Key TopicsIntroductionThe Decision-making processDecision making stagesDecision-making modelsDecision StylesDecision ImplementationA discussion on Group Decisions
“No sensible decision can be made any longer withouttaking into account not only the world as it is, but the world as it will be. . .” -Isaac Asimov
What is Decision Making?Decision making is the cognitive process leading to the selectionof a course of action among alternatives.Every decision making process produces a final choice . It can bean action or an opinion .It begins when we need to do something but we do not knowwhat.Therefore, decision making is a reasoning process which can berational or irrational, and can be based on explicit assumptions ortacit assumptions.Examples: Shopping, deciding what to eat, What to wear, when tosleep, etc..
Decision-making Process1. Identifying a problem2. Identifying decision criteria3. Allocating weights to criteria4. Developing alternatives5. Analyzing alternatives6. Selecting an alternative7. Implementing the alternative8. Evaluation (of decision effectiveness)
Problem DefinitionProblem is a discrepancy (difference) between an existing and adesired state.Example:“ The manager has resigned, and we need another manager”Here the phrase “manager has resigned” reflects the current statewhile “need another manager” represents a desired state .Identifying Decision CriteriaThe word criteria, is defined as “ a standard by which somethingcan be judged ”. A decision criteria therefore, is the basis of adecision, which outlines the relevant and important factors for adecision. And implicitly, it also defines what is not important.
Developing AlternativesInvolves defining the possible alternatives (or choices) that wouldresolve the problem.In our case, the alternatives would be a list of candidates or jobapplicants.Analyzing AlternativesAlternatives are rated and analyzed on the basis of the criteriaThe rating can be based on a specified scale , say 1 – 5 etc.Rating may be subjective in nature and thus, may depend on thejudgment of the individual(s)
Selecting an alternativeInvolves choosing the best alternative, based on the above ratingand analysisGenerally implies selecting the alternative with the highest score.Implementing the AlternativePutting the decision into actionInvolves clear communication of the decision to all concerned andobtaining their commitment
EvaluationEvaluation forms an integral part of any processInvolves evaluation of the outcome based on the desired goal andcriteriaInvolves assessing the effectiveness and efficiency of the outcome(or the entire process)In case of any undesired results, each step of the process iscarefully reviewed to trace the root causes
Construct a clear picture of precisely what must bedecided.Compile a list of requirements that must be met.Collect information on alternatives that meet therequirements.Compare alternatives that meet the requirements.Consider the “what might go wrong” factor with eachalternative.Commit to a decision and follow through with it.
Problem Analysis vs Decision MakingIt is important to differentiate between problem analysis anddecision making. The concepts are completely separate from oneanother. Problem analysis must be done first, then the informationgathered in that process may be used towards decision making.Problem Analysis• Analyze performance, what should the results be against whatthey actually are• Problems are merely deviations from performance standards• Problem must be precisely identified and described• Problems are caused by some change from a distinctive feature
• Something can always be used to distinguish between what hasand hasnt been effected by a cause• Causes to problems can be deducted from relevant changes foundin analyzing the problem• Most likely cause to a problem is the one that exactly explains allthe factsDecision Making• Objectives must first be established• Objectives must be classified and placed in order of importance• Alternative actions must be developed
• The alternative must be evaluated against all the objectives• The alternative that is able to achieve all the objectives is the tentative decision• The tentative decision is evaluated for more possibleconsequences• The decisive actions are taken, and additional actions are takento prevent any adverse consequences from becoming problemsand starting both systems (problem analysis and decision making)all over again• There are steps that are generally followed that result in adecision model that can be used to determine an optimalproduction plan
Decision-Making StagesThere are four stages that should be involved in all group decisionmaking. These stages, or sometimes called phases, are importantfor the decision-making process to begin1. Orientation stage- This phase is where members meet for the first time and start to get to know each other.2. Conflict stage- Once group members become familiar with each other, disputes, little fights and arguments occur. Group members eventually work it out.3. Emergence stage- The group begins to clear up vague opinions by talking about them.4. Reinforcement stage- Members finally make a decision, while justifying themselves that it was the right decision.
The Decision making model Classify and define problem or opportunity Set objectives and criteria Generate creative and innovative alternative Analyze alternatives and select the most feasible Plan and implement the decision Control the decision
Decision-making ModelsModel :“ A simplified representation or description of a systemor complex entity ”Examples :1. Rational Model (Classical Model) • The decision maker attempts to use optimizing—selecting the best possible alternative.2. Bounded Rationality Model • The decision maker uses satisficing —selecting the first alternative that meets the minimal criteria for solving the problem.
Rational/Bounded RationalSo Rational and Bounded Rational Models are cognitivemodels that describe how managers make rationaldecisions
1. Define and diagnose the 2. Set goals problem7. Follow upand control External and 3. Search for internal Environ. alternative forces solutions6. Implement the solution selected 4. 5. Choose Compare among and alternative evaluate solutions solution
Decision-Making StylesReflexive Style Makes quick decisions without taking the time to get all the information that may be needed and without considering all the alternatives.Reflective Style Takes plenty of time to make decisions, gathering considerable information and analyzing several alternatives.Consistent Style Tends to make decisions without either rushing or wasting time.
Decision-Making StepsWhen in an organization and faced with a difficult decision, there areseveral steps one can take to ensure the best possible solutions willbe decided. These steps are put into seven effective ways to goabout this decision making process .The first step - Outline your goal and outcome. This will enabledecision makers to see exactly what they are trying to accomplishand keep them on a specific path.The second step - Gather data. This will help decision makers haveactual evidence to help them come up with a solution.The third step - Brainstorm to develop alternatives. Coming up withmore than one solution enables you to see which one can actuallywork.
The fourth step - List pros and cons of each alternative. With thelist of pros and cons, you can eliminate the solutions that havemore cons than pros, making your decision easier.The fifth step - Make the decision. Once you analyze eachsolution, you should pick the one that has many pros (or the prosthat are most significant), and is a solution that everyone canagree with.The sixth step - Immediately take action. Once the decision ispicked, you should implement it right away.The seventh step - Learn from, and reflect on the decisionmaking. This step allows you to see what you did right and wrongwhen coming up, and putting the decision to use.
Pareto analysisThis is the idea that 80% of tasks can be completed in 20% of thedisposable time. The remaining 20% of tasks will take up 80% of thetime. This principle is used to sort tasks into two parts.The 80-20-rule can also be applied to increase productivity: it isassumed that 80% of the productivity can be achieved by doing 20%of the tasks. Similarly, 80% of results can be attributed to 20% ofactivity. If productivity is the aim of time management, then thesetasks should be prioritized higher.Paretos Principle, the 80/20 Rule, should serve as a daily reminder tofocus 80 percent of your time and energy on the 20 percent of youwork that is really important. Dont just "work smart", work smart onthe right things
SWOT analysis (alternately SLOT analysis) is a strategic planningmethod used to evaluate theStrengths, Weaknesses/Limitations, Opportunities, and Threatsinvolved in a project or in a business venture.It is also a powerful strategic planning tool used to evaluate a projector in a business venture or in any other situation of an organization orindividual requiring a decision in pursuit of an objective.It involves specifying the objective of the business venture or projectand identifying the internal and external factors that are favorable andunfavorable to achieve that objective.1. Internal factors – The strengths and weaknesses internal to the organization.2. External factors – The opportunities and threats presented by the external environment to the organization.
SWOT Analysis – Strategic UseOrienting SWOTs to An Objective - If SWOT analysis does not startwith defining a desired end state or objective, it runs the risk ofbeing useless.If a clear objective has been identified, SWOT analysis can be usedto help in the pursuit of that objective. In this case, SWOTs are: Strengths Weaknesses Attributes of the Attributes of the organization that are helpful organization that are to achieving the objective. harmful to achieving the objective. Opportunities Threats External conditions that are External conditions that are helpful to achieving the harmful to achieving the objective. objective.
SWOT Analysis – Creative UseCreative Use of SWOTs – If the objective seems attainable, theSWOTs are used as inputs to the creative generation of possiblestrategies, by asking (usually in groups) and answering each of thefollowing four questions, many times: Strengths Weaknesses How can we use each How can we Stop Strength? each Weakness? Opportunities Threats How can we Exploit How can we Defend each Opportunity? against each Threat?
SWOT Analysis – Errors to Be Avoided• Conducting a SWOT analysis before defining and agreeing uponan objective (a desired end state). SWOTs should not exist in theabstract. They can exist only with reference to an objective.• Opportunities external to the company are often confused withstrengths internal to the company. They should be kept separate.• SWOTs are sometimes confused with possible strategies.SWOTs are descriptions of conditions, while possible strategiesdefine actions.
Plan, Implement the Decision, and ControlPlan Develop a plan of action and a schedule of implementation.Implement the Plan Communicate and delegate for direct action.Control Use checkpoints to determine whether the alternative is solving the problem. Avoid escalation of commitment to a bad alternative.
Implement and Monitor Your Solution or Course of ActionSometimes corrections need to be made A choice doesn’t mean that it is the only way to go Remember, you need to monitor and evaluate your solution throughout its progress to see how it’s working out Circumstances change, and a good decision today may not be the best for the futureSometimes a “self-destruct” deadline may be a good option It can help you to monitor what you’re doing and you can make a better decision once you begin nearing your deadline
Group Decision-makingThe factors requiring group decisions include:1. Involving sensitive issues2. High cost alternatives3. Involving very high risk factor4. Strategic impact
Group Decisions: Advantages1. Acceptance of group members2. Coordination is easier3. Communication is easier4. Existence of large alternatives5. More information can be processed6. Diversity of experience and perspectives
Group Decisions: Disadvantages1. Take longer time2. Group can be indecisive3. Groups can compromise4. Groups can be dominated5. Groups can “ play games ”6. Victim to Groupthink
Situational Factors for Group DecisionData collection Making Risk taking solution neededImportance of acceptance Better understandingImportance of solution Whole responsibilityComplex problem Feedback requiredDemocratic process Making Need for innovation and creativity
Improving Group Decision-Making BrainstormingNominal group techniquesElectronic meeting
“ Successful leaders have the courage to take action while others hesitate.” - John C. Maxwell
Barriers to Good Decision Making1. Hasty - Making quick decisions without having much thought.2. Narrow - Decision making is based on very limited information.3. Scattered - Our thoughts in making decisions are disconnected or disorganized.4. Fuzzy - Sometimes, the lack of clarity on important aspects of a decision causes us to overlook certain important considerations.