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DECISION MAKING AND STRESS MGMT

Anubha

© 2005 Prentice Hall Inc. All rights reserved. 5–1


Phases of DM

 Identification Phase – identify problem


– Recognize and Diagnose
 Development phase – Solution
– Search and design
 Selection phase – Choice of solution
– Judgment, Analysis & authorisation

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Types of decision

 Basic & Routine (Basic decision that are taken,


generally only once and have a long lasting impact
on the working of an org whereas routine are day to
day basis and don’t have a major impact )
 Personal & Organizational (Personal decision
cannot be delegated and org often, if not always be
delegated)
 Program and non programmed ( Decision are
routine and repetitive decision that are normally
handled by bureaucratic procedure whereas non
programmed decision made by individual using the
info available and their own ability to judge the
situation)
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 Mechanistic Decision – the decision maker is
sure of alternative and outcome of each
alternative
 Analytical Decision – decision taken where a
large alternatives can be generated since a lot of
information is available and outcome of each
alternative can be calculated.
 Judgment decision – A limited no. of alternatives
are available to solve the problem and outcome
of decision are also unknown
 Adaptive Decision - a large no of alternatives are
available and their outcome is not known

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Techniques used in steps of DM
 Brainstorming
 Synectics
 Delphi Technique

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1
Identify The Decision-Making
Problem Process

2 Develop 3Allocate 6 Select


Decision Weights to Alternative
Criteria Criteria
7
Implement
4 5 Alternative
Develop Analyze
Alternatives Alternatives
8Evaluate
Results

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Step 2: Decision Criteria
 Price
 Interior comfort
 Factors that are relevant in  Durability
making the decision  Repair record
 Performance
 Handling

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Step 3: Allocating Weights
Determining the relative priority
of each of the criteria

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Problem: To purchase a new car

Criterion Weight

Price 10

Interior comfort 8

Durability 5

Repair record 5

Performance 3

Handling 1

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Step 5: Analyzing Alternatives
Assessing the value of each
alternative by making a value
judgment of the feature

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Concluding Steps in Making a Decision

Step 6: Select the “best”

Step 7: Implement decision

Step 8: Evaluate decision

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Assumptions Of Rationality

Single, well-
defined goal
is to be achieved
All alternatives Problem is
and clear and
consequences unambiguous
are known
Rational
Decision Final choice
Preferences Making will maximize
are clear
payoff

Preferences
No time or cost
are constant
constraints exist
and stable

© Prentice
Robbins Hall, 2002 of Management, 4th Canadian
et al., Fundamentals
FOM 4.12
Edition © 2005 Prentice Hall Inc. All rights reserved. 5–12
©2005 Pearson Education Canada, Inc.
Creativity and Decision Making
 Creativity is the ability to produce novel and
useful ideas
 Important to decision making as it allows the
decision-maker to “see” problems that others
can’t
 It helps identify more viable alternatives

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Unleashing Creative Potential
 “Thinking out of the box”
 Using the right side of your brain
 Three-component model of creativity
– Expertise
– Creative-thinking skills
– Intrinsic task motivation

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Bounded Rationality

 Uncertainty
 Risk
 Satisfying
 Focusing on highly visible choices

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Errors in Decision-Making Process
 Heuristics
– Availability
– Representative
 Escalation of commitment

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Well-Structured vs. Ill-Structured Problems
 Straightforward  New or unusual
 Familiar  Ambiguous information
 Easily-defined  Incomplete information

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Categories of Decisions
 Programmed
 Non-programmed

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Programmed Decision

Procedure

Rule

Policy
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Relationship of Problems, Decisions, and
Level

Ill-Structured Top

Type of
Level
Problem

Non-programmed
Programmed
Decisions
Decisions
Lower
Well-Structured

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Decision-making and Technology
 Information technology can help support
decision-making
 Types of software include
– Expert systems
– Neural networks
– Groupware

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Decision-Making Styles

High

Analytical Conceptual
Tolerance for
Ambiguity

Directive Behavioural

Low
Rational Intuitive
Way of Thinking
Source: S. P. Robbins, Supervision Today (Upper Saddle River, NJ: Prentice
Hall, 1995), page 111.

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Advantages of Group Decision-Making
 More complete information
 Diversity of experience
 Generation of more
alternatives
 Solutions more likely to be
accepted by those concerned

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Disadvantages of Group Decision-Making

 Time-consuming
 Domination by a few
 Pressure to conform

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When are Groups More Effective
 When accuracy is important
 When creativity is important
 When buy-in is important
 When size of group is 5-7 people

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Ways to Improve Group Decision-Making

 Brainstorming
 Nominal group technique
 Electronic meetings

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Decision-Making and National Culture

 Differs from one country to another


 Need to recognize what is acceptable
 Managers can expect high payoff if they can
accommodate the diversity

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How Are Decisions Actually Made in
Organizations

Bounded Rationality
Individuals make decisions by constructing
simplified models that extract the essential
features from problems without capturing all
their complexity.

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How Are Decisions Actually Made in
Organizations (cont’d)

 How/Why problems are identified


– Visibility over importance of problem
• Attention-catching, high profile problems
• Desire to “solve problems”
– Self-interest (if problem concerns decision maker)
 Alternative Development
– Satisficing: seeking the first alternative that solves
problem.
– Engaging in incremental rather than unique
problem solving through successive limited
comparison of alternatives to the current
alternative in effect.

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Common Biases and Errors
 Overconfidence Bias
– Believing too much in our own decision
competencies.
 Anchoring Bias
– Fixating on early, first received information.
 Confirmation Bias
– Using only the facts that support our decision.
 Availability Bias
– Using information that is most readily at hand.
 Representative Bias
– Assessing the likelihood of an occurrence by trying
to match it with a preexisting category.

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Common Biases and Errors
 Escalation of Commitment
– Increasing commitment to a previous decision in
spite of negative information.
 Randomness Error
– Trying to create meaning out of random events
by falling prey to a false sense of control or
superstitions.
 Hindsight Bias
– Falsely believing to have accurately predicted
the outcome of an event, after that outcome is
actually known.

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Intuition
 Intuitive Decision Making
– An unconscious process created out of distilled
experience.
 Conditions Favoring Intuitive Decision Making
– A high level of uncertainty exists
– There is little precedent to draw on
– Variables are less scientifically predictable
– “Facts” are limited
– Facts don’t clearly point the way
– Analytical data are of little use
– Several plausible alternative solutions exist
– Time is limited and pressing for the right decision

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Organizational Constraints on Decision Makers
 Performance Evaluation
– Evaluation criteria influence the choice of actions.
 Reward Systems
– Decision makers make action choices that are
favored by the organization.
 Formal Regulations
– Organizational rules and policies limit the alternative
choices of decision makers.
 System-imposed Time Constraints
– Organizations require decisions by specific deadlines.
 Historical Precedents
– Past decisions influence current decisions.

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Cultural Differences in Decision Making
 Problems selected
 Time orientation
 Importance of logic and rationality
 Belief in the ability of people to solve problems
 Preference for collect decision making

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Ethics in Decision Making
 Ethical Decision Criteria
– Utilitarianism
• Seeking the greatest good for the greatest number.
– Rights
• Respecting and protecting basic rights of individuals
such as whistleblowers.
– Justice
• Imposing and enforcing rules fairly and impartially.

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Ethics in Decision Making
 Ethics and National Culture
– There are no global ethical standards.
– The ethical principles of global organizations
that reflect and respect local cultural norms are
necessary for high standards and consistent
practices.

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Ways to Improve Decision Making
1. Analyze the situation and adjust your decision
making style to fit the situation.
2. Be aware of biases and try to limit their impact.
3. Combine rational analysis with intuition to
increase decision-making effectiveness.
4. Don’t assume that your specific decision style is
appropriate to every situation.
5. Enhance personal creativity by looking for novel
solutions or seeing problems in new ways, and
using analogies.

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STRESS MANAGEMENT

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Work Stress and Its Management

Stress
A dynamic condition in which an
individual is confronted with an
opportunity, constraint, or demand
related to what he or she desires and
for which the outcome is perceived to
be both uncertain and important.

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Work Stress and Its Management

Constraints
Forces that prevent
individuals from doing what
they desire.

Demands
The loss of
something desired.

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Potential Sources of Stress
 Environmental Factors
– Economic uncertainties of the business cycle
– Political uncertainties of political systems
– Technological uncertainties of technical
innovations
– Terrorism in threats to physical safety and
security

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Potential Sources of Stress
 Organizational Factors
– Task demands related to the job
– Role demands of functioning in an organization
– Interpersonal demands created by other
employees
– Organizational structure (rules and regulations)
– Organizational leadership (managerial style)
– Organization’s life stage (growth, stability, or
decline)

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Potential Sources of Stress (cont’d)
 Individual Factors
– Family and personal relationships
– Economic problems from exceeding earning capacity
– Personality problems arising for basic disposition
 Individual Differences
– Perceptual variations of how reality will affect the
individual’s future.
– Greater job experience moderates stress effects.
– Social support buffers job stress.
– Internal locus of control lowers perceived job stress.
– Strong feelings of self-efficacy reduce reactions to job
stress.

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Consequences of Stress

High Levels
of Stress

Physiological Psychological Behavioral


Symptoms Symptoms Symptoms

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Managing Stress
 Individual Approaches
– Implementing time management
– Increasing physical exercise
– Relaxation training
– Expanding social support network

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Managing Stress
 Organizational Approaches
– Improved personnel selection and job placement
– Training
– Use of realistic goal setting
– Redesigning of jobs
– Increased employee involvement
– Improved organizational communication
– Offering employee sabbaticals
– Establishment of corporate wellness programs

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A Model of Stress

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Managing Stress
 Individual Approaches
– Implementing time management
– Increasing physical exercise
– Relaxation training
– Expanding social support network

© 2005 Prentice Hall Inc. All rights reserved. 5–48


Managing Stress
 Organizational Approaches
– Improved personnel selection and job placement
– Training
– Use of realistic goal setting
– Redesigning of jobs
– Increased employee involvement
– Improved organizational communication
– Offering employee sabbaticals
– Establishment of corporate wellness programs

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Inverted-U Relationship between Stress and
Job Performance
OPTIMAL

ALERT ANXIETY

SLEEP
DISORGANISED

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