Decisions solutions new [autosaved]

Topic 8 Decision Making 147
8.1 What is the nature of Decision Making? 148
8.2 Types of Decisions 149
8.3 Decision Making is a Recursive Process 150
8.4 Factors Influencing Decision-making Processes 150
Thinking Styles
8.6 Decision Making in Everyday Life 155
8.7 Evidence-driven Decision-making Cycle 156
8.11 Risk 163
Presentation Contents

THERE IS NOTHING REAL IN MYSELF
JUST YOURSELF.
I'M A SECRET HOLDER
NO FEELING OF HEAVY BURDEN
I REMAIN FAITHFUL
I TAKE CARE OF YOUR TRUST
NO ONE CAN BREAK A PROMISE.
THE PROMISE IS BINDED NEATLY
NO FORMULA CAN LOOSE IT
BACK.
Shoot the nails in the nails
Nails come from the other side
Look for me in me
I hid in the light.
Sago fish spikes
Eaten, chewed, chewed
Looking for me mere futile effort
REVERT,
to the teachings of the Quran and Sunnah
POETRY THROUGHOUT THE AGES
FromHeartto
Heart
GENUINE PANTUN

TIADA NYATA PADA DIRIKU
HANYA DIRIMU.
AKU PENANGGONG RAHSIA
TIADA RASA BERAT DIPIKUL
AKU TETAP SETIA MENJUNJUNG
AMANAHMU KU JAGA
TIADA MUNGKIN KUMUNGKIR JANJI.
JANJI DIIKAT KUSIMPUL KEMAS
TIADA FORMULA MELONGGARKANYA
KEMBALI.
MADAH SEPANJANG
ZAMAN
Pucuk paku dalam paku
Paku datang dari seberang
Carilah aku di dalam aku
Aku berselindung di dalam terang.
Pucuk paku ulam sagu
Dimakan, dikunyah, dimamah-mamah
Mencari aku tidak tercari aku
Kembalilah,
kepada ajaran Al-Quran dan Sunnah
PANTUN ILMU HAKIKAT
DariHatiKeHati

Model Preskriptif (Penetapan)
(Mencadangkan bagaimana keputusan
sepatutnya dibuat)
MODEL PERLAKUAN
Model Deskriptif (Pernyataan)
(Mencadangkan bagaimana keputusan itu
sebenarnya dibuat)
Kedudukan Asas
Membuat keputusan adalah rasional,
logik dan sistematik
 objektif yang dipersetujui dan
senarai tindakan alternatif
 Pembuat keputusan bekerja
hanya untuk kepentingan
organiasi
 Dilema etika tidak timbul
 maklumat yang tepat yang
lengkap boleh didapati
Mengiringi Andaian
Mengiringi Andaian
Keputusan yang rasional adalah ber-
dasarkan kpd had kemampuan manusia
Kedudukan Asas
MODEL RATIONAL-EKONOMI

PERLAKUAN
Model Deskriptif
(Pernyataan)
(Mencadangkan
bagaimana keputusan itu
sebenarnya dibuat)
Membuat keputusan adalah
rasional, logik dan sistematik
Keputusan yang rasional
adalah sukar dicapai
berdasarkan kepada had
kemampuan manusia
Kedudukan Asas Kedudukan Asas
Preskriptif (Penetapan)
(Mencadangkan bagaimana
keputusan sepatutnya
dibuat)
RASIONAL-EKONOMI

 Maklumat yang tepat yang
lengkap boleh didapati
Mengiringi Andaian
Mengiringi Andaian
MODEL RATIONAL-EKONOMI MODELPERLAKUAN
objektif yang dipersetujui
dan senarai tindakan alternatif
 Pembuat keputusan bekerja
hanya untuk kepentingan
organisasi
 Dilema etika tidak timbul
dalam proses membuat
keputusan
 Rasional yang terbatas
menjejaskan proses membuat
keputusan
Gerak hati yang berasaskan
pengalaman akan menjejaskan
proses membuat keputusan
 Pembuat keputusan akan
menerima keputusan sekadar
yang memuaskan
 Peningkatan komitmen
boleh berlaku

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HOW TO DECIDE IN LIFE?

Decisionmaking is a recursive process, in which case
decisions aremade byweighing the pros andcons of
alternativedecisions.
It isthe process of "moving backand forth between the
choiceof criteria(thecharacteristicswe want our choices to
meet) andthe identificationof alternatives(the possibilities
we can choose from among).

Decision Making
www.humanikaconsulting.com

adorable
THINKING AND
DECISION MAKING

WHAT’S
YOUR
DECISION?
THINK IT’S
SHOULD I
INCREASE
MORE WEIGHT
TO TONE THE
FINE MUSCLES

Give me the
second chance
how to be a good
decision maker.

HAT!
BOO, BOO, BOO
Physically I am well, Psychologically I am not.
If there is no
risk of failure
there would be
no Success

With Feelings
Without Feelings
CRITICAL
THINKING
CREATIVE
&

• Decision making is
the act of choosing
one alternative from
among a set of
alternatives.
• We have to first decide that a
decision has to be made and then
secondly identify a set of feasible
alternatives before we select one.

The Nature of
Decision Making
Making effective decisions, as well as recognizing
when a bad decision has been made and quickly
responding to mistakes, is a key ingredient in
organizational effectiveness.
Some experts believe that decision making is the
most basic and fundamental of all managerial
activities.
Decision making is most closely linked with the
Planning function.
However, it is also part of Organizing, Leading and
Controlling.

A successful manager doesn't just attack symptoms;
he works to uncover the factors that cause these
symptoms.

Topic 8 Decision Making 147
8.1 What is Decision Making? 148
8.2 Nature and Types of Decisions 149
8.3 Decision Making is a Recursive Process 150
8.4 Factors Influencing Decision-making Processes 150
8.6 Decision Making in Everyday Life 155
8.7 Evidence-driven Decision-making Cycle 156
8.11 Risk 163
Presentation Contents

The decision‐making process involves the
following steps:
1.Define the problem.
2.Identify limiting factors.
3.Develop potential alternatives.
4.Analyze the alternatives.
5.Select the best alternative.
6.Implement the decision.
7.Establish a control and evaluation system.
DECISION‐MAKING PROCESS

CAN YOU MAKE
DECISION
IN A FLASH

Say there are two railroad tracks. One track is
closed for use, another is in use. Five or six
children are playing on the open track. One child is
playing on the closed track.
A train is coming from away. The train blows the
horn, but it’s not working. The train is too close
now and the only option the driver has is to switch
the tracks.
Whether he should continue on the track he is on
and hit five kids or whether he should switch
temporarily to the closed track and hit the only kid
there?
A Thinking Exercise

One railway track is
obsolete or not in use
and the other one is
being used as normal
track..
The story of “Kids on
The Train Tracks”
Problem And Design
of Social Systems

Five or six children are
playing on the open track.
One child is playing on the
closed track.
A train is coming from
away. The train blows the
horn, but it’s not working.
The story of “Kids on The Train Tracks” Problem
And Design of Social Systems
Should I pull the lever or not.
YES OR NO. What will happen
if I pull the lever? Should I
shout at the kids

Should I pull the lever
or not. yes or no. what
will happen if I pull the
lever. Should I shout at
the kids?
The train is too close
now and the only
option the driver has
is to switch the tracks
The story of “Kids on The Train Tracks” Problem
And Design of Social Systems

Five or six children are
playing on the open track.
One child is playing on the
closed track.
Should I pull the lever
or not.YES OR NO.
what will happen if I
pull the lever? Should
I shout at the kids.
The story of “Kids on The
Train Tracks” Problem And
Design of Social Systems
A train is coming from a
way. The train blows the
horn, but it’s not working.

As in English Literature series shakespere
'HAMLET' - as the saying says 'to be or not to
be' in decision making involves psychological
theories to make better assumptions. The
person involved in making decision carrying
within himself list of psychological sickness
as well as psychological mental trauma.
Dear Sir,

In my opinion I think of little harm done, THE BEST
PRIORITY, I consider is that let the train passed on the right
track, even though it may harm few kids while saving the
train and its passengers.
Action Risk Reward
Take
open
track
Kill more kids
for sure
100% safety of train
passengers, 100%
guarantee that anyone
who has followed
instructions is safe.
Take
closed
track
Risk train
passengers,
risk future
confusion
Kill less number of kids
in short term. Kill one.
Here is a risk reward matrix that explains the decision.

My hunch is that, MOST
PROBABLY, these local kids
and their families for de-
cades have lived and played
there with knowledge of the
passing train. So why so
much worry about them.
My intuitive mind tells me
that while the train nearing
the kids, at least some kids
are aware of the approa-
ching train while the other
kids may heed the warning
of the sound of the train.

Moreover, what if the
accident really happens
and that all the
communities involved
will then be aware of their
adamant parents and
kids to accept the fate
and learn their bitter
lessons for decades. And
that local authorities
should be well aware of
that matter.

What if the
accident
really
happens?
All the
commu-
nities
involved
will then
be aware
of their
adamant
parents
and kids

All of them
have to accept
the fate and
learn their
bitter lessons.

Say there are two railroad tracks. One track is
closed for use, another is in use. Five or six
children are playing on the open track. One child is
playing on the closed track.
A train is coming from away. The train blows the
horn, but it’s not working. The train is too close
now and the only option the driver has is to switch
the tracks. Whether he should continue on the track
he is on and hit five kids or whether he should
switch temporarily to the closed track and hit the
only kid there?
A Thinking Exercise.

The quick reflex
answer, a response
grounded in humanity
for most people, is to
switch the tracks and
hit one kid instead of
five. Why not? The less
casualties, the better.
Right

But……..the train and its
passengers will share the same
catastrophe

A THINKING
EXERCISE. Say
there are two
railroad tracks.
One track is
closed for use,
another is in
use. Five or six
children are
playing on the
open track. One
child is playing
on the closed
track.
A train is coming
from away. The
train blows the
horn, but it’s not
working. The train
is too close now
and the only option
the driver has is to
switch the tracks.
Whether he should
continue on the
track he is on and
hit five kids or
whether he should
switch temporarily
to the closed track
and hit the only kid
there?
The story of “Kids
on The Train
Tracks” Problem
And Design of
Social Systems

The quick reflex answer,
a response grounded in
humanity for most
people, is to switch the
tracks and hit one kid
instead of five. Why not?
The less casualties, the
better. Right
TO PULL THE LEVER
OR NOT. YES OR NO.
WHAT WILL HAPPEN IF
I PULL THE LEVER.
SHOULD I SHOUT AT
THE KIDS
The story of “Kids on The Train Tracks”
Problem And Design of Social Systems

Models of Decision Making
•The Rational Model
•Simon’s Normative Model
Dynamics of Decision Making
•Contingency Model of Decision Making
•Improving Decision Making
•General Decision-Making Styles
•Escalation of Commitment
•Creativity

The Lesson from The Frog and Boiling
Water

What does Paradigm shift
mean?
Definition Of Paradigm Shift. :
an important change that happens when the usual
way ofthinking about or doing something is
replaced bya newand differentway This discovery
willbringabout a paradigm shift inour understanding
of evolution.

PARADIGM SHIFTS
don’t just happen
overnight. They evolve
and grow gradually,
often unseen by many.
When they have the
right maturity, they will
come out in the open,
having developed the
correct narrative to
spread across the
world.

There is a fable of a
frog sitting in a pot of
water slowly increasing
in temperature. The
frog does not realize
this until it is too late
and he is killed in the
boiling water. This is
where some industries
are today. The next
paradigm shift has
been sneaking upon
them.

https://www.bing.com/videos/search?q=Boiled+Frog&ru=%2fvideos%2fsearch%3fq%3dBoiled%2
rog%26FORM%3dVDMHRS&view=detail&mid=EC8A1E4A59F78E10ACD2EC8A1E4A59F78E10ACD
rvsmid=04BCC2FF5B358F5C36CD04BCC2FF5B358F5C36CD&FORM=VDQVAP

inconceivable
None of it
matters

We solve the problem by
drinking the half-full and
the half-empty glass of
water

Making Decision
Models of Decision Making
•The Rational Model
•Simon’s Normative Model
Dynamics of Decision Making
•Contingency Model of Decision Making
•Improving Decision Making
•General Decision-Making Styles
•Escalation of Commitment
•Creativity

….is to assess how the natureof the group, leader, and situation
determinethe degree to whichthe group is to be included in
thedecision-makingprocess.
This is accomplished by a flowchart
style decisionmakingprocedure thatarrives ata style of decision-
making
The Central Focus Of The Vroom-
yetton-jago Decision Making Model of
Leadership

9-2
•Consists of a structured four-step sequence
* identifying the problem
* generating alternative solutions
* selecting a solution
* implementing and evaluating
the solution
The Rational Model of Decision
Making

•Based on the notion of bounded
rationality, i.e. decision makers face
a variety of constraints
•Decision making is characterized
by
* limited information
processing
* use of judgmental heuristics
(rules, shortcuts)
* satisficing
Simon’s Normative Model of
Decision Making

Availability Heuristic: A decision
maker’s tendency to base decisions
on information that is readily available
in memory.
Representativeness Heuristic:
The tendency to assess the likelihood
of an event occurring based on one’s
impressions about similar
occurrences.
Judgmental Heuristics

Satisficing: Choosing a
solution that meets a
minimum standard of
acceptance
Judgmental Heuristics (cont)

Individual Decision Making
 Choose Alt.
 Implement Alt.
 Doa / Pray
 Evaluate
 Gratify

 Looking back  Think it over
 Firm to one
decision

Decision Making
Process
 Define Problem
 Analyze Problem.
 Develop Alt.
 Weighing
 Choose Alt.
 Implement Alt.
 Evaluate

Decision
Making
Process
Group Decision Making

Group Decision Making
 Advantages and Disadvantages of
Group-Aided Decision Making
 Participative Management
 When to Have Groups Participate in
Decision Making: The
Vroom/Yetton/Jago Model
 Group Problem-Solving Techniques
(continued)

Types of Decisions
• Programmed decision is
one that is fairly structured or
recurs with some frequency
(or both).
• Non-programmed decision
is one that is unstructured and
occurs much less often than a
programmed decision.

Programmed Decisions. .
Many decisions regarding
basic operating systems
and procedures and
organizational
standard
transactions
category.
McDonald’s
fall into this
employees are
Mac
according
trained to make the Big
to specific
procedures.
Starbucks, and many other
organizations, use programmed
decisions to purchase new
cups
supplies [coffee beans,
and napkins].

Nonprogrammed Decisions. ..
Most of the decisions made by
top managers involving strategy
and organization design are
nonprogrammed.
Decisions about mergers, acquisitions
and takeovers, new facilities, new
products, labor contracts and legal issues
are nonprogrammed decisions.
Managers faced with
nonprogrammed decisions must
treat each one as unique,
investing great amounts of time,
energy and resources into
exploring the situation from all
views.
Intuition and experience are
major factors in these decisions.

Decision-Making Conditions
• Decision
Certainty
Making Under
• Decision
Risk
Making Under
• Decision Making Under
Uncertainty

Decision Making Under Certainty
 A State Of Certainty exists when a decision
maker knows, with reasonable certainty, what
the alternatives are and what conditions are
associated with each alternative.
 Very few organizational decisions, however, are
made under these conditions.
 The complex and turbulent environment in
which businesses exist rarely allows for such
decisions.

Decision Making Under Risk
 A state of risk exists when a
decision maker makes decisions
under a condition in which the
availability of each alternative and
its potential payoffs and costs are
all associated with probability
estimate.
 Decisions such as these are based
on past experiences, relevant
information, the advice of others
and one’s own judgment.

Decision is ‘calculated’
on the basis of which
alternative has the highest
probability of working
effectively. [union nego-
tiations, Porsche’s SUV
focus vs high-performance
sports cars]

Decision Making Under Uncertainty
A state of uncertainty exists when a decision
maker does not know all of the alternatives, the
risks associated with each, or the
consequences each alternative is likely to have.
Most of the major decision making in today’s
organizations is done under these conditions.
To make effective decisions under these
conditions, managers must secure as much
relevant information as possible and approach
the situation from a logical and rational view.
Intuition, judgment and experience always play
major roles in the decision- making process
under these conditions.

A View of Decision-Making Conditions
Level of ambiguity and chances of making a bad decision
Lower Moderate Higher

Improving Decision Making Through
Effective Knowledge Management
 Systems and practices that increase
the sharing of knowledge and information
 Types of knowledge
Implicit knowledge – intuition,
experience, natural abilities
Explicit knowledge
 Explicit knowledge requires access to
large amounts of information; implicit
knowledge is obtained through
observation, mentoring, collaboration, etc.

General Decision Making Styles
 Based on how one perceives and
comprehends stimuli and chooses to
respond
 Value orientation – task and technical
concerns or people and social concerns
 Tolerance for ambiguity – need of
structure or control

Decision-Making Process
• Decision-Making Process includes:
• recognizing and
defining the nature of a
decision situation
• identifying alternatives
• choosing the ‘best’
effective] alternative and
• putting it into practice.

Decision-Making Process. .
.(continued)
.
Sometimes effective decisions must be
made to:
•Optimize some set of factors such as
profits, sales, employee welfare and market
share or
•Minimize loss, expenses or employee
turnover or Select best method for going out
business,laying off a temployees, or
terminating strategic alliance

Decision-Making
Process. . .(continued)
Managers make both
Decisions about problem
(undesirable situations) and
Opportunitie(desirable situations).
Learning that the company has earned higher-
than-projected profits.
It may take a long time before a manager can
know for sure if the right decision was made.

Evaluating Alternatives in the
Decision-Making Process

The step by step method for taking
decisions
A decision maker should follow these
steps before taking decisions
Decision Making Process

Multi-criteria decision-making in general
follows six steps including,
(1) problem formulation,
(2) identify the requirements,
(3) set goals, (S.M.A.R.T.)
(4) identify various alternatives,
(5) develop criteria, and
(6) identify and apply decision-
making technique
(Sabaei, Erkoyuncu, & Roy, 2015)

Define the Problem
Gather facts and develop alternatives
Evaluate Alternatives
Select the best alternative.
Implement the chosen Alternative
Follow up and evaluate the chosen
alternative.
The Decision Making Process

Identify The Problem
Problem :
 A discrepancy / diffrence between an
existing and desired state of affairs
Characteristic
 There is a pressure to solve the problem.
The manager must have the authority,
information, or resources needed to
solve the problem.

 Manager becomes aware of it.

 Decision criteria are factors that are
important ( relevant) to resolving the
problem.
Costs that will be incurred (investment
required).
 Risks likely to be encountered ( chance of
failure).
Outcomes that are desired ( growth of the
firm).
Identify The Decision Criteria

Decision criteria are not of equal
importance:
Assigning a weight to each item.
 Places the items in the correct
priority order of their importance in
the decision making process.
Allocating Weights to the Criteria

The rating should range from 1= less importance and 5= high importance. Then,
add these rates under each criterion in the table. The figure below shows that the
competency got 3, cost= 4, viability=5, desirability= 4, and alignment=2.

In this example, we will name the ideas (Idea 1,
2,3…etc.), and set the evaluation criteria to the
following:
•Competency refers to how the new product
competes in the market
•Cost refers to the cost required to adopt the
new idea
•Viability determines if the idea is applicable in
real life
•Desirability refers to how the consumer will
accept and interact with the new idea
•Alignment refers to how the idea aligns with
the company production strategy

Calculate the weighted rate for each option (idea)

Calculate the weighted rate for each option (idea)
Idea A weight = criteria rank X idea score

Promote Self-Identity
Resilient Spirit
Increase Work
Efficiency
Maintaining Focus
Work As A Team
Job Satisfaction
TOTAL
Criteria FOR PERSONNEL / WORKER
LABELLERS SENDERS
PICKERS
36 40 42
EXAMPLE :

A problem can be solved by
different alternative solutions
Develop alternative solutions
Think on all the alternative possible
solutions

What criteria can be used for judging the appropriateness of
alternatives?
Criteria are given below;
•Cost: Cost is a factor that plays an important part. Keep into
consideration thisparameter to run a smooth case study.
•Authenticity: Make sure that the whole alternative you are selecting is
credible and authentic or not. This will prevent the onset of future
problems.
•Balance and dependability: Will alternative work in unfortunate
circumstances? Search for this answer while choosing alternatives.

•Riskiness:Never use an alternativethatinvolves highrisk. A high
risked alternative can destroy the whole case study.
•Safeguard: Try to go for a conclusion thatwill work even if some
of its components fail.
•Flexibilityand resilience:If the alternative is good enoughto
accomplish more thanone goal, go for it.
Criteria are givenbelow……contd….

•Durability:Make sure thatthe alternative you are selectingwill
succeed in multiplesituations.
•Merit: Prefer an alternativethatticks allthe boxes. Don’t assume
anything.It’ll ruin your whole work.
•Compatibility:Screen an alternativethatis easy by following
norms and procedures.
•Communicability: An alternative that is easy to understand will be
preferred in the case study. This is acharacteristic that is highly
recommendable.
Criteria are given below……contd….

Evaluate And Choose Among
Alternative Solutions
Feasibility
Acceptability
Costs
Ethics
Quantitative or qualitative
approaches
Forecast the result

Choosing the best alternative
 The alternative with the highest total
weight is chosen.
 The best alternative is the one that
produces the most advantages and the
fewest serious disadvantages.
 Sometimes, the optimal solution is a
combination of several alternatives.
Selecting The Alternative

Implement And Monitor The Chosen
Solution
 Reveals its effectiveness and
significance in achieving the desired
goals
 Depends on careful planning and
sensitivity
 To ensure that the alternative put into
action is moving towards the objectives
 Confirms that the organization goals
have been achieved.

Decision Making Process
 Always continuous & dynamics
 It is not only a process and also a
practice
 A good decision maker will be the good
manager
 Be a best decision maker.., Be a best
manager

1
2
3
4
5
6
7
8
• Allocating Weights to the Criteria
• Define the Problem,objectives & goals
• Identify The Decision Criteria
• Gather facts and develop alternatives
• Evaluate Alternatives
• Select the best alternative
• Implementing the Alternative
• Evaluate the decision’s effectiveness

Analytical Conceptual
Directive Behavioral
Tasks and Technical
Concerns
People and Social
Concerns
Value Orientation
Low
High
Decision Making Styles

Hands on
Exercise
• Which of the four styles best represents
your decision-making style? Which is least
reflective of your style?
• How do your scores compare with the
following norms: directive (75), analytical
(90), conceptual (80), and behavioral
(55)?
• What are the advantages and dis-
advantages of your decision-making style?
What is Your Decision Making Style?

Growth / Escalation of
Commitment
 Tendency to stick to a course of action
even when it is associated with and
unlikely to reverse a bad situation. Why?
Psychological and social
Bias facts to support a decision
“Recover losses” more attractive
than achieve gains
Ego

Organizational inertia
Characteristics of project – long-
term returns
Contextual determinants – outside
organization
Growth / Escalation of
Commitment

9-9
1. Set minimum targets for performance, and have
decision makers compare their performance with
these targets.
2. Have different individuals make the initial and
subsequent decisions about a project.
3. Encourage decision makers to become less ego-
involved with a project.
4. Provide more frequent feedback about
project completion and costs.
5. Reduce the risk of penalties of failure.
6. Make decision makers aware of the
costs of persistence.
Skills And Best Practices: Recommendations
To Reduce Increase Of Commitment

9-10
1. Preparation: Reflects the notion that creativity starts from
a base of knowledge.
2. Concentration: Where an individual concentrates on the
problem at hand.
3. Incubation: Done unconsciously. During this stage, people
engage in daily activities while their minds simultaneously
consider over information and make remote associations.
4. Illumination: Remote associations from the incubation
stage are ultimately generated.
5. Verification: Entails going through the entire process
to verify, modify, or try out the new idea.
Stages Underlying the Creative
Process

Problem of Late
Delivery Of Products

Individual has a
tendency to
think and
question before
performing.
Individual decisions
are more focused
and rational com-
pared to group.

Advantages of Individual Decision
Making
1. Individuals generally make prompt decisions
– Group is dominated by various people,
making decision-making very time
consuming.
– Assembling group members consumes lot of
time.
2. Individuals do not escape responsibilities
– They are accountable for their acts and
performance.
– In a group, it is not easy to hold any one
person accountable for a wrong decision.
3. Individual decisions are more focused and

DISDVANTAGES OF INDIVIDUAL
DECISION MAKING
 Groups are more potential of collecting
information compared to an individual
while making decisions.
 Groups have many members, many views
and many approaches and hence better
decision making.
 Groups discover hidden talent and core
competency of employees of an
organization.
 Groups will take into account interests of
all members, unlike individuals.

Group Decision-making
 Data suggests that innovative groups
possessed high levels of both minority
disagreement and participation in decision making
 Note four requirements of effective decision
making in a group:
 Focus on process
 Understand requirements for an effective choice
 Assess positive qualities of alternative solutions
 Assess negative qualities of alternative solutions
 Suggests openness, acceptance of
disagreement?

9-11
Table 9-2
Advantages Disadvantages
1. Greater pool of knowledge 1. Social pressure
2. Different perspectives 2. Minority domination
3. Greater comprehension 3. Logrolling
4. Increased acceptance 4. Goal displacement
5. Training ground 5. “Groupthink”
Advantages and Disadvantages of
Group-Aided Decision Making

Group Problem Solving Techniques
 Definition of consensus – . . .
reached when all members can say
they either agree . . . Or have had
their “day in court” and were unable to
convince the others of their viewpoint.
In the final analysis, everyone agrees
to support the outcome

Group Achieving Consensus Decision
In the final analysis, everyone agrees to support the
outcome

Group Problem Solving Techniques…..contd.
 Other approaches to a group decision
Unanimity
A minority or one decides

More Formal Group
Problem Solving Techniques
 Brainstorming - disciplined process
Silent idea (optional)
Ideas/opinions solicited / be sought and
written on a board, disallowing
criticisms, allowing piggy-backing on
ideas, clarification
 Delphi technique is another, more formal form
of brainstorming. Involves several rounds of
questionnaire, feedback, etc. Useful in cases
where participants are not in the same place.

More Formal Group Problem
Solving Techniques
 Nominal Group Technique – used to
narrow down options through voting
 Computer-aided Decision Making
Uses computers to manage brainstorming
or delphi questioning

Behavioral Aspects of Decision Making
• Sometimes decision making must
reflect subjective considerations
(tastes, etc.)
• Other behavioral aspects
include: political forces,
intuition, escalation of
commitment, risk
propensity / tendency
and ethics.

Bounded rationality
suggests that decision
makers are limited by their
values and unconscious
reflexes, skills and habits.
[American vs foreign
automakers]

Behavioral
Aspects. . .
(continued)
The Administrative Model
of Decision Making
Herbert A Simon, a Nobel Prize
winner in Economics, developed
the model to describe how decisions
are often made rather than to prescribe
how they should be made.
Argues that decision makers have
incomplete and imperfect infor -mation,
are constrained by ‘bounded
rationality’ and tend to ‘satisfice’
when making decisions.

Behavioral
Aspects
Satisficing is the tendency to
search for alternatives only
until one is found that meets
some minimum standard of
sufficiency.
Rather than conducting an
exhaustive search for the best
possible alternative, decision
makers tend to search only
until they identify an
alternative that meets some
minimum standard of
sufficiency.

The Administrative Model of
Decision Making
When faced with a
decision situation
managers
actually…
Use incomplete and
imperfect Information.
Are constrained by
bounded rationality.
Tend to satisfice…
...and end up
with a decision
that may or
may not serve
the interests of
the
organization.

The Classical Model
attempts to explain how
managers can at least
attempt to be more rational
and logical in their
approach to decisions.
The Administrative Model
can be used by managers
to develop a better under-
standing of their inherent
biases and limitations.

Behavioral Aspects.
. . (continued)
Bounded rationality
suggests that decision
makers are limited by
their values and
unconscious reflexes,
skills and habits.

Behavioral Forces Influencing Decisions
Political Forces in Decision Making
Coalition -.
Which is the best definition of a coalition?
-One major element of politics, coalitions, is especially
relevant to decision making. A coalition isan informal
allianceof individuals or groups formed to achieve a
common goal. _____ are decision-makinggroups or
teams in which members openly discuss, argue about,
and agree on the best alternative.
Impact of a
coalition may be
positive or
negative.

 Intuition – is an innate belief about
something, without conscious
consideration.
 Deciding to do something because it ‘feels
right’ or one has a ‘hunch’.
 Feeling is based on years of experience
and practice in making decisions in
similar situations; may help managers
make occasional decisions without going
through an a-to-z process.

Your intuition
is
your best
friend

Growth / Increase /
Escalation of
Commitment – occurs
when a decision maker
stays with a decision even
when it appears to be wrong.
[Pan Am holdings]
 Decision makers must guard
against sticking too long with
an incorrect decision.
 However, managers should
not ‘bail out’ of a seemingly
incorrect decision too soon.

Risk Propensity –
the extent to which a
decision maker is
willing to gamble when
making a decision.
Organizational culture
is a prime ingredient
in encouraging
different levels of risk.

 Ethics
 Managerial ethics involves
a wide variety of decisions:
 Relationships of the firm to its
employee (closing a department
to save money).
 Relationship of employees
to the firm
Relationships of the firm to
other economic agents

 Questions and Answers
 FAQ
If time permits . . .

Decision Making and
Problem
Solving

What is Decision Making?
Cognitive
Process
Opinion
Choosing
An
Alternativ
e
Consider
Something
Judgment

Decision
Making
An act of making up your mind
about something
A position or opinion or judgment
reached after consideration.

Process of Decision Making
Planning Directing
Leading Controlling Organizing
DECISION MAKING

Strategic Decision Making
Process

The Elements of Decision
Making
• The problem context (Who is affected by
the problem)

Making
• Problem finding and agenda setting

Making
• Rationales (the reason for doing or
believing in something)

Making
Setting (The Business
Setting)

Making
• Scope and Level (how serious is the problem)

Making
• Procedural and technical aids

Making
• Outcome (The result of the decision)

• Implementation
Making

Definitions of Problem
Solving
• Analytical Skills
• Mathematical skills
• Forward thinking
• Cause and effect analysis
Process of
working
through details
of a problem
To reach a
solution

Problem Solving /
Problem
Management
Process Decision

• Problem solving is a mental process of
problem finding and problem shaping

Seven Steps for Effective
Problem Solving in the
Workplace
1. Identify
the
issues.
2.Understand
everyone's
interests.
3. List the possible
solutions (options)
4. Evaluate
the
options.
5. Select an
option or
options.
6. Document
the
agreement(s).
7. Agree on
contingencies,
monitoring, and
evaluation.

Process of Decision Making
Defining the
problem
Problem
Analysis
Generating
possible Solutions
Analyzing
solutions
Selecting the
best solutions
Planning
the next
course of
action

1. Defining the Problem
Identify What you
want to
achieve
Analysis
Clear
Doubts

2. Analyzing the Problem
•Current situation
•Finding the route cause

3. Generating Possible
Solutions
Possible
alternatives
Make a list
of them

4. Analyzing the Solutions
Pros
and cons
Practicality
of each
alternatives
Safety

5. Selecting the Best
Solution
The Most
Appropriate
Solution
Low cost
High
Effectivenes
s

6. Planning the next course
of action
Plan What You
Are Going To Do
Draw Up The
Action Plan
Avoid Possible
Issues In Future

THE ART OF EFFECTIVE DECISION MAKING
THE CLASSIC FIVE STEPS APPROACH TO
DECISION MAKING
Step – 5 Implement and Evaluation
Step – 3 General feasible options
Step – 2 Collect relevant Information
Step – 1 Define the objective
Step – 4 Select the best alternative.

Contd. . . . . . . . THE ART OF EFFECTIVE DECISIONMAKING
 DEFINE THE OBJECTIVE
Do you know what you are trying to
achieve ? You do need to be clear – or as
clear as possible – about where you want
to get to. Otherwise the whole process of
decision making is obscured in a cloud. As
the proverb says,
If you do not know what part you are
heading for, any wind is the right wind.

COLLECT RELEVANT INFORMATION
The next skill is concerned with collecting and
sifting relevant information. Some of it will be
immediately apparent, but other data may be
missing. It is a good principle not to make decisions
in the absence of critically important information that
is not immediately to hand, provided that a planned
delay is acceptable.
Remember the distinction between available and
relevant information. Some thinkers do not, however,
look at the information at their disposal and ask
themselves, ‘Is this relevant ?’ Instead they wonder,
‘How can I use it ?’ They are confusing two kinds of
information.

Contd. . . . . . . . THE ART OF EFFECTIVE DECISION MAKING
Contd…..COLLECT RELEVENT
INFORMATION
Life would be much simpler if you could
just use the information at your disposal,
rather than that which you really need to
make the decision ! So often quantities of
data are advanced – there are acres of it
on the internet – that merely add bulk to,
say, a management report without giving
its recommendations any additional
weight.

GENERAL FEASIBLE OPTIONS
Notice the word options rather than
alternatives.
An alternative is literally one of two courses
open. Decision makers who lack skill tend to
jump far too quickly to the either or alternatives.
They do not give enough time an mental energy
to generating at least three or four possibilities.
As a Major in the says to his men, ‘You can be
sure that if the enemy has only two courses of
action open to him, he will choose the third.’

MAKE THE DECISION
The critical preliminary activity here is
to establish the selection criteria. It is
worth dividing them into different
levels of priority.
MUST
SHOULD
MIGHT

Contd……..MAKE THE DECISION
Unless an option meets the MUST
requirements you should discard it. But after
the essentials have been satisfied, the list of
desirables – highly desirable SHOULDs or
pleasant addition MIGHTs – comes into play.
Choosing a car is a relatively simple case,
because there is a finite number of models to
choose from and a relatively SIMPLE LIST
OF CRITERIA.

In order to help you choose in more complex cases,
remember that you can make a decision by :
 Listing the advantages and
disadvantages,
 Examining the consequences of each
course,
 Testing the proposed course against the
yardstick of your aim or objective,
 Weighting the risks against the expected
gains.
MAKE A SIMPLE LIST OF CRITERIA.

 IMPLEMENT AND EVALUATE
Decision comes from a Latin verb
meaning ‘to cut off’. It is related to such
cutting words as ‘scissors’ and ‘incision’.
What is ‘cut off’ when you make a decision
is the preliminary activity of thinking,
especially the business of weighing up the
pros and cons of the various courses of
action. You now move into the action
phases.
Not to decide is to decide

The Decision should be seen as part of the
overall process. You may hardly notice the
actual point of decision, just as passengers
on a ship may be asleep when their ship
crosses the equator line. The ‘cut off’ point,
be it conscious or unconscious, is when
thinking ends – your mind is made up – and
you move into the action or implementation
phase. But you are still evaluating the
decision, and up to the Point of No Return
(PNR), you can always turn back if the early
signs dictate.

SHARING DECISIONS WITH OTHERS
A key issue in leadership is how far the
designated leader should share decisions
with others. Before looking together at the
decision making aspect of leadership let me
put it in context by reminding you of the generic
role of leader true for all fields of work and all
levels of leadership. If you look closely at
matters involving leadership, there are always
three elements or variables :

 the leader – qualities of personality
and character
 the situation – partly constant, partly
varying
 the group – the followers their needs
and values
SHARING DECISIONS WITH OTHERS

Contd. . . . . SHARING DECISIONS WITH OTHERS
The Sharing Decision Making Needs - Three
Types
TASK
NEEDS
INDIVIDUAL
NEEDS
DECISION MAKING
NEEDS
TEAM
MAINTENANCE
NEEDS

 TASK NEEDS
Work groups and organizations come
into being because there is a task to be
done that is too big for one person. You
can climb a hill or small mountain by
yourself, but you cannot climb Mount
Everest on your own – you need a team
for that.

TEAM MAINTENANCE NEEDS
This is not so easy to perceive as the task
need, as with an iceberg, much of the life of any
group lies below the surface. The distinction
that the task need concerns things and the
second need involves people does not help
much.
Whichis the best image for team work?
A concept image depicting a mixedgroup of coworkers - a funimage
showing rows Teamwork, Teams, TeamWork, Ants. Ants create an
abstract concept for teamwork,

 Contd.. TEAM MAINTENANCE NEED
Again, it is best to think of groups that
are threatened from without by forces
aimed at their disintegration or from within
by disruptive people or ideas. We can then
see how they give priority to maintaining
themselves against these external or
internal pressures, sometimes showing
great ingenuity in the process.
Instinctively a common feeling exists that
‘United we stand, divided we fall’ , that good
relationship, desirable in themselves, are
also an essential means towards the shared

 INDIVIDUAL NEEDS
Third, individuals bring into the group
their own needs – not just the physical
ones for food and shelter (which are
largely catered for by the payment of
wages these days) but also the
psychological ones, recognition, a sense
of doing something worthwhile, status and
the deeper needs to give to and receive
from other people in a working situation.
These individual needs are perhaps more
profound that we sometimes realize.

They spring from the depths of our common
life as human beings. They may attract us to,
or repel us from, any given group. Underlying
them all is the fact that people need one
another not just to survive but to achieve and
develop personality.
 Contd….INDIVIDUAL NEEDS

HOW TO GENERATE IDEAS
When you are struck in problem solving –
that is when the techniques you have
applied successfully in the past are not
working – try a more creative thinking
approach. You may be trying to dig the
same hole deeper, worrying at your
problem like a terrier, when perhaps you
should be digging you hole somewhere
else.
BRAINSTORMING

Contd. . . . . . HOW TO GENERATE IDEAS
 BRAINSTORMING

The Decision Making & Problem Solving Strategy
I found the answers in my room
Roof said : Aim high
Fan said : Be cool
Clock said: Every minute is precious
Mirror said : Reflect before you act
Window said : See the world
Calender said : Be up-to-date
Door said: Push hard to achieve your goals.
7 Secrets of Success

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