Human decision making process

1. HUMAN DECISION MAKING
PROCESSES
CHAPTER TWO
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2. CONT…
 Decision-making is the process of choosing among two or
more alternative courses of action for the purpose of
attaining one or more goals.
 Managerial decision-making is synonymous with the entire
management process.
 Consider, for instance, the critical managerial function of
planning, which involves a series of decisions such as what
should be done, when, where, why, how, and by whom.
Every phase in the planning process involves managerial
decision-making, and the collective accuracy, or the
optimality, of the decision made determines the value of the
outcome obtained.
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3. CONT…
Consider the important managerial function of planning.
 Planning involves a series of decisions: What should
be done? When? Where? Why? How? By whom?
Managers set goals, or plan; hence, planning implies
decision making. Other managerial functions, such as
organizing and controlling, also involve decision
making.
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4. Decision Making and Problem
Solving
 A problem occurs when a system does not meet its
established goals, does not yield the predicted results,
or does not work as planned. Problem solving may
also deal with identifying new opportunities.
 decision making and problem solving are
interchangeably.
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5. Decision-Making Disciplines
 Decision making is directly influenced by several major
disciplines, some of which are behavioral and some of
which are scientific in nature.
 Behavioral disciplines include anthropology, law,
philosophy, political science, psychology, social
psychology, and sociology.
 Scientific disciplines include computer science, decision
analysis, economics, engineering, the hard sciences (e.g.,
biology, chemistry, physics), management
science/operations research, mathematics, and statistics.
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6. Decision Style and Decision Makers
 Decision style is the manner by which decision makers
think and react to problems.
 This includes the way they perceive a problem, their
cognitive responses, and how values and beliefs vary
from individual to individual and from situation to
situation. As a result, people make decisions in
different ways. Although there is a general process of
decision making, it is far from linear.
 Different decision styles require different types of
support.
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7. DECISION MAKERS
 Decisions are often made by individuals, especially at
lower managerial levels and in small organizations.
 Most major decisions in medium-sized and large
organizations are made by groups. Obviously, there are
often conflicting objectives in a group decision-
making setting.
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8. PHASES OF THE DECISION-MAKING
PROCESS
 decision-making can be considered a step in the
problem-solving process.
Decision making process
 1. intelligence,
 2. design,
 3. choice,
 4. implementation.
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 Phase 1. Intelligence
 The intelligence phase in the decision-making
process involves scanning the environment,
either intermittently or continuously.
 It includes several activities aimed at identifying
problem situations or opportunities. It may also
include monitoring the results of the
implementation phase of a previously completed
decision-making process.
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11. CONT..
Phase 2. Design
 The design phase involves finding or developing and
analyzing possible courses of action. These include
understanding the problem and testing solutions for
feasibility.
 A model of the decision-making problem is
constructed, tested, and validated. Modeling involves
conceptualizing a problem and abstracting it to
quantitative or qualitative form.
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12. CONT..
 The process of modeling involves a combination of art
and science.
 As a science, there are many standard model classes
available, and, with practice, an analyst can determine
which one is applicable to a given situation.
 As an art, creativity and finesse are required when
determining what simplifying assumptions can work,
how to combine appropriate features of the model
classes, and how to integrate models to obtain valid
solutions.
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13. CONT…
Phase 3. Choice
 Choice is the critical act of decision-making.
 The choice phase is the one in which the actual decision
and the commitment to follow a certain course of action are
made.
 The boundary between the design and choice phases is
often unclear because certain activities can be performed
during both phases and because the decision-maker can
return frequently from choice activities to design activities,
such as by generating new alternatives while performing an
evaluation of existing ones.
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Phase 4. Implementation
 The implementation phase involves putting a
recommended solution to work, not necessarily
implementing a computer system.
 Many generic implementation issues, such as
resistance to change, degree of support of top
management, and user training, are important in
dealing with managerial decisions.
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15. Steps of Decision Making
Step 1: Identify the decision
 You realize that you need to make a decision.
 Try to clearly define the nature of the decision you
must make. This first step is very important.
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16. CONT…
Step 2: Gather relevant information
 Collect some pertinent information before you make
your decision.
 what information is needed, the best sources of
information, and how to get it.
 This step involves both internal and external “work.”
Some information is internal: you’ll seek it through a
process of self-assessment. Other information is
external: you’ll need it online, in books, from other
people, and from other sources.
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17. CONT…
Step 3: Identify the alternatives
 As you collect information, you will probably identify
several possible paths of action, or alternatives.
 You can also use your imagination and additional
information to construct new alternatives. In this step,
you will list all possible and desirable alternatives.
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18. CONT…
Step 4: Weigh the evidence
 Draw on your information and emotions to imagine
what it would be like if you carried out each of the
alternatives to the end.
 Evaluate whether the need identified in Step 1 would
be met or resolved through the use of each alternative.
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Step 5: Choose among alternatives
 Once you have weighed all the evidence, you are ready
to select the alternative that seems to be the best one
for you. You may even choose a combination of
alternatives. Your choice in Step 5 may very likely be
the same or similar to the alternative you placed at the
top of your list at the end of Step 4.
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Step 6: Take action
 You’re now ready to take some positive action by
beginning to implement the alternative you chose in
Step 5.
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21. CONT..
Step 7: Review your decision & its consequences
In this final step v , consider the results of your
decision and evaluate whether or not it has resolved
the need you identified in Step 1. If the decision has
not met the identified need, you may want to repeat
certain steps of the process to make a new decision.
For example, you might want to gather more detailed
or somewhat different information or explore
additional alternatives.
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22. Making
Command
 The Command method is when decisions are made
without involving others. This can also be called
authoritative and is, of course, the fastest option
because you aren’t delayed by other people offering
their opinions or discussing other solutions.
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23. CONT…
Consult
 The Consult method is when a person invites input
from others but ultimately one person makes the
decision. This option takes more time than Command
because other opinions are considered and alternatives
can be proposed, making it less risky.
 It is the most passive way to involve others and can be
used to make people feel like they were included in the
decision
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24. CONT…
Vote
 The Vote method is when options are discussed across
the group and then a vote is called, where the most
favorable option to the most people is chosen. This can
be called democratic as well because each person’s
opinion is included in the final decision.
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Consensus
 The Consensus method is when the group discusses
the options and recommendations until everyone
agrees to one course of action.
 This method should be used sparingly solely based on
the time implications of getting agreement across the
group. It is also vital that communication that the
decision has been made and agreed upon is blatantly
obvious to those involved.
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26. How to Choose Which Method of
Decision Making to Use?
Who cares?
 Determine who genuinely wants to be involved in the
decision along with those who will be affected. It’s not
worth it to involve people who won't be impacted by
the end decision.
Who knows?
 Identify who has the expertise you need to make the
best decision and encourage those people to weigh in.
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27. CONT…
Who must agree?
 Think of those whose cooperation you need to
influence in any decisions you might make.
 It’s better to involve these people early than to surprise
them later and suffer their resistance.
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How many people is it worth involving?
 Your goal should be to involve the fewest number of
people possible - while still ensuring a quality decision
and support from that group. Ask, “Do we have
enough people to make a good choice?
 Will others have to be involved to gain their
commitment?” Once you can answer those questions,
you’ve found your team. Think too, about when your
team may need to be temporarily augmented.
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