Decision making is an integral part of a manager's job and responsibilities. It involves examining options and possibilities, comparing them, and choosing a course of action. Effective decision making requires managers to construct a clear understanding of the decision needed, compile requirements, collect information on alternatives, compare alternatives, consider potential issues, and commit to and implement a decision. There are various types of decisions managers must make, including organizational vs personal, basic vs routine, programmed vs non-programmed, individual vs group, and strategic vs tactical decisions. Barriers to good decision making include decisions that are hasty, narrow, scattered, fuzzy, rely too heavily on heuristics or hindsight bias, involve overconfidence, or make illusory correlations

3. DECISION MAKING

4. • DM is an integral part of every Managers job.
• It is his primary responsibility and identity.
• DM permeates every task of managers, exists
in every part of an organisation and associates
with every action.
• Latin word ‘decidere’ meaning – ‘Cutting away’
• It the process of examining your possibilities,
options, comparing them and choosing a course
of action.

5. It is the cognitive process, every DM process produces a
final choice . It can be an action or an opinion .
It begins when we need to do something but we do not
know what.
Therefore, DM is a reasoning process which can be
rational or irrational, and can be based on assumptions.
According to Hayens and Massie -
“A decision is a course of action which is consciously
chosen for achieving a desired result”

6. • Plan
• Organize
• Direct
• Control
Managers-
• Achieve
goals
• Objectives
In order to:
• Effectiveness
• Efficiency
Resulting in:

7.  Construct : clear picture of precisely what must be
decided.
 Compile : a list of requirements that must be met.
 Collect : information on alternatives that meet the
requirements
 Compare : alternatives that meet the requirements.
 Consider : the “what might go wrong’; factor with
each alternative.
 Commit : to a decision and follow through with it.

8. Characteristics/Nature of
Decision Making
1) Making Choices
2) Logical sequence
3) Involves rationality
4) A judgment
5) Narrowing choice
6) Iterative activity(recurring)
7) Action commitment
8) Purposive (means not ends)
9) Human and social process
10)Directed at solving problems

9. 1. Heart of Administration
2. Synonymous with managing
3. Universal mark of a manager
4. First managerial skill and responsibility
5. Basis of managerial functions
6. Core of planning
7. Building sound organizational structure
8. Provides direction
9. Basis of effective control
10. Path to success
11. DecisivenessTo face challenges
12. Means to problem solving

10. A. Organizational Decisions:
◦ Managers have to make decision in official capacity.
◦ These can be delegated to others
◦ Example: Introducing a new incentive system, transferring an
employee, reallocation or redeployment of employees etc.
Non-organizational(Personal) Decisions:
◦ Managers have to make decision in their individual capacity.
◦ These can not be delegated to others
◦ Example: Decision to quit the organization

11. B. Basic Decisions:
◦ Unique and one-time which involve long range commitments
and huge investments.
◦ These can be policy decisions made at higher levels
◦ Example: Decision regarding investing surplus funds
Routine Decisions:
◦ Managers have made decision which have minor effect on the
welfare of the concern.
◦ These are repetitive and require little thought.
◦ Example: Decision regarding allocation of shift duties

12. C. Programmed Decisions: routine, almost automatic
process.
◦ Managers have made decision many times before.
◦ There are rules or guidelines to follow.
◦ Example: Deciding to reorder office supplies.
Non-programmed Decisions: unusual situations that
have not been often addressed.
◦ No rules to follow since the decision is new.
◦ These decisions are made based on information, and a
manger’s intuition, and judgment.
◦ Example: Should the firm invest in a new technology?

13. D. Individual Decisions:
◦ Made by manager in capacity as a manager.
◦ Most of the decisions are taken by a single individual
◦ Example: Subordinates ACR
Group Decisions:
◦ As complexity increases major decision require exchange of
ideas
◦ Individuals participate as group in reaching a decision.
◦ Example: formation of committee to submit report on
malpractices in wastage disposal

14. E. Strategic Decisions:
◦ Characterized as novel, complex and open ended
◦ They involve establishing enterprise goals and selecting
strategies
◦ Fall within the purview of top management
◦ Example: Decision regarding rival’s new product
Tactical Decisions:
◦ Are less important and routine type.
◦ Situation is given and requirements are evident.
◦ Only problem is to find economical adaptation of known
resources
◦ Example: Decision regarding maintenance scheduling.

16. Barriers/Problems in Good DM
1. Hasty - Making quick decisions without having
much thought.
2. Narrow – D M 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.

17. 5. Heuristics - A heuristic is a sort of mental
shortcut or rule of thumb that we utilize
when making a judgment or decision.
For example, gamblers often judge the probability
that they will win their next game based on whether
or not they won the last game.

18. 6. Hindsight Bias – tendency to look back and easily spot all the
signs leading up to a particular outcome. ("I-knew-it-all-along")
For example, a gambler might mistakenly believe that they can
accurately predict the outcome of a game of cards.
7. Overconfidence- A tendency to overestimate our own
knowledge, skill, or judgment.
8. Illusory Correlation(stereotype) - When making decisions,
we sometimes see relationships that do not really exist.
For example, if you have a bad experience with a rude
waitress, you might mistakenly believe that all waitresses are
rude.