Presented by:

Ekta Belwal
HHM/2013-011
M.Sc. (FN)
Decision Making
 “Decision Making is a conscious & Human
Process involving both individual & social
phenomenon based upon factual & value
premises which concludes with a choice of one
behavioural activity among one or more
alternatives with the intention of moving towards
some desired state of affairs.”
- Shull, Delberg & Cumming
 “Decision- making is a process of identifying &
choosing alternative courses of action in a manner
appropriate to the demand of the situation. The
act of choosing implies that alternative courses of
action must be weighted & weeded out.”
- Kreitner
Six ‘s of Decision Making

 Construct a 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.
 1.Organisational &
Personal Decisions

5.Individual & 2.Tactical(Routine)

Group Decisions & Strategic(Basic)
Decisions
Types of
Decisions

3.Programmed & Non-

4.Policy & Operative Programmed
Decisions Decisions
1.Organisational and Personal
Decisions
 Organisational decisions are those which
managers undertake under certain conditions
relating to organisation. Sometimes taken
independently and sometimes delegated to
other colleagues.

 Personal decisions are to be taken by the

managers on their own. Others need not to be
consulted.
 2. Tactical(Routine) &
Strategic(Basic) Decisions
Tactical (Routine) Decisions
 Concerned with routine & repetitive problems
 neither require collection of new data nor conferring with the
people. Thus can be taken without much deliberation.
 Has short term implications
 May be complicated but are always one dimensional.
 More experience & judgement is needed.
Strategic(Basic) Decisions
 made on the problems which are important.
 Require thorough fact finding analysis of the possible
alternatives.
 Finding the correct problem in such decisions assume more
importance.
 Has long term implications
3. Programmed & Non-Programmed
Decisions

 Professor Herbert Simon has given this

classification. He has utilised computer terminology
in classifying decisions.

 Programmed decision may also be called as Routine

Decision and Non programmed as Strategic
Decisions
 4. Policy & Operative
Decisions
 Policy decisions determine the the basic policies of the
organisations & are taken at top level management. The
policies are decided at the top become the basis for
operative decisions can go beyond the policy framework
of the organisation. These are important in nature & have
long term impact.
 Operative decisions on other hand, are less important &
related with day-today operations of the business. Middle
and lower management take these decisions since these
involve actual execution and supervision.

Whether to allow bonus to employees or not is a policy

decision. Once it is decided to pay bonus then making
calculation of payments to be made to different employees
is an operative decision.
5. Individual & Group
Decisions
It is based on the number of persons involved in
decision-making.
 Generally individual decision are less important &
programmed one.
 Group decisions are taken by a group of persons.
These are generally important decisions & relate
to policy matters. The decisions are taken after a
thorough discussion among persons who are
assigned this work. The problem of delay in taking
group decisions may create difficulties but
otherwise these are well discussed decisions.
 FACTORS AFFECTING DECISION MAKING
(IN AN ORGANISATION)
Whenever we are involved in making decisions a number of factors can affect
the process we follow and ultimately the decision we make.

They can be organised into three major groups:

 Perception Issues

 Organisational Issues

 Environmental Issues
PERCEPTION ISSUES:
Perception can be described as the way in which individuals interpret their
environment.
Perception can be influenced by the following:
 The perceiver
The types of personal characteristics that can affect an individual's
perception include:
 Background and experience
 Personal values

 Personal expectations

 Personal interests

 The situation: Time, location and other situational factors can influence our
perception of an object. E.g., For example, a Team Leader may notice
team members who work late on the same evenings as the Team
Leader. However, team members who work late on other evenings may
not be noticed by the Team Leader.
The object:
 The object, which refers to any person, item or event can
have an impact on the way it is perceived.
For example, when a manager receives a number of reports to read he may
be more inclined to read the one with the most colourful cover as this one stands
out.

 The relation an object has to other objects can also affect

the perception of the perceiver.
For example, an individual team member may be judged on the actions of
the whole team even when it is more appropriate for them to be judged on their
own merits.
ISSUES WITHIN THE ORGANISATION:

A number of organisational issues can impact on the

decision making process. These issues include:

 Policies
and procedures
 Organisational hierarchy
 Organisational politics
 POLICIES AND PROCEDURES
 Many organisations have formalised policies and
procedures which have been developed to resolve
common problems and to guide managers when
making decisions.
 e.g., many organisations have documented
disciplinary procedures which guide managers
through a process of resolving issues with staff
members.
 ORGANISATIONAL HIERARCHY
 Organisational hierarchy refers to the management
structure of the organisation. Most organisations
have different levels of management which carry
with them different degrees of authority. The degree
of authority directly impacts on the nature of the
decisions an individual can make.
 E.g., a Customer Contact Centre Team Leader
cannot make decisions about the overall goals of
the organisation. However, the Team Leader can
make decisions about how their team contributes to
the achievement of the organisation's goals.
 ORGANISATIONAL POLITICS
Organisational politics refers to behaviour displayed by
individuals and groups which is designed to influence others.
Individuals and teams will often use politics to:
 Advance their careers
 Advance their interests and ideas
 Increase their rewards

 Organisations are made up of individuals with different

beliefs, values and interests. These differences are often the
driving forces behind organisational politics.
 For example, two teams believe they require an extra team
member. Unfortunately the organisation can only afford one
new employee. The two teams may well use politics in an
attempt to influence their manager to allocate the new
employee to their team.
ISSUES WITHIN THE ENVIRONMENT:
Environmental issues are the external factors that
affect the organisation. The types of external factors
that can have an effect on decision making include:
 The market in which the organisation
operates
 The economy
 Government legislation
 Customers' reaction to the organisation's
products and services
 Personal
Factors

Psychological Cultural
factors
Factors factors
affecting
Decision
making

Information
Social
Factor
Personal factors
 Personal Demographics: age, gender, stages
in life cycle, education, occupation, economic
position, etc.

 Personal psychographics: includes lifestyle,

attitudes, self-concept, concern about status,
value systems, beliefs etc.
Cultural factors
 Culture: combined resulted of factors like religion,
traditions, taboos, language, education, upbringing,
established pattern of social behaviour, values (core &
secondary)etc.
 Sub culture: caste

 Social class: it is determined by the education level,

wealth, occupation, profession & designation, location
of residence, values, and behaviour of its members.
Social Factors
Influence of reference group:
 Intimategroups: e.g. family, friends, peer
groups, close colleagues & close-knit
organisations.
 Face-to-face & frequent interactions are characteristic
feature of the group.
 Secondary groups(including Opinion leaders):
based on occupation, profession place of
residence, etc., of the members.
 O.L has the high credibility & influence.
 Information

 information, should be
authentic, reliable, adequate
and must be available at time.
So enough time must be there
to analyse the problem.
 It reduces the uncertainty.

 Too much information or

information over-load creates
confusion & delay in decision
making.
 Psychological factors

 Motivation: it all begins with needs.

 Perception: According to consistency theory one
mostly listen to things that support one’s existing
belief system)
 Selective attention
 Selective distortion

 Selective retention

 Learning Process: people do change their beliefs,

faiths, likes & dislike which happens through learning
 Memory Process: include past experiences even
the hearsay experiences.
Heuristic
 In psychology, heuristics are simple, efficient
rules, learned or hard-coded by evolutionary
processes, that have been proposed to explain
how people make decisions, come to judgments,
and solve problems typically when facing complex
problems or incomplete information. These rules
work well under most circumstances, but in
certain cases lead to systematic errors or
cognitive biases.
 Examples of this method include using a rule of
thumb, an educated guess, an intuitive judgment,
stereotyping, or common sense.
• Anchoring and adjustment – Describes the common human tendency to rely too heavily
on the first piece of information offered (the "anchor") when making decisions.

• Availability heuristic – A mental shortcut that occurs when people make judgments about
the probability of events by the ease with which examples come to mind. For example, in
a 1973 Tversky & Kahneman experiment, the majority of participants reported that there
were more words in the English language that start with the letter K than for which K was
the third letter. There are actually twice as many words in the English Language that have
K as the third letter than start with K, but words that start with K are much easier to recall
and bring to mind.

• Escalation of commitment – Describes the phenomenon where people justify increased

investment in a decision, based on the cumulative prior investment, despite new evidence
suggesting that the cost, starting today, of continuing the decision outweighs the expected
benefit.

• Familiarity heuristic – A mental shortcut applied to various situations in which individuals

assume that the circumstances underlying the past behaviour still hold true for the
present situation and that the past behaviour thus can be correctly applied to the new
situation.
Inherent Personal Traps
ã Trying too hard to play it safe.
ã Letting fears and biases tilt your
thinking and analysis.
ã Getting lost in the minutia can cause
trouble.
ã Craving for unanimous approval.
ã Trying to make decisions which are
outside your realm of authority.
Inherent System Traps
+ Willing to begin with too little,
inaccurate, or wrong information.
+ Overlook viable alternatives or waste
time considering alternatives which
have no realistic prospects.
+ Not following the six C's.
+ Failure to clearly define the results
you expect to achieve.
+ Worst of all, failure to reach a
decision.
 “Doing what's right isn't hard --
Knowing what's right is.”
Lyndon B. Johnson.

Thank You.