify alternatives.
Analyze the consequences.
Make a choice.
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9. Step 1. Define the Problem
Start by writing down your initial assessment of the problem.
Dissect the problem.
What triggered this problem (as I’ve assessed it)?
Why am I even thinking about solving this problem?
What is the connection between the trigger and the problem?
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10. Step 2. Clarify Your Objectives
Write down all the concerns you hope to address through your decision.
Convert your concerns into specific, concrete objectives.
Separate ends from means to establish your fundamental objectives.
Clarify what you mean by each objective.
Test your objectives to see if they capture your interests.
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11. Checklist 3.2 How to Clarify Your Objectives
Write down all the concerns you hope to address through your decision.
Convert your concerns into specific, succinct objectives.
Separate ends from means to establish your fundamental objectives.
Clarify what you mean by each objective.
Test your objectives to see if they capture your interests.
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12. Step 3. Identify Alternatives
Generate as many alternatives as you can yourself.
Expand your search, by checking with other people, including experts.
Look at each of your objectives and ask, “how?”
Know when to stop.
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13. Step 4. Analyze the Consequences
Mentally put yourself into the future.
Process Analysis
Solving problems by thinking through the process involved from beginning to end, imagining, at each step, what actually would happen.
Eliminate any clearly inferior alternatives.
Organize your remaining alternatives into a table (matrix) that provides a concise, bird's-eye view of the consequences of pursuing each alternative.
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14. Consequence Matrix
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15. Step 5. Make a Choice
Analyses are useless unless the right choice is made.
Under perfect conditions, simply review the consequences of each alternative, and choose the alternative that maximizes benefits.
In practice, making a decision—even a relatively simple one like choosing a computer—usually can’t be done so accurately or rationally.
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16. How To Make Better Decisions
Increase Your Knowledge
Ask questions.
Get experience.
Use consultants.
Do your research.
Force yourself to recognize the facts when you see them (maintain your objectivity).
Use Your Intuition
A cognitive process whereby a person instinctively makes a decision based on his or her accumulated knowledge and experience.
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17. Are You More Rational or More Intuitive?
Source: Adapted and reproduced by permission of the Publisher, Psychological Assessment Resources. Inc., Odessa FL 33556, from the Personal Style Inventory by William Taggart, Ph.D., and Barbara Hausladen. Copyright 1991, 1993 by PAR, Inc.
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FIGURE 3–2

18. How To Make Better Decisions (cont’d)
Weigh the Pros and Cons
Quantify realities by sizing up your options, and taking into consideration the relative importance of each of your objectives.
Don’t Overstress the Finality of Your Decision
Remember that few decisions are forever.
Knowing when to quit is sometimes the smartest thing a manager can do.
Make Sure the Timing Is Right
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19. Decision Matrix FIGURE 3–3
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FIGURE 3–3

20. Checklist 3.3 Making a Choice
Increase your knowledge.
Use your intuition.
Weigh the pros and cons.
Don’t overstress the finality of your decision.
Make sure the timing is right.
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21. Creativity and Decision Making
The process of developing original, novel responses to a problem.
Brainstorming
A creativity-stimulating technique in which prior judgments and criticisms are specifically forbidden from being expressed in order to encourage the free flow of ideas which are encouraged.
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22. Checklist 3.4 How to be More Creative
Create a culture of creativity.
Encourage brainstorming.
Suspend judgment.
Get more points of view.
Provide physical support for creativity.
Encourage anonymous input.
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23. Decision-making Shortcuts and Traps
Using a Heuristic
Applying a rule of thumb or an approximation as a shortcut to decision making.
Anchoring
Unconsciously giving disproportionate weight to the first information available.
Adopting a Psychological Set
The tendency to rely on a rigid strategy or approach when solving a problem.
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24. Decision-making Shortcuts and Traps (cont’d)
Perception (Personal Bias)
The unique way each person defines stimuli, depending on the influence of past experiences and the person’s present needs and personality.
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25. Looking at the Problem In Just One Way
Source: Lester A. Lefton and Laura Valvatine, Mastering Psychology, 4th ed. Copyright © 1992 by Allyn & Bacon. Reprinted by permission.
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FIGURE 3–4

26. The Advantage of Not Just Looking at the Problem in One Way
Source: Max H. Bazerman, Judgment in Managerial Decision Making. Copyright © 1994 Wiley, p. 93. Reprinted by permission of Wiley.
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FIGURE 3–5

27. Using Creativity to Find a Solution
Source: Applied Human Relations, 4th ed., by Benton/Halloran cW Reprinted by permission of Prentice-Hall, Upper Saddle River, NJ.
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FIGURE 3–6