Introduction To Decision Making Methods

UNIT 4
Introduction to Decision Making Methods

1. Decision Making Process
Decision making is the study of identifying and choosing alternatives based on the values and
preferences of the decision maker. Making a decision implies that there are alternative
choices to be considered, and in such a case we want not only to identify as many of these
alternatives as possible but to choose the one that best fits with our goals, objectives, desires,
values, and so on.
Decision making should start with the identification of the decision maker(s) and
stakeholder(s) in the decision, reducing the possible disagreement about problem definition,
requirements, goals and criteria.
Then, a general decision making process can be divided into the following steps:
SEVEN-STEP DECISION-MAKING PROCES
A. Defining the Problem or Opportunity
Defining the problem is the critical step. The accurate definition of a problem affects all the
steps that follow; if a problem is inaccurately defined, every other step in the decision-making
process will be based on that incorrect point. A manager needs to focus on the problem and its
causes, not the symptoms. A tool a manager can use is the funnel approach. The consequences
of not properly defining the problem are wasted time and energy.
B. Identifying Limiting Factors
. Limiting factors are those constraints that rule out certain alternative solutions.
Limitations include the following resources: personnel, money, facilities,
equipment, and time.
C. Developing Potential Alternatives
Alternatives are solutions to the problem.
The alternatives should eliminate, correct, or neutralize the problem.
While building the list of alternatives, it is wise to avoid being critical or
judgmental about any alternative that occurs to you or those assisting you.
Initially, the alternatives should be separate and distinct solutions to the problem.
After the initial list is developed, variations will develop and combinations will
emerge.
Sources for alternatives include past experience; other persons whose opinions and
judgments are respected; the practice of successful managers; group opinions
through the use of task forces and committees; and the use of outside resources,
including managers in other organizations.
D. Analyzing the Alternatives
The purpose of this step is to decide the relative merits of each alternative.
Depending on the type of problem and the potential solutions developed, the
manager might need to make a more thorough analysis by applying specific
decision-making aids.
E. Selecting the Best Alternative

Sometimes the optimal solution is a combination of several of the alternatives.
Find a solution that appears to offer the fewest serious disadvantages and the most
advantages.
F. Implementing the Decision
Managers are paid to make decisions, but they are also paid to get results from
these decisions. Results must follow decisions.
Everyone involved with the decision must know what he or she must do, how to
do it, why to do it, and when to do it.
Programs, procedures, rules, or policies must be thoughtfully put into effect.
Carelessness at this stage causes problems.
G. Establishing a Control and Evaluation System
Ongoing actions need to be monitored. They cannot be forgotten.
The system should provide feedback on how well the decision is being
implemented, what the results are, and what adjustments are necessary to get
results that were wanted when the solution was chosen.
4.2 Influence of Managerial Style on Decision Making

A. Personal Decision-Making Approaches
1. Three influences are personal attributes (the managers personal decision-making
approach), the ability to set priorities, and the timing of decisions.
2. Personal decision-making approaches:
a. Rational/logical decision model. The manager who uses this model employs a step-by-step
process. Decisions are made on facts and logic using payback analysis, decision trees, and
research.
b. Intuitive decision model. Managers who rely on gut decisions rely on their feelings. The
manager who relies on intuition from long-range decision making courts disaster. The best
decisions are a result of a blend of the decision makers intuition and the rational step-by-step
approach.
c. Predisposed decision model. This approach is evidenced by a manager who decides on a
solution, then gathers the material to support the decision.
3. Regardless of the model favored by the manager, a critical element is for the manager to
know what his or her tendencies are in decision making and to move toward the rational
model. A problem can be created when a manager believes he or she is using one approach
when in reality it is a different model.
B. Ability to Set Priorities
1. A factor that can influence a managers success is the ability to establish priorities for
decision-making.
2. Each manager may have a different and unique set of criteria.
C. Timing of Decisions
1. After a decision is made, it must be translated into action.
2. Good timing plays an important part in successfully implementing a decision; improper
timing can harm the best decision.
D. Tunnel Vision
1. Many causes lead to tunnel vision
2. The glass ceiling of promotability is a prime example of this phenomenon.
3. Lack of maturity, inadequate education, or personal hang ups are indicative of nearsighted thought and behavior.
E. Commitment to Previous Decisions
1. Decisions often build upon other decisions.
2. Commitments from previous decisions can influence subsequent decisions.
3. Many decisions do not stand alone. One decision may create another.
F. Creativity
1. Imagination and innovation benefit decision making.
2. Frequently, organizational circumstances curtail creative thought and action. Bureaucratic,
traditional organizations discourage thought.

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UNIT 4

Introduction to Decision Making Methods

E. Selecting the Best Alternative

4.2 Influence of Managerial Style on Decision Making

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