DECISION MAKING

Department of Health Policy and Management

Jimma University
By: Bezawit B.(BSC, MPH/HSM)

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 Learning Objectives
After completing this unit students will be able to describe:
 Decision making
 Factors influencing Decision making
 Nature of the problem and decisions
 Steps of decision making
 Problem solving and decision making

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 DECISION MAKING
 Decision-making and problem-solving are basic
ingredients of managerial leadership
 “What ever a manager does, he does through decision
making”- Peter F. Drucker
 Is required universally in all management functions
(continuous management function)
 Decision-making is integral to all management functions,
activities and roles.
 Managers spent a great deal of their time making
decisions and are evaluated on that.
 Is the process of identifying a problem and choosing the
best alternatives to solve it.
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 DECISION MAKING
 Management can be said to be ‘deciding what to do and getting it
done’.
 Success in business stems from good quality management decisions
which depends on the skills of leadership, influencing,
communication and motivation.
 “The ability to take decisions’ is the most important attribute of top
management-made on each function
• John Adair :There are three forms of applied thinking that we all
need:
 Decision Making,
 Problem Solving And
 Creative thinking. These overlap considerably but they can be
distinguished.

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 Decision Making….
 Decision making is about deciding what action to take; it
usually involves choice between options.
 The object of problem solving is usually a solution, answer
or conclusion.
 The outcome of creative thinking, by contrast, is new ideas.
Decision making is about how, what, why, when and where
a course of action and how to overcome obstacles and to
solve problems.
Decision-making is what turns thought into action: it
implies change and requires a decision to be made against a
background of uncertainty and risk.

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 Decision Making…..
 An effective decision-maker is always an effective thinker.
 The three essential skills are:

1. Analyzing (the component elements)

2. Synthesizing (putting ideas together)
3. Valuing (assessing relative worth)
 The crucial elements in decision-making are:
 establish the facts
 consider the options
 decide the course of action.

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Definition
A decision is a choice between two or more alternatives.
This implies 3 things.
1. When managers make decisions they are choosing -
they are deciding what to do on the basis of some
conscious and deliberate logic or judgment.
2. Managers have alternatives available when they are
making a decision. It require wisdom and experience
to evaluate several alternatives and select the best
one.
3. Managers have a purpose in mind when they make a
decision.

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Importance of decision-making
 A decision making is thus a key part of a managers
activities. It works throughout all managerial
functions such as planning, organizing, directing
controlling and coordinating etc.

 In planning it is through the process of decision

making that objectives and policies are laid down and
the manager decides many things such as what to
produce , what to sell, where, when, How etc.

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Importance of decision-making
In organizing it helps to the choose of structure, and form of
organization, division of work, delegation of authority,
fixing of responsibility and the like.
In directing, it helps to determine the course of action,
deciding the orders and instructions to be given, providing
dynamic leadership and similar other issues.
In controlling, the decision making relate to the lying down
of performance standards, strategic control, procedure for
control and so on.
It helps in anticipating and preventing problems or solving
them when prevention fails

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 Factors influencing decision-making
There are three major factors influencing problem solving and
decision making
1. Attributes/Features of the problem solver
2. Nature of the situation/problem
3. Characteristics of the Environment-External to manager
• Decision making is a critical part of being an effective
manager.
• Managers make dozens of decisions everyday.
• Many are quite small but some are huge.
• Your success as a manager depends on how well you make
decisions.
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 Factors influencing…….
1.Problem -solver attributes
• Experience, knowledge and judgment; are the most
important attributes of the decision maker.

• The training, knowledge and experience of clinical

staff such as physicians, nurses and pharmacists are
essential to high quality patient care

• Health services managers are formally educated in

graduate programs and informally educated through
continuing education and in-service training.

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Factors influencing …
2. The situation
• Urgency of results and time pressures.
• Magnitude and importance
• Structure, uncertainty and risk
• Cost-benefit
3. The environmental conditions
• External
• Internal

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 Who should participate?
we involve others in decisions when tests are met:
Test of Relevance--when they have an important
personal stake in the problem and their interest is high
Test of Expertise–they can contribute competently to the
solution.
Test of Jurisdiction—if a problem is in their jurisdiction
or within their work domain allow participation, but if
not, don’t allow them to decide as it may lead to
frustration.

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 Nature of problem and decision
 Depending on the nature of the problem, a manager can
make one of two different types of decisions:
 Structured Problems
 Unstructured Problems

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1. Structured Problems
Some problems are straightforward.
 Involve goals that are clear
 Are familiar (have occurred before)
 Are easily and completely defined ‒ information about the problem is available
and complete
Programmed Decision
 A repetitive decision that can be handled by a routine approach.

• Manager relies on 3 things to make programmed decisions:

 Procedure
, Rule, Policy
2. Unstructured Problems
 Problemsthat are new or unusual and for which information is ambiguous or
incomplete.
 Problems that will require custom-made solutions.

Non-programmed Decisions
 Decisions that are unique and nonrecurring.
 Decisions that generate unique responses.

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 Programmed Vs Non-programmed
Decisions

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 Types of decisions
• Most of managerial decisions are of 3 types.

1. Ends-means

2. Administrative-operational

3. Nonprogrammable- programmable

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 Types of decisions…
 Ends-means
• End decisions :determine the individual or
organizational objectives and results to be achieved.
• Means decisions :choose the strategies or programs
and activities to accomplish desired results.

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 Types of decisions…

Administrative - operational

• Many administrative decisions that are made by senior level executives

significantly affect the HSO/HS and have major implications for
resource allocation and utilization.
• Policy decisions are a synonym for administrative decisions. E.g.
deciding whether to finance facility construction or renovation, hire
hospital based physicians, contract laundry services, reduce the capital
equipment budget.

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 Types of decisions…
• Operational decisions are made by middle level
managers and first –level managers.
• They include deciding whether to purchase non
capital equipment, reassign staff, modify work
systems and modify job content.

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 Types of decisions…. Venn diagram
• Overlap of decision types; the Venn diagram shows that three
decision types may overlap.

Ends-
means
Non
Administrative-
Programmable-
operational
Programmable

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Ways of decisions making
1.Individual decision making
Depends on:
1. Environmental factors (internal/external)
2. Style of the individual
3. Ability to set priorities
4. Timing of decision
5. Commitment to previous decisions
6. Creativity

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 Ways of decisions making
2.Group decision making
• Process of solving problems jointly
• is a key for integration and co-ordination
Outcomes
 Indecision –failure to decide – disagreement

 Authority rule - decision by the manager alone

 Minority rule – decision by few influential

individuals and accepted by others management

 Majority rule – the majority agrees

 Consensus – accepted by all with no argument

 Unanimity – accepted by all after through

discussion and argument

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 Group decision making …
Advantages Disadvantages
• More information for decision Time consuming
(eg. Brain storming) Power dominance
• More alternatives and creativity costly
• Acceptance and commitment Diffusion of
responsibility
• Risk sharing conflict and disagreement
*Indecision

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 Decision making conditions
1. Certainty
A situation in which a manager can make an accurate decision because
the outcome of every alternative choice is known.
2. Risk
A situation in which the manager is able to estimate the likelihood
(probability) of outcomes
– Managers have historical data from past personal experiences or
secondary information
– Intuition is- Making decisions on the basis of experience,
feelings, and accumulated judgment
3. Uncertainty
 Limited information prevents estimation of outcome
 Goals are known, but information about alternatives alternatives and
future outcomes is incomplete (probabilities unknown.

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 Decision making conditions

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Decision Making Steps
1. Identify the problem
 The first step is to recognize there is a problem and a decision
must be made
 Some people just react to problems, but good managers seek to
understand the problem.
 Defining and clarifying/ understanding the problem
 Decision making is essentially a problem-solving process.
Eg. H/professional turnover increased by 5%
2. List alternatives
 Managers need to develop a list of possible courses of action that
will solve the problem.
 Managers must look for standard and also creative answers
Eg. Increase wage, increase benefit or change working condition

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Decision…
3. Select the best alternative.
• Evaluating is part of selecting to see pros & cons
• you should list the potential effects of each choice
• You should also weigh the advantages and disadvantages
• Discuss those effects and make the decision based on what is best for the
organization
Each alternative must pass three stages
1. Feasibility –Is it financially possible? Is it legally possible? Are there limited
human resources available?
2. Satisfactory
 Does the alternative satisfy the conditions of the situation?
 Eg. 50% reduction in H/professional turn over

3. Affordability
 How will this alternative affect other parts of the organization?
• What financial and non-financial costs are associated?

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Eg. Increasing salary may not be feasible, illegal
•Increasing wage and changing working condition may satisfy all
conditions
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Decision…
4. Implement the chosen alternative
 Put the alternative into action. This is critical
 All of your successful analysis won’t good if you are afraid to act.
 Whether the implementation is easy or hard, you must take action.
 Eg. Changing working condition may take time to reduce turn over, so
increase wage
 Managers must consider people’s resistance to change when
implementing decisions.
 For some decisions, implementation is easy; for others, very difficult
or time consuming.
 Operational plans are very useful in implementing alternatives.
 Managers must also recognize that even if all of the alternatives
evaluated , unanticipated consequences are still likely

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Decision…
5. Evaluate
 Earlier we evaluated the alternatives, now this final step means to evaluate
the action.
• Managers must evaluate the effectiveness of their decisions –did the chosen
alternative serve its original purpose?
• This is done with feedback.
• Eg, Turnover dropped to its previous level after 6 month
 If the implemented alternative appears not to be working, the manager has
several choices:
1. Another previously identified alternative might be adopted or
2. Recognize that the situation was not correctly defined and start the process
all over again or
3. Decide that the alternative has not been given enough time to work or
should be implemented in a different way.

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 Thank you!!!!

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