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A conscious choice among alternatives followed by action to implement the choice.
What are the variables that influence a decision maker?
Reason, Emotion, Knowledge, Uncertainty, Risk, Group factors, Imagination, Individual factors
Types of Managerial Decisions
- Programmed and Nonprogrammed Decisions
- Proactive and Reactive Decisions
- Intuitive and Systematic Decisions
Response to repetitive and routine problems, which is handled by a standard procedure that has been developed by management.
Who is Herbert Simon?
A management scholar that defined management decisions as either programmed or unprogrammed
Guidelines for managerial action that must be adhered to at all times. Policymaking is an important management-planning element for ensuring that action is oriented toward objectives. The purpose of policies is to achieve consistency and direction and to protect an organization's reputation.
A decision for novel and unstructured problems or for complex or extremely important problems; deserves special attention of top management.
A decision made in anticipation of an external change or other condition.
These can prevent many common problems from affecting an organization
A decision made in response to changes that have already occurred.
Intuitive decision making
Basing decisions on the use of estimates, guesses, or hunches to decide among alternative courses of action.
Systematic decision making
An organized exacting, data-driven decision-making process that requires a clear set of objectives, a relevant information base, and a sharing of ideas among key managers and other employees.
Decision Making Process
- a. Clarify the problem or opportunity
- b. Develop alternative courses of action
- c. Evaluate and select a course of action
- d. Implement the decision
- e. Monitor its effectiveness
The realization that a discrepancy exists between a desired state and current reality.
Perceptual biases that cause managers to make mistakes while clarifying a problem
- a. Perceptual inaccuracies: Individual attitudes, feelings, or mental models may prevent individuals from recognizing problems. Fond feelings of employee may cloud visibility of problem.
- b. Defining problems in terms of solutions: This occurs often when someone has a favorite tool or procedure that they like to implement.
- c. Identifying symptoms as problems: This occurs when a manager doesn't look deeply enough into a problem to find the larger issue that needs to be addressed.
A popular approach to identifying and studying firms that are leaders in a given area of business.
Develop alternate courses of action
Examine the organization's internal and external environments for information and ideas that may lead to creative solutions to the problem.
Evaluate Alternatives and Select a Course of Action
- Evaluate and compare options
- select alternatives that will produce the most favorable outcome
- Guided by previously established goals and objectives.
Two cautions when evaluating courses of action
- a. This phase of the decision making process should be kept distinct from the previous step, especially in a group context.
- b. Be wary of solutions that are evaluated as being "perfect" - especially when the decision is being made under conditions of uncertainty.
A decision maker who accepts a reasonable alternative course of action that ins't necessarily the optimum course.
The process by which authority is distributed downward in an organization.
Six Steps to effective delegation
- a. Clearly define the task: When you assign work describe the results you want, not how to do the job.
- b. Provide guidelines to begin or follow: some may or may not know how to get started on a task. Others may want guidance along the way. Best chance of success is in the guidelines.
- c. Delegate authority to accomplish the task: Trust people to get the job done and give them the authority to see it through.
- d. Monitor the task, but don't hover: Give room to operate and freedom for creativity.
- e. Provide feedback along the way: ask for updates on how the process is going. Make course adjustments if off task.
- f. Reward and recognize effort as well as results: Encouragement goes a long way.Motivate with judicious praise.
Control and Assess the Consequences of the Action
checking the results along the way. If not giving outcomes needed, change the objective(s), course of action, or implementation.
Two types of feedback in assessing consequences of actions
Formative & Summative
Feedback on the job performance while the job is being performed.
Used at the end of the implementation process to provide a "bottom-line" assessment of the effectiveness of a decision by comparing the results to company and industry standards.
Four major Influences on Individual Decision Makers
The importance of the decision, time pressures, the manager's values, and the manager's propensity for risk.
Key to organizational performance
The ability to make decisions rapidly
Values-based decision making
A methodical decision-making approach that ensures organizational values enter into all major decisions.
Some specific influences of values on the decision making process include:
- a. Value judgments are necessary in the development of objectives and the assignment of priorities.
- b. In developing alternatives, you must make value judgments about the various possibilities.
- c. When you select an alternative, your value judgments will be reflected in your choice.
- E - Experience
- T - Training
- H - Hindsight
- I - Intuition
- C - Company
- S - Self-esteem
Negative Influencers of Open Group Discussions
- a. The pressure to conform
- b. The influence of a dominant personality type in the group
- c. Status incongruity, as a result of which lower-status participants are inhibited by higher-status participants and "go along" even though they believe that their own ideas are superior.
- d. The attempt of certain participants to influence others because these participants are perceived to be expert in the problem area.
Group processes for nonprogrammed decisions
- a. Groups are probably superior to individuals because of greater amount of knowledge available to groups.
- b. In identifying alternatives, the individual efforts of the group members are necessary to ensure a broad search in the various functional areas of the organization.
- c. In evaluating alternatives, the collective judgment of the group, with its wider range of viewpoints, seems superior to that of the individual decision maker.
- d. In choosing an alternative, it has been shown that group interation and the achievement of consensus usually result in the acceptance of more risk than would be accepted by an individual decision maker. In any event, the group decision is more likely to be accepted as a result of the participation of those accepted as a result of the participation of those affected by its consequences.
- e. Implementation of a decision, whether or not it is made by a group, is usually accomplished by individual managers. Thus, since a group cannot be held responsible, the responsibility for the implementation necessarily rests with the individual manager.
Garbage Can Phenomenon
A commonplace occurrence in group decision making where individuals bring their favorite problems or solutions to each group meeting.
Three techniques that improve creativity in groups
- a. Brainstorming
- b. The Delphi Technique
- c. The Nominal Group Technique
A technique for simulating creativity by using a rigorous set of rules that promote the generation of ideas while avoiding the inhibitions that many people feel in group settings.
Basic Rules of Brainstorming
- a. No idea is too ridiculous
- b. Each idea presented belongs to the group, not the person stating it.
- c. No idea can be criticized.
The Delphi Technique
A technique for stimulating creativity that involves soliciting and comparing anonymous judgments on the topic of interest through a set of sequential questionnaires that are interspersed with summarized information and feedback of opinions from earlier responses.
It starts with a mailed out questionnaire. Responses are tallied and resent out for evaluation. Not much advantage after two rounds. Not susceptible to the biasing effects.
Nominal Group Technique
A technique for generating ides that involves the anonymous contribution of ideas in a group setting.
No verbal communication in group.
- 7 - 10 people
- Each writes ideas on a pad
- Then after 5 minutes, each presents ideas to the group
- No debate/discussion
- Continues until all have spoken all ideas
Result is a long list of possible options.
Then the group votes on each idea independently
Basic differences between the Delphi Technique and Nominal Group Technique
- a. Delphi participants are anonymous to one another, while NGT participants become acquainted.
- b. NGT participants meet face-to-face around a table, while Delphi participants are physically distant and never meet face-to-face.
- c. In the Delphi process, all communication between participants is by way of written questionnaires and feedback from the monitoring staff. In NGT, communication is direct between participants.
The period characterized by the abundance of newspapers, journals, magazines, television and radio programs, seminars, and the explosive increase in the use of computers and especially the Internet.
The storage of pieces of knowledge, often in the form of stories, for easy access for those who have future need of it
The use of software to search through the warehouse of stored information for relevant bits.
A subset of a data warehouse that is easier for people to search for the data and information they need.
Internet services that locate information on the Web using keywords or phrases
Software tools that will perform services for an individual on the web. For example a person may request that an agent find the lowest price for a new computer.
Decision Support Systems (DSS)
Interactive information systems that enable managers to gain instant access to information in a less-structured format than a traditional management information system or database.
Attributes of Truly Useful Information
- a. Accessible: Information can be obtained easily and quickly.
- b. Timely: Information is available when needed.
- c. Relevant: Managers need the information to make a particular decision.
- d. Accurate: Information is error free.
- e. Verifiable: Information is confirmed.
- f. Complete: All details needed are available.
- g. Clear: Information is stated in such a way that no facts are misunderstood.
Executive Information Systems (EIS)
A user-friendly DSS designed specifically for executives; doesn't require prior knowledge of computers or databases but provides analysis by interpreting it in terms of the organization's strategic goals and presenting the results in an easily understandable format.
A computer program that allows computers to solve problems using imagination, abstract reasoning, and common sense.
Computer systems that can make decisions without human interaction.