This document discusses decision making in management. It outlines the six steps of the decision making process: 1) recognize the need for a decision, 2) identify stimuli that prompt a decision, 3) determine internal or external factors causing the need for a decision, 4) decide whether to react or proactively make a decision, 5) make a timely decision. It also discusses cognitive biases that can negatively impact decisions and lists advantages and disadvantages of group decision making.

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Management
Information
Systems
David Alejandro Nova Martínez
David Eduardo Corona Miranda

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The managers
make decisions
and explores
how individual,
group, and
organizational
factors affect
the quality of
decisions and
thus determine
organizational
performance.

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OBJECTIVES
 Differentiate between programmed and nonprogrammed decisions,
and explain why nonprogrammed decision-making is a complex,
uncertain process.
 Describe the six steps that managers should take to make the best
decisions.
 Explain how cognitive biases can affect decision-making and lead
managers to make poor decisions.
 Identify the advantages and disadvantages of group decision-
making, and describe techniques that can improve it.
 Explain the role that organizational learning and creativity play in
helping managers to improve their decisions.

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STEPS IN THE DECISION-MAKING
PROCESS
Many managers must make important
decisions with incomplete information.
 There are six steps that managers should
consciously follow to make a good
decision.
1. The first step is to recognize the need for a
decision.
2. Some stimuli spark the realization that
there is a need to make a decision.

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3. The stimuli are as likely to result from the actions of managers
inside an organization as they are from changes in the external
environment.
4. Managers can be reactive or proactive in recognizing the need to
make a decision.
5. The important issue is that they must recognize this need and
respond in a timely and appropriate manner.

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TIPS FOR NEW MANAGERS: MANAGING
THE DECISION MAKING PROCESS
1. Recognize that it is impossible for you to make optimum decisions
and orient your actions to making the best decisions possible.
2. To make the best decision possible, learn to use intuition and
judgment to uncover acceptable alternative and to choose
between them.
3. Constantly monitor changes in organizational performance and in
the environmental forces to discover if there are any opportunities
or threats that need to be addressed.

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4. Create a set of clearly defined criteria to frame opportunities and
threats and apply these criteria consistently.
5. Encourage your subordinates to make problem solving a major part
of their jobs and to generate as many feasible alternatives as possible.
6. Be aware of the role people’s preferences and interests play in
generating alternative courses of action and learn how to manage
coalitions to promote effective decision making.
7. Learn from your successes and mistakes.

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COGNITIVE BIASES AND DECISION
MAKING.
1. Rules of thumb help decision makers make sense of complex,
uncertain, and ambiguous information.
2. Sometimes the use of heuristics can lead to systematic errors in
the way decision makers process information.
3. Systematic errors are errors that people make over and over and
that result in poor decision making.
4. Four sources of biases can adversely affect the way managers
make decisions.

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GROUP DECISION MAKING
Advantages:
a. When managers work as a team,
their choices of alternatives are less
likely to suffer from biases.
b. They are able to draw on the
group’s combined skills and
accumulated knowledge.
c. Group decision-making allows
managers to process more
information and correct each other’s
errors.

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Disadvantages:
a. Groups often take much longer
than individuals to make
decisions.
b. Getting two or more managers
to agree can be difficult because
managers’ preferences differ.
c. Group decision-making can be
undermined by biases.