The document discusses decision making processes at various levels of organizations. It describes decision making as a conscious process aimed at choosing a course of action to achieve goals. Decisions can be made at the individual, group, or organizational level. Key aspects of decision making include intelligence gathering, design of alternatives, and choosing among options. Effective decision making balances rational analysis with intuition. While no single style is best, participative decision making is often effective. The document also discusses using utility analysis to evaluate the costs and benefits of human resources decisions.

1. UNDERSTANDING
THE
DECISION MAKING
PROCESS

2. THE PURPOSE OF DECISION
MAKING
• WITH DECISION MAKING, WE TRY TO
DIRECT HUMAN BEHAVIOR TOWARDS
A FUTURE GOAL.
• IF THERE WERE NO ALTERNATIVES,
THERE WOULD BE NO NEED FOR A
DECISION.

3. THE NATURE OF DECISION
MAKING
• DECISION MAKING IS A CONSCIOUS PROCESS
FOR MAKING CHOICES WITH AN INTENTION
OF MOVING TOWARDS A DESIRED COURSE OF
ACTION (MARCH, 1997).
• MINTZBERG DESCRIBED A THREE-SET ROLES
THAT A MANAGERS FILLS:
1. INTERPERSONAL
2. INFORMATIONAL
3. DECISIONAL

4. THE NATURE OF DECISION MAKING
• DECISION MAKING CAN BE ANALYZED AT
VARIOUS LEVELS:
• INDIVIDUAL
• GROUP
• ORGANIZATIONAL
• INVOLVES THE FOLLOWING ACTIVITIES:
• INTELLIGENCE ACTIVITY
• DESIGN ACTIVITY
• CHOICE ACTIVITY

5. DECISION MAKING LEVELS OF
ORGANIZATIONS
• EXECUTIVE LEVEL
• LONG-TERM DECISIONS (STRATEGIES)
• UNSTRUCTURED DECISIONS
• MANAGERIAL LEVEL
• DECISIONS COVERING WEEKS AND MONTHS
(TACTICS)
• SEMI-STRUCTURED DECISIONS
• OPERATIONAL LEVEL
• DAY-TO-DAY DECISIONS (OPERATIONS)
• STRUCTURED DECISIONS

6. RATIONAL VS INTUITION
• GETTING LOST IN DATA AND NEVER
DECIDING- PARALYSIS BY ANALYSIS
• RELY SOLELY ON INSTINCTS AND DECIDING
TOO SOON
THE SECRET OF EFFECTIVE DECISION-MAKING
LIE IN THE BALANCE BETWEEN RATIONAL
AND INTUITIVE THOUGHT.

7. MODELS OF BEHAVIORAL
DECISION MAKING
1. ECONOMIC RATIONALITY MODEL
2. SOCIAL RATIONALITY MODEL
3. BOUNDED RATIONALITY MODEL
4. JUDGEMENTAL HEURISTIC AND BIAS
MODEL

8. DECISION MAKING STYLES
Analytical
(Score B)
Conceptual
(Score C)
Directive
(Score A)
Behavioural
(Score D)
High
Low
ToleranceforAmbiguity
Task and technical
concerns
People and social
concerns
Value Orientations

9. DECISION MAKING STYLES
Directive style
•Efficient, pragmatic & systematic
in problem solving
•Focus on facts and quick
accomplishment
•Action oriented, & short run focus
Analytical style
•Analyse situations in detail &
evaluate more information &
alternatives
•May take a long time to reach
decision
•Respond well to new or uncertain
situations
Conceptual style
•Take a broad perspective in
problem solving & consider many
options
•Discuss to gather information &
then use intuition to decide
•Good at taking risks & generating
creative solutions
Behavioural style
•Work well with others & like opinion
sharing
•Receptive to suggestions,
supportive
•Avoid conflicts & prefer verbal
communication
•Difficulty in saying no & making
tough decision

10. WHICH STYLE IS BETTER?
• NO ONE STYLE IS APPROPRIATE FOR
ALL SITUATIONS
• NEED TO BE FLEXIBLE IN USING
VARYING STYLES IN RESPONSE TO
THE SITUATION
• IN MANY SITUATIONS, PARTICIPATIVE
DECISION MAKING IS RELATIVELY
BETTER

11. VALUE OF HR DECISION
MAKING
• WHAT DO HRM DECISIONS CONTRIBUTE TO ORGANIZATIONAL
OBJECTIVES?
• ARE THE ORGANIZATIONAL INVESTMENTS IN HRM PROGRAMS
(SUCH AS PAY FOR KNOWLEDGE, ENHANCED EMPLOYEE
BENEFITS, TRAINING, STAFFING, AND EMPLOYEE
INVOLVEMENT) JUSTIFIED BY THEIR RETURNS?
• SINCE LABOR COSTS CAN EXCEED FIFTY PERCENT OF TOTAL
OPERATING EXPENSES, ARE THE HUMAN RESOURCES BEING
MANAGED WITH THE SAME ACCOUNTABILITY, RATIONALITY
AND CARE AS THE PLANT, EQUIPMENT AND MARKETING
RESOURCES?
• IS SUCH MANAGEMENT EVEN POSSIBLE WITH HUMAN
RESOURCES, OR ARE THE "PEOPLE ISSUES" FACING
ORGANIZATIONS SIMPLY TOO ILL-DEFINED AND
UNPREDICTABLE TO BE MANAGED SYSTEMATICALLY?

12. HR EXAMPLES
• MILLION-DOLLAR HRM PROGRAMS ARE
ROUTINELY MADE WITH LITTLE EXPLICIT
CONSIDERATION OF THEIR EFFECTS ON
PRODUCT QUALITY OR COST.
• FOR EXAMPLE, THE DECISION TO TRAIN
EMPLOYEES CAN EASILY INCUR COSTS OF
THOUSANDS OF RUPEES PER TRAINEE
(CONSIDERING COURSE DEVELOPMENT,
INSTRUCTOR TIME, TRAVEL AND LODGING), BUT
TRAINING RESULTS OFTEN GO UNMEASURED.

13. UTILITY (COST/BENEFIT) ANALYSIS
(UA)
• UA IS A DECISION SUPPORT FRAMEWORK THAT
EXPLICITLY CONSIDERS THE COSTS AND BENEFITS OF
HR DECISIONS.
• UA PROVIDES FORMULA FOR COMPUTING THE VALUE
OF HR PROGRAMS.
• UA REPRESENTS ONE VALUABLE DECISION SUPPORT
TOOL FOR HR DECISION MAKERS.
• ‘UTILITY’ SIMPLY MEANS USEFULNESS, AND THE AIM
OF IS TO PREDICT, EXPLAIN AND IMPROVE THE
USEFULNESS OF DIFFERENT HR DECISIONS.

14. WHAT MAKES HR PROGRAMS
USEFUL?
• NO DECISION SYSTEM ENCOMPASSES ALL OF THESE
EFFECTS, BUT UTILITY ANALYSIS FOCUSES ON THREE
IMPORTANT FACTORS: QUANTITY, QUALITY AND
COST.
• HR PROGRAMS HAVE VALUE WHEN THEY AFFECT
MANY (QUANTITY) EMPLOYEE WORK BEHAVIORS
OVER TIME, WHEN THEY PRODUCE LARGE
IMPROVEMENTS (OR AVOID LARGE REDUCTIONS) IN
THE QUALITY (OR VALUE) OF THOSE WORK
BEHAVIORS, AND WHEN THEY MINIMIZE THE COSTS
REQUIRED TO DEVELOP, IMPLEMENT AND MAINTAIN
THE PROGRAMS.