You are on page 1of 35

Decision Making

Unit V



Decision making is the process of choosing the

best from among the alternative solutions
under a given set of circumstances.

Decision making involves 3 aspects of human


Cognition Activities of mind associated with knowing
 Conation (willingness, Desire)
 Affection (Emotion , temperament)

Decisions and Decision

Decision choice made
from available


Decision Making –
the process of
Identifying problems
And opportunities and
Then resolving them.


CHARACTERISTICS OF DECISIONS MAKINGS Alternatives Freedom to chose Goal Directed Rational vs Judgmental .


programmed decisions are relevant for solving unique and unusual problems in which various alternatives cannot be decided in advance.Programmed:.TYPES OF DECISION Programmed and non-programmed Programmed:-Programmed Decisions are routine and repetitive and are made with the framework of organizational policies and rule. Evaluation of Alternatives are not possible fully. .Non. Non.

and policies Judgment and creativity .rules.Programmed vs.unusual Information Readily available Ambiguous or incomplete Time frame for solution Short Relatively long Solution relies on Procedures. Nonprogrammed Decisions Characteristics Programmed decisions Non-programmed decisions Type of problem Structured Unstructured Managerial level Lower level Upper level Frequency Repetitive New.

sanction of increment. introduction to the new product. paying of bill. E. integrated and comprehensive issues of the organization. .TYPES OF DECISION Strategic vs Operational Strategic:-Strategic decisions are related to unified.g. E. Operational:.Routine activities related decision are operational decisions.g diversification.

Decisions affecting overall organization is the major decision. Minor:. .Decisions affecting only specific functional area is known as minor decision .TYPES OF DECISION Major and Minor Major:.

TYPES OF DECISION Simple and Complex Simple:-Decisions involving less no of variables to be considered. . Complex:-Large number of variables are considered before taking the decision.

.Temporary employees selection is short run. Short-run:. E.TYPES OF DECISION Long –run vs Long-run:-Decisions taken for the long run plans.g Selection of candidates for the permanent post.

TYPES OF DECISION Individual and Group Individual:-Decisions taken by individual selector Group:.Decision taken by panel .

. and flexible. easy to use.Characteristics of an Effective Decision-Making  It focuses on what is important  It is logical and consistent.  It is straightforward.  It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking.  It requires only as much information and analysis as is necessary to resolve a particular dilemma.  It encourages and guides the gathering of relevant information and informed opinion.reliable.

* Behavioral # Avoid conflict by working well with others and being receptive to suggestions.Decision-Making Styles (cont’d) Types of Decision Makers * Directive # Use minimal information and consider few alternatives. * Conceptual # Maintain a broad outlook and consider many alternatives in making decisions. . * Analytic # Make careful decisions in unique situations.

THE STAGES OF DECISION MAKING Identifying and diagnosing the problem Generating alternative solutions Evaluating alternatives Making the choice Implementing the decision Evaluating 3-15 the decision .

Approaches to Decision making .

The Intuitive The Rational A Satisficing Political Behavioural Incremental Model Garbage Model .

rather than seeking an optimal decision. 18 .Approaches Intuition The ability of managers to be perfectly rational in making decisions is limited by facts such as: Inadequate information Time and cost constraints  cognitive capacity Managers seek alternatives only until they find one which looks satisfactory.

What is Intuition ? Their past experiences Ethical values and culture Experience-based Decisions Values or ethicsbased Decisions Subconscious mental processing Data from subconscious mind intuition Feelings or emotions Affect-Initiated Decisions Cognitive-Based Decisions Skills. and training .knowledge.

Decision-maker takes decision based on intuitions which is characterized by the use of hunches. inner feelings or the gut-feeling of the decision-maker. He prefers habit or experience relative thinking and instinct. The decision maker working on this approach practices management in the form of art. using the unconscious cognitive process. .

Becoming aware of biases. .making and evaluation of taken decision.Tips to carry out this approach Becoming more involved decision. Seek out independent opinions. Developing an awareness that hunches can help in decision-making.

Consider all possible choices Decide the most optimal alternative that can be adopted. Fully aware of all available feasible alternatives to maximize advantages.Rational Decision Making Approach Decision maker is rational and intelligent. .

An Anoptimal optimaldecision decision isispossible possible All Allrelevant relevantinformation information isisavailable available All Allrelevant relevantinformation informationisis understandable understandable Rational Rational Decision Decision Making Making All Allalternatives alternativesare areknown known All Allpossible possibleoutcomes outcomesknown known 23 .

Process Recognize the need for a decision Establish. Rank and weigh criteria. . Gather available information and data Evaluate each alternative Select the best alternative.


Time Timeconstraints constraints Limited Limitedability abilityto to understand understandall allfactors factors Inadequate Inadequatebase base of ofinformation information Limited Limitedmemory memoryof of decision-makers decision-makers ‘Satisficing’ ‘Satisficing’ decision decision making making Poor Poorperception perceptionof offactors factors to tobe beconsidered considered in indecision decisionprocess process 26 .

. “Garbage can” model where states that organizations are not rational and that decisions are solutions that become attached to problems for accidental reasons. Political models of decision making where decisions result from competition and bargaining among the organization’s interest groups and key leaders.Organizational Models of Decision-Making Bureaucratic models of decision making where decisions are shaped by the organization’s standard operating procedures(SOPs).

THREE DECISION MAKING MODELS Political PoliticalModel Model  Administrative AdministrativeModel Model  Classical ClassicalModel Model  6-28 .

Rational choice by individual for maximizing outcomes. ambiguous information. Administrative Model Political Model Vague problem and goals.CLASSICAL. ADMINISTRATIVE. Inconsistent viewpoints. Limited information about alternatives and their outcomes. Satisficing choice for resolving problem using intuition. Condition of uncertainty. Condition of certainty. Bargaining and discussion among coalition members. conflicting goals. Condition of uncertainty/ambiguity. Pluralistic. Full information about alternatives and their outcomes. . AND POLITICAL DECISION-MAKING MODELS Classical Model Clear-cut problem and goals.

CONSTRAINTS ON DECISION MAKERS Political Social Economical Organizational Technical Constraints Environmental Human Ethical .

Group Decision Making .

Degree Of Participation Experiences Expertise Nature of Task Difference of opinion Openness of Group leader Org Culture Employee Empowerment and freedom .

.Methods of Group Decision making The majority wins scheme The truth wins scheme Two third Majority scheme First shift rule Status Quo Rule.

Avoid domination 2. Brainstorm 2. Avoid groupthink and satisficing 4. Encourage input 3. Air legitimate differences 2.MANAGING GROUP DECISION MAKING Leadership 1. Be impersonal 4. Avoid criticizing 3. Combine ideas . Play devil’s advocate Effective Group Decision Making Creativity 1. Remember goals Constructive Conflict 1. Exhaust ideas 4. Stay task-focused 3.

Techniques in Group Decision Making .