Chapter 6 - Decision Making and Problem Solving

The Nature of Decision Making Function

Weihrich and Koontz defined decision-making as the selection of a course of action from among alternatives. According to
them, “it is the core of planning. A plan cannot be said to exist unless a decision (to commit resources, direction or
reputation) has been made.” Decision-making is the core of planning and is a major step in the planning process. Decisions
are judgments that directly affect a course of action. The significance of decision making is most important to a manager
faced with two or more feasible alternatives and must decide which one to select. Decision-making is, therefore, the process
of identifying a set of feasible alternatives and choosing a course of action from them. As planning is necessary for other
managerial functions of organizing, directing and controlling, decision-making too has a pervasive influence on all
managerial functions. That is why; decision-making is regarded by many writers as a part of the planning process. A
manager reaps double advantage when he has to find a solution for a problem confronting him, viz.,
 He serves the organization when he successfully overcomes the problem
 He derives, simultaneously personal satisfaction and a sense of accomplishment which is, in fact, the best reward
to satisfy one’s egoistic demands
A business executive is by profession a decision-maker. His life itself is a perpetual choice-making activity. Uncertainty or
risk is his opponent; overcoming it is his mission. Whether the outcome is a consequence of luck or wisdom, the moment of
decision-making is the most creative event in his life.

The following is the nature of decision-making:

1. Goal-Oriented Process: Decision-making is a goal-oriented process. It aims at achieving certain specific goals of
the organization.
2. Selection Process: Decision-making is a selection process in which best alternative course of action is chosen from
the given alternative courses of action.
3. Continuous Process: Decision-making is a continuous process because a manager is required to take decisions
continuously for different activities.
4. Art as Well as Science: Decision-making is considered both an art and a science.
5. Responsibilities of Managers: Decision-making is the responsibility of managers at different levels of management.
6. Positive as Well as Negative: Decision-making can be both positive and negative i.e. it may be positive (to perform
certain activities) or negative (not to perform certain activities).
7. Future Course of Action: Decisions are made for future course of action based on the basis of past experiences and
present conditions.

The Decision Making Process

Strong decision-making skills are essential for newly appointed and seasoned managers alike. The ability to navigate
complex challenges and develop a plan can not only lead to more effective team management but drive key organizational
change initiatives and objectives. Despite decision-making’s importance in business, a recent survey by McKinsey shows
that just 20 percent of professionals believe their organizations excel at it. Survey respondents noted that, on average, they
spend 37 percent of their time making decisions, but more than half of its used ineffectively. For managers, it’s critical to
ensure effective decisions are made for their organizations’ success. Every managerial decision must be accompanied by
research and data, collaboration, and alternative solutions. Few managers, however, reap the benefits of making more
thoughtful choices due to undeveloped decision-making models.

Steps in the Decision Making Process

1. Frame the Decision - Pinpointing the issue is the first step to initiating the decision-making process. Ensure the
problem is carefully analyzed, clearly defined, and everyone involved in the outcome agrees on what needs to be
solved. This process will give your team peace of mind that each key decision is based on extensive research and
collaboration. Schlesinger says this initial action can be challenging for managers because an ill-formed question
 can result in a process that produces the wrong decision. “The real issue for a manager at the start is to make sure
they are actively working to shape the question they’re trying to address and the decision they’re trying to have
made,” Schlesinger says. “That’s not a trivial task.”
2. Structure Your Team - Managers must assemble the right people to navigate the decision-making process. “The
issue of who’s going to be involved in helping you to make that decision is one of the most central issues you face,”
Schlesinger says. “The primary issue being the membership of the collection of individuals or group that you’re
bringing together to make that decision.” As you build your team, Schlesinger advises mapping the technical,
political, and cultural underpinnings of the decision that needs to be made and gathering colleagues with an array of
skills and experience levels to help you make an informed decision. . “You want some newcomers who are going to
provide a different point of view and perspective on the issue you’re dealing with,” he says. “At the same time, you
want people who have profound knowledge and deep experience with the problem.” It’s key to assign decision
tasks to colleagues and invite perspectives that uncover blind spots or roadblocks. Schlesinger notes that
attempting to arrive at the “right answer” without a team that will ultimately support and execute it is a “recipe for
failure.”
3. Consider the Timeframe - This act of mapping the issue’s intricacies should involve taking the decision’s urgency
into account. Business problems with significant implications sometimes allow for lengthier decision-making
processes, whereas other challenges call for more accelerated timelines. “As a manager, you need to shape the
decision-making process in terms of both of those dimensions: The criticality of what it is you’re trying to decide
and, more importantly, how quickly it needs to get decided given the urgency,” Schlesinger says. “The final question
is, how much time you’re going to provide yourself and the group to invest in both problem diagnosis and
decisions.”
4. Establish Your Approach - In the early stages of the decision-making process, it’s critical to set ground rules and
assign roles to team members. Doing so can help ensure everyone understands how they contribute to problem-
solving and agrees on how a solution will be reached. “It’s really important to get clarity upfront around the roles
people are going to play and the ways in which decisions are going to get made,” Schlesinger says. “Often,
managers leave that to chance, so people self-assign themselves to roles in ways that you don’t necessarily want,
and the decision-making process defers to consensus, which is likely to lead to a lower evaluation of the problem
and a less creative solution.”
5. Encourage Discussion and Debate - One of the issues of leading a group that defaults to consensus is that it can
shut out contrarian points of view and deter inventive problem-solving. Because of this potential pitfall, Schlesinger
notes, you should designate roles that focus on poking holes in arguments and fostering debate. “What we’re
talking about is establishing a process of devil’s advocacy, either in an individual or a subgroup role,” he says.
“That’s much more likely to lead to a deeper critical evaluation and generate a substantial number of alternatives.”
Schlesinger adds that this action can take time and potentially disrupt group harmony, so it’s vital for managers to
guide the inner workings of the process from the outset to ensure effective collaboration and guarantee more quality
decisions will be made. “What we need to do is establish norms in the group that enable us to be open to a broader
array of data and decision-making processes,” he says. “If that doesn’t happen upfront, but in the process without a
conversation, it’s generally a source of consternation and some measure of frustration.”
6. Navigate Group Dynamics - In addition to creating a dynamic in which candor and debate are encouraged, there
are other challenges you need to navigate as you manage your team throughout the decision-making process. One
is ensuring the size of the group is appropriate for the problem and allows for an efficient workflow. “In getting all the
people together that have relevant data and represent various political and cultural constituencies, each incremental
member adds to the complexity of the decision-making process and the amount of time it takes to get a decision
made and implemented,” Schlesinger says. Another task, he notes, is identifying which parts of the process can be
completed without face-to-face interaction. “There’s no question that pieces of the decision-making process can be
deferred to paper, email, or some app,” Schlesinger says. “But, at the end of the day, given that so much of
decision-making requires high-quality human interaction, you need to defer some part of the process for ill-
structured and difficult tasks to a face-to-face meeting.”
7. Ensure the Pieces Are in Place for Implementation - Throughout your team’s efforts to arrive at a decision, you
must ensure you facilitate a process that encompasses:
a) Shared goals that were presented upfront
b) Alternative options that have been given rigorous thought and fair consideration
 c) Sound methods for exploring decisions’ consequences
According to Schlesinger, these components profoundly influence the quality of the solution that’s ultimately
identified and the types of decisions that’ll be made in the future. “In the general manager’s job, the quality of the
decision is only one part of the equation,” he says. “All of this is oriented toward trying to make sure that once a
decision is made, we have the right groupings and the right support to implement.”
8. Achieve Closure and Alignment - Achieving closure in the decision-making process requires arriving at a solution
that sufficiently aligns members of your group and garners enough support to implement it. As with the other
phases of decision-making, clear communication ensures your team understands and commits to the plan. In a
video interview for the online course Management Essentials, Harvard Business School Dean Nitin Nohria says it’s
essential to explain the rationale behind the decision to your employees. “If it’s a decision that you have to make,
say, ‘I know there were some of you who thought differently, but let me tell you why we went this way,’” Nohria
says. “This is so the people on the other side feel heard and recognize the concerns they raised are things you’ve
tried to incorporate into the decision and, as implementation proceeds, if those concerns become real, then they’ll
be attended to.”

Related Behavioral Aspects of Decision Making

Behavioral aspects are very important in every decision making process. The inter-and multidisciplinary decision-making
theories distinguish two main typologies of research directions: The first one consists of two lines: the normative and
descriptive (behavioral). Under the direction of the normative approach attention is taken to what and how to decide, with an
emphasis on decision-making methods and areas of application of these methods. It seeks also to determine the optimal
solution for the ideal decision-maker, which completely uses the available information, determines the benefits of perfect
accuracy and operates in a fully rational manner.

Descriptive approach to decision-making

In the descriptive approach, the focus is on the analysis of human behavior in decision-making, especially exposing the
psychological and social aspects of decision-making. Taking into account the psychological aspects is to draw attention to
the decision-making processes in the human brain and to study the impact of personality traits on decisions such as the
choice of subjective criteria or tendency to take risk. Social (sociological) approach examine the social conditions: the place
of decision maker in the organization, decision-making in groups and conflicts related to this.

Interdisciplinary nature of decision-making process analysis

The interdisciplinary nature of decision support systems, involves social sciences, cognitive psychology, behavioral decision
theory, research on artificial intelligence, economics, operations research, decision methodology, and other sciences.

Behavioral Aspects of Decision Making

It is important for every manager to understand the behavioral aspects of decision making. These are as follows:
 Rationality – Decision making is a mental process. The human brain has the ability to learn, grasp, think, analyze,
synthesize, evaluate and relate complex facts and variables which lead to rationality in decision making
 Commitment - Escalation of commitment is a human behavior pattern in which an individual or group facing
increasingly negative outcomes from a decision, action, or investment nevertheless continue the behavior instead of
altering course. The actor maintains behaviors that are irrational, but align with previous decisions and actions.
 Ethics - Behavioral ethics is the study of why people make the ethical and unethical decisions that they do. Its
teachings arise from research in fields such as behavioral psychology, cognitive science, and evolutionary biology.
Behavioral ethics is different from traditional philosophy. Instead of focusing on how people ought to behave,
behavioral ethics studies why people act as they do. Arguably, it is more useful to understand our own motivations
than to understand the philosophy of Aristotle. Research in behavioral ethics finds that people are far from
completely rational. Most ethical choices are made intuitively, by feeling, not after carefully analyzing a situation.
Usually, people who make unethical decisions are unconsciously influenced by internal biases, like the self-serving
bias, by outside pressures, like the pressure to conform, and by situational factors that they do not even notice. So,
behavioral ethics seeks to understand why even people with the best intentions can make poor ethical choices.