SBEQ 2712

PRINCIPLES OF
MANAGEMENT
WEEK 2
DECISION MAKING IN ORGANIZATIONS

DR ZAFIRA NADIA MAAZ

DEPARTMENT OF QUANTITY SURVEYING,
FACULTY OF BUILT ENVIRONMENT AND SURVEYING
UNIVERSITI TEKNOLOGI MALAYSIA
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THE NATURE OF DECISION MAKING

TODAY'S
TYPES OF DECISION MAKING

THE DECISION MAKING

PROCESS
AGENDA DECISION MAKING
TECHNIQUES
GROUP DECISION MAKING
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OPPORTUNITIES

Plan
THE NEED FOR
Organize
DECISION
Direct
MAKING
Control

THREATS
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PROGRAMMED DECISION MAKING
Routine, virtually automatic process
Mainly decision making that relates to the day-to-day running of an
organization
Managers do not need to repeatedly make new judgments about
what should be done
Managers can develop rules and guidelines to regulate all routine
organizational activities

TYPES OF DECISION MAKING

NONPROGRAMMED DECISION MAKING

Non-routine decisions
Decision response to unusual or unexpected opportunities, threats
and risks
No ready-made decision rules for managers to apply
How?
TIME 1. Intuition: feelings, beliefs, and hunches that come readily to mind, require little effort
and information gathering, and result in on-the-spot decisions
2. Reasoned judgments: decisions that require time and effort and result from careful
NO ESTABLISHED RULES information gathering, generation of alternatives, and evaluation of alternatives
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LOCUS
THE OF CONTROL
CLASSICAL MODEL THE ADMINISTRATIVE
SELF-ESTEEM
WHY DECISIONS MODEL

ARE AS SUCH? A prescriptive approach to decision

making based on the assumption that
the decision maker can identify and
evaluate all possible alternatives and
their consequences and rationally
choose the most appropriate course of
action
An approach to decision making that
explains why decision making is
inherently uncertain and risky and why
managers usually make satisfactory
rather than optimum decisions.
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Cognitive limitations: imita- tions in their

BOUNDED RATIONALITY ability to interpret, process, and act on
FACTORS AFFECTING information
DECISION MAKING
QUALITY INCOMPLETE Information is incomplete because the full
INFORMATION range of decision-making alternatives is
unknowable in most situations, and the
consequences associated with known
alternatives are uncertain
Information is incomplete because of risk
and uncertainty, ambiguity, and time
constraints

Risk is present when managers know the

RISK AND UNCERTAINTY possible outcomes of a particular course of
action and can assign probabilities to them
Uncertainty: Probabilities of alternative
outcomes cannot be determined and future
outcomes are unknown
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Its meaning is not clear— it can be

FACTORS AFFECTING AMBIGUOUS
interpreted in multiple and often conflicting
INFORMATION ways
DECISION MAKING
QUALITY
Managers have neither the time nor the
TIME CONSTRAINTS AND money to search for all possible alternative
INFORMATION COSTS solutions and evaluate all the potential
consequences of those alternatives

Exploring a limited sample of all potential

SATISFICING sample

EXPERIENCE

INTUITION

JUGDEMENT
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DECISION MAKING PROCESS

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ETHICALNESS
Managers must ensure that a
possible course of action is ethical
and will not unnecessarily harm
any stakeholder group. When
examining alternative courses of
action, managers need to be clear
about the potential effects of their
decisions

LEGALITY ECONOMIC FACTORS TO

Managers must ensure that a
FEASIBILITY CONSIDER WHEN
possible course of action will Alternatives are economically
not violate any domestic or feasible & can be
ACCESSING
accomplished by the company
international laws or
goal (i.e. cost–benefit analysis)
ALTERNATIVES
government regulations

PRACTICALITY
Capabilities and resources required
to implement the alternative, and
they must be sure that the
alternative will not threaten the
attainment of other organizational
goals
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Effective managers always conduct a retrospective

analysis to see what they can learn from past successes or
failures. Managers who do not evaluate the results of their
decisions do not learn from experience; instead they LEARN FROM
stagnate and are likely to make the same mistakes again
and again. To avoid this problem, managers must establish FEEDBACK
a formal procedure with which they can learn from the
results of past decisions

1. Compare what actually happened to what was

expected to happen as a result of the decision.
2. Explore why any expectations for the decision were not
met.
3. Derive guidelines that will help in future decision
making.
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Advantages
When managers work as a team to make decisions and
solve problems, their choices of alternatives are less
likely to fall victim to the biases and errors discussed
GROUP previously.
Able to draw on the combined skills, competencies, and
DECISION accumulated knowledge of group members and thereby
improve their ability to generate feasible alternatives
MAKING and make good decision
Allows managers to process more information and to
correct one another’s errors
Probability successful decision implementation
increases
Disadvantages
Can be time-consuming
Can lead to conflict
Groupthink can occur, where the group prioritizes
consensus over critical thinking
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DEVIL'S ADVOCATE
TECHNIQUE
The devil's advocate approach is best suited for decisions that
are important and require critical thinking. It is particularly useful
when a group is making a decision and wants to ensure that all
possible angles have been considered. The devil's advocate
approach can stimulate critical thinking, foster constructive
debate, generate more ideas, explore more options, identify more
risks, and evaluate more evidence. Examples of how the devil's
advocate approach can be used in business

1. Product development: To challenge assumptions and identify

potential flaws in the product design.
2. Strategy development: To challenge assumptions and identify
potential risks and obstacles.
3. Risk management: To challenge assumptions and identify
potential risks that may have been overlooked.
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DEVIL'S ADVOCATE
TECHNIQUE
1. Assign a credible challenger: Begin by assigning an individual or subgroup to
serve as the devil's advocate. This person's job is to challenge the
assumptions, arguments, and evidence of the team's preferred option. They
should probe the arguments presented to uncover underlying assumptions,
push people to explain their reasoning, and clarify points that are unclear. This
person or group challenges proposals put forth by digging into arguments to
provide additional information that might reveal unstated weaknesses.
2. Rotate the role: The devil's advocate role should be rotated among group
members to ensure that everyone has the opportunity to challenge the group's
thinking.
3. Define the scope: The scope of the devil's advocate role should be clearly
defined to ensure that the individual or subgroup knows what they are
responsible for challenging.
4. Promote constructive debate: The devil's advocate approach can stimulate
critical thinking, foster constructive debate, generate more ideas, explore more
options, identify more risks, and evaluate more evidence. As a result, teams
can make decisions that are more robust, creative, and informed; decisions that
are less likely to be influenced by bias or pressure.
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CREATIVITY IN DECISION MAKING:

SCAMPER TECHNIQUE
The SCAMPER technique is a brainstorming method used to develop or
improve products or services.
It is useful when a group is making a decision to ensure that all
possible angles have been considered.
SCAMPER technique allows individuals to gain a deeper
understanding of the issue at hand and make more informed decisions
The SCAMPER technique can be used to generate as many ideas as
possible, and often the most brilliant ideas can come from them.
It is a lateral thinking technique that challenges the status quo and
helps you explore new possibilities.
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HOW TO CONDUCT THE SCAMPER

TECHNIQUE
Substitute: What can be replaced? (for example, components,
materials, people)
Combine: What can be combined? (for example, other features,
devices)
Adapt: What can be adapted? (for example, to a new environment, to a
new market)
Modify/Magnify: What can be modified or magnified? (for example,
size, shape, color)
Purpose: What other purposes can it serve? (for example, can it be
used for something else?)
Eliminate/Minimize: What can be eliminated or minimized? (for
example, features, steps, costs)
Rearrange/Reverse: What can be rearranged or reversed? (for
example, the order of steps, the direction of flow)
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DISCUSSION
Select and of this topics:
Resource Allocation: Determine the allocation of
manpower, equipment, and materials to various
projects. This involves optimizing resource utilization
while considering project timelines and budgets.
Safety Measures and Protocols: Assess and decide
on safety protocols and measures to ensure the well-
being of workers and compliance with industry
standards.
Supplier and Subcontractor Selection: Choose the
most suitable suppliers and subcontractors based on
factors like quality, reliability, cost, and adherence to
project specifications.
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ANY QUESTIONS?
zafiranadia@utm.my