1. I. THE NATURE OF PROBLEM SOLVING & DECISION MAKING Problem → is a discrepancy between ideal and actual conditions. Decision → is choosing among alternatives • When we think about a problem in a homework/assignment, we are almost sure that there is a solution and that the associated solution methods would be some of things that we have learned in class unless professors intend to test us further • Much of what managers do is solve problems and make decisions. Decision-making is a key role of a manager and leader. Some managers find this to be one of the most difficult tasks to perform. They have a fear of failure and procrastinate mainly because they have a lack of a structured approach. One of two things usually happen, they either put off making the decision in the hopes that someone else will bail them out, or even worse, make a decision using a knee jerk reaction. • New managers often try to solve problems and make decisions by reacting to them before they fully understand all of the possible factors. They feel that the quickness of a decision is more important than the long term outcome. There are times when a quick decision is needed, such as dealing with a violent not in the workplace. However, most decision are not needed immediately and you do in fact have the time to make the right decision. That is the key, making the right decision. DECISION MAKING → is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. Making a decision implies that there are alternative choices to be considered, and in such a case, we want not only to identify as many of these alternatives as possible but to choose the one that (1) has the highest probability of success or effectiveness (2) best fits with our goals, desires, lifestyle, values and so on. 2 Kinds of Decision Making 1. Programmed decision → is a repetitive a routine, and made according to a specific procedure. Three techniques in programmed decision making:
2. a. Habit → the most general, the most pervasive → internalized (recorded in the central nervous system). Through constant exposure to a given type of situation, the individual may automatically formulate certain rules for procedures. → decisions handled are those routine, everyday decision that relate to the day-to-day operations of the organization. b. Standard operating procedures (SOP) → normal, written, recorded program → provides a way of examining, modifying, and improving habitual patterns. c. Systems approach → more sophisticated method of programmed decision making → one of the elements of a relatively new discipline called operations research. Systems analysis involves looking at the total problem rather than at one phase. → a computer is essential to this type of programmed decision making. 2. Non programmed Decision → is unique decision (no routine) → when a problem has not taken the same form in the past or is extremely complex or significant → original thinking is requiredII. THE DECISION MAKING PROCESSde-sid → to arrive at a solution that ends uncertainty or disputedecider → latin word which means to cut offDecision-making → is one of the defining characteristics of leadership. It is core to the job description. → is a distinctly human activity.
3. What is a Decision? A Decision is a choice between two or more alternatives. ( if you only have one alternative, you do not have a decision) → from Thesaurus: Accommodation, agreement, arrangement, choice, compromise, declaration, determination, outcome, preference, resolution, result, and verdict to try and give the concept of decision.WHOSE JOB/ RESPONSIBILITY IS MAKING DECISIONS?A Manager → plans, organizes, staffs, leads and controls her team executing decisions. The effectiveness and quality of these decisions determine how successful a manager will be.MANAGERS → are constantly called up to make decisions in order to solve problems. Decision making and problem solving are ongoing process of evaluating situations or problems, considering alternatives, making choices and following them up with the necessary actions. Sometimes the decision-making process is extremely short and mental reflection is essentially instantaneous. In other situations, the process can drag in for weeks or even months. The entire decision-making process is dependent upon the right information being available to the right people at the right time.HOW CAN WE MAKE HIGH QUALITY DECISIONS?By following PROCESS → without process, you are likely to drag decisions into your comfort zone, handling “this one” in exactly the same way you handled “that one” even though this one and that one may have little in common. Without an ORGANIZATIONAL DECISION PROCESS, that same “ stimulus/response, stay in your comfort zone”
4. dynamic can easily become the predominate driver of your organization’s culture and effectiveness. With a process, you have the mechanism you need to warrant the quality of your own decisions. Perhaps more importantly, you also have a common language and set mental model that makes conversations about decisions more efficient and effective. This common understanding of decision processes, criteria and roles avoids many of the common organizational decision traps, allowing people in your organization to spend their conversational energies on creating better alternatives and validating assumptions and ultimately warranting their own decision.THE DECISION-MAKING PROCESS INVOLVES THE FOLLOWING STEPS: 1. Define the problem 2. Identify limiting factors 3. Develop potential alternatives 4. Analyze the alternatives 5. Select the best alternative 6. Implement the decision 7. Establish a control and evaluate system 1. DEFINE THE PROBLEM → the decision-making process begins when a manager identifies the real problem. The accurate definition of the problem affects all the steps that follow; if the problem is inaccurately defined, every step in the decision-making process will be based on an incorrect starting point. One way that a manager can help determine the true problem in a situation is by identifying the problem separately from its symptoms. 2. IDENTIFY LIMITING FACTORS
5. → all managers want to make the best decisions. To do so, managers need to have the ideal resources/factors: a. Information b. Time c. Personnel d. Equipment e. Supplies And identify any limiting factors. Realistically, managers operate in an environment that normally doesn’t provided ideal resources. For example, they may lack the proper budget or may not have the most accurate information or any extra time. So, they must choose to satisfice to make the best decision possible with the information, resources, and time available.3. DEVELOP POTENTIAL ALTERNATIVES → time pressures frequently cause a manager to move forward after considering only the first or most obvious answers. Thus, a manager should think through and investigate several alternative solutions to a single problem before making a quick decision. Brainstorming → best known methods for developing alternatives where a group works together to generate ideas and alternative solutions. The assumption behind brainstorming is that the group dynamic stimulates thinking —one person’s ideas, no matter how outrageous, can generate ideas from the others in the group. Ideally, this spawning of ideas is contagious, and before long, lots of suggestions and ideas flow. Rules should be followed during brainstorming session: a. Concentrate on the problem at hand → this rule keeps the discussion very specific and avoids the group’s tendency to address the events leading up to the current problem. b. Entertain all ideas
6. → in fact, the more ideas that come up, the better. In other words, there are no bad ideas. Encouragement of the group to freely offer all thoughts on the subject is important. Participants should be encouraged to present ideas no matter how ridiculous they seem, because such ideas may spark a creative thought on the part of someone else. c. Refrain from allowing members to evaluate others’ ideas on the spot → all judgements should be defered until all thoughts are presented, and the group concurs on the best ideas. OTHER WAYS TO HELP DEVELOP SOLUTIONS: *Nominal group technique → this method involves the use of a highly structured meeting, complete with an agenda, and restricts discussion or interpersonal communication during the decision-making process. This technique is useful because it ensures that every group member has equal input in the decision-making process. It also avoids some of the pitfalls, such as pressure to conform, group dominance, hostility, and conflict, that can plague a more interactive, spontaneous, unstructured forum such as brainstorming. *Delphi technique → with this technique, participants never meet, but a group leader uses written questionnaires to conduct the decision making.4. ANALYZE ALTERNATIVES → process wherein managers must identify the advantages of each alternative solution before making a final DECISION. • Determine the pros and cons of each alternative • Perform a cost-benefit analysis for each alternative • Weigh each factor important in the decision, ranking each alternative relative to its ability to meet each factor, and then multiply by a probability factor to provide a final value for each alternative.
7. → regardless of the method used, a manager needs to evaluate each alternative in terms of its • Feasibility—can it be done? • Effectiveness—how well does it resolve the problem situation? • Consequences—what will be its costs (financial and nonfinancial) to the organization?5. SELECT THE BEST ALTERNATIVE → is the one that produces the most advantages and the fewest serious disadvantages. → (select) alternative with the highest probability of success6. IMPLEMENT THE DECISION → managers are paid to make decisions, but they are also paid to get results from these decisions. Positive results must follow decisions. Everyone involved with the decision must know his or her role in ensuring a successful outcome. To make certain that employees understand their roles, managers must thoughtfully devise programs, procedures, rules, or policies to help aid them in the problem-solving process.7. ESTABLISH A CONTROL AND EVALUATION SYSTEM Evaluation system → provides feedback on how well the decision is being implemented, what the results are, and what adjustments are necessary to get the results that were intended when the solution was chosen. In order for a manager to evaluate his decision, he needs to gather information to
8. determine its effectiveness. Was the original problem resolved? If not, is he closer to desired situation than he was at the beginning of the decision-making process? If a manager’s plan hasn’t resolved the problem, he needs to figure out what went wrong. A manager may accomplish this by asking the following questions: • Was the wrong alternative selected? → if so, one of the other alternatives generated in the decision-making process may be a wiser choice. • Was the correct alternative selected, but implemented improperly? → if so, a manager should focus attention solely on the implementation step to ensure that the chosen alternative is implemented successfully. • Was the original problem identified incorrectly? → if so, the decision-making process needs to begin again, starting with a revised identification step. • Has the implemented alternative been given enough time to be successful? → if not, a manager should give the process more time and re-evaluate at a later date.III. BEHAVIORAL INFLUENCES ON DECISION MAKING FACTORS THAT INFLUENCE ON DECISION MAKING:
9. A. Intuition → is an experienced-based way of knowing or reasoning in which weighting, and balancing evidence are done unconsciously and automatically. → is currently recognized as an important aspect of managerial decision making, yet has limitations. → for example, when the stakes are high rational analysis is important. It is best to use one’s intuition about when to use intuition.B. Personality and Cognitive Intelligence → the personality and cognitive intelligence of the decision maker influence his or her ability to find effective solutions. Propensity for risk taking is an important personality factor. Cautiousness and conservatism are also related to decisiveness. Perfectionism and rigidity also influence decision making. High cognitive intelligence generally improves decision- making quality. Some intelligent people, however, suffer from “ analysis paralysis”.C. Emotional Intelligence → how effective you are in managing your feelings and reading other people can affect the quality of your decision making. Emotional intelligence refers to qualities such as understanding one’s own feelings, empathy for others, and the regulation of emotion to enhance living. → five key factors are involved in emotional intelligence: 1. Self awareness 2. Self management of emotion 3. Social awareness including empathy 4. Intuition 5. Relationship management
10. D. Quality and Accessibility of Information → high-quality information improves decision making, but many decision makers rely heavily on accessible information. A related factor is that people are influenced by the first information they receive. Anchoring occurs when the mind gives too much weight to the first information it receives. Another decision-making trap is over-confidence.E. Political Considerations → many decisions are based on political considerations such as favouritism, alliances, and the desire to stay in favor with powerful people. The status quo trap is a decision-making tied to political factors. You fail to challenge the status quo because you worry that being critical of how things are will invite criticism from key people. The person with integrity is aware of not alienating people in power, yet supports what he or she thinks is the best decision.F. Degree of Certainty → the more certain the decision maker is of the outcome of a decision, the more calmly and confidently the person will make the decision. The three degrees of certainty are certainty, risk, and uncertainty. Risky decisions can be difficult to implement because people may not be confident that the steps will lead to good results. Effective managers often accept a condition of risk.G. Crisis and Conflict → in a crisis, many decision makers panic whereas as smaller number are at their best. → when conflict is not overwhelming, and is directed at real issues and not personalities, it can be an asset to decision making. It helps to
11. visualize crises ahead of time. Conflict relates to crisis because both can be an emotional experience. H. Values of the Decision Maker → all decisions are ultimately based on values, such as concern for profits or concern for human welfare. Clinging to the status quo is a value and can be a hidden trap in decision making that can prevent optimum decision making. I. Procrastination → many decision makers are poor decision makers because they procrastinate, or delay taking action without a valid reason. Procrastination results in indecisiveness and inaction. The problem can often be overcome by acquiring a higher degree of self discipline. J. Decision-Making Styles → a manager’s typical pattern of making decisions is his or her decision- making style. According to the Decision Dynamic research, decision different in terms of how information is used, and how options are created. The four styles are (1) decisive (one option, less information), (2) flexible (many options, less information), (3) hierarchic (one option, more information), and (4) integrative (many options, more information). It is helpful to be aware that such styles exist, and reflect on one’s style.IV. INDIVIDUAL DECISION MAKING/GROUP DECISION MAKING • Good decision making is skill to be learned and mastered, especially for leaders who are managing a team. More importantly, individuals must also practice
12. being good decision makers since it is not advisable to be too dependent on others for personal decision. • The decision of being too dependent on others is that you might have hard time standing on your own two feet when a situation would require you to make a choice without anyone’s help. A better way to deal with it is to consult friends or trusted people who can advise you on the kind of decision you are about to make. They can give you suggestions or warnings before you implement it. This way you are still on your own in arriving a decision.PROS AND CONS OF INDIVIDUAL DECISION MAKING When you make a decision on your own, you take pride in it especially if the decision made was successful and effective yet, there are moments when it is just difficult not to seek assistance from others.ADVANTAGES OF INDIVIDUAL DECISION MAKING: 1. You can take immediate action and fast solution to a problem or situation 2. You are solely responsible for the kind of decision achieved whether it is good or bad 3. You take full responsibility for the outcome of the decision and its consequences 4. You take no arguments with your personal opinion on how to address a problem 5. You became efficient with the use of time and effort in reaching a decision 6. There is no need to delegate role and responsibilities so you do not have to deal with people who are hesitant to take on a responsibility 7. You are free from too much diversity in a group which tends to limit cohesiveness and affect the decision making
13. DISADVANTAGES OF INDIVIDUAL DECISION MAKING: 1. You only see things based on your own perception 2. You have no one to discuss regarding the projected outcome of the decision. there may be other people who have already gone through the kind of situation that you are experiencing and they might be able to share whether they were successful or not in the kind of decision made 3. You have a hard time reaching a decision especially when you have an indecisive character 4. It can be difficult for you to tell whether you are experiencing a decision making pitfall or not 5. The level of motivation there is in individual decision making is not as strong as when a team is successful enough to create a motivations effect to the members 6. There may not be so many creative solutions generated when only one person makes the decisionGROUP DECISION MAKING The functionality of a group in terms of performance has been known to be effective in various aspects such as conflict situations, problem solving, and decision making. The group takes into account the individual needs and ideas of the members, making it a collaborative approach in dealing with just about any kind of situation. When it comes to decisions, a group decision making style works best for any kind of situation.ADVANTAGES OF GROUP DECISION MAKING 1. Groups provide a broader prospective
14. 2. Employees are more likely to be satisfied and to support the final decision 3. Opportunities for discussion help to answer questions and reduce uncertainties for the decision makersDISADVANTAGES OF GROUP DECISION MAKING 1. This method can be more time consuming than one individual making the decision on his own 2. The decision reached could be a compromise rather than the optional solution 3. Individuals become guilty of GROUPTHINK—the tendency of members of a group to conform to the prevailing opinions of the group 4. Groups may have difficulty performing tasks because the group, rather than a single individual, makes the decision, resulting in confusion when it comes to implement and evaluate the decisionINDIVIDUAL VS GROUP DECISION MAKING: Both approaches in making decisions follow the same process in decision making. However, a decision worked out by a GROUP has a greater tendency to be more effective than that of an individual effort because it is an outcome of collective or cohesive minds. And results of dozens of individual vs group performance studies indicate that groups not only tend to make better decisions than a person acting alone, but also that groups tend to inspire star performers to even higher levels of productivity. INDIVIDUAL DECISION making is best left to skilled decision makers. Yet, we might wonder what about the day-to-day small decisions that only individual himself should make? Well, these petty situations should mold us in learning to become independent with your decisions.
15. THANK YOU....
16. BUKIDNON STATE UNIVERSITY External Studies Center New Bataan, Compostela ValleyPROBLEM SOLVING & DECISION MAKING
17. Submitted to: Dr. Lilian C. Calicdan PA 205 InstructorsSubmitted by: Renato Z. Dianito Evangeline S. Manila Ivan Kleb Ulgasan Juvy F. Sobrevilla