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Information Management, and

Decision Making
information management entails organizing,
retrieving, acquiring and maintaining
• Information management (IM) is the
collection and management of information
from one or more sources and the
distribution of that information to one or
more audiences. Management means the
organization of and control over the
structure, processing and delivery of
Information management concepts
Jay Galbraith has identified five main organization design
strategies within two categories —
1. Increased information processing capacity and
2. Reduced need for information processing.
• Reduction of information processing needs
– Environmental management
– Creation of slack resources
– Creation of self-contained tasks
• Increasing the organizational information processing
– Creation of lateral relations
– Vertical information systems
• Environmental management. Instead of adapting to changing
environmental circumstances, the organization can aim at modifying
its environment.
An example for reducing uncertainty in the relation with the prior or
demanding stage of the industry system is the concept of Supplier-
Retailer collaboration or Efficient Customer Response.
• Creation of slack resources. In order to reduce exceptions,
performance levels can be reduced, thus decreasing the information
load on the hierarchy. These additional slack resources, required to
reduce information processing in the hierarchy, are representing an
additional cost to the organization and the choice of this method is
clearly depending on the alternative costs of other strategies.
• Creation of self-contained tasks.
Achieving a conceptual closure of tasks is
another way of reducing information
processing. In this case, the task-
performing unit has all the resources
required to perform the task. This
approach is concerned with task (de-)
composition and interaction between
different organizational units, i.e.
organizational and information interfaces
• Creation of lateral relations. In this case, lateral
decision processes are established that cut across
functional organizational units. The aim is to apply a
system of decision subsidiarity, i.e. to move decision
power to the process, instead of moving information from
the process into the hierarchy for decision-making.
• Investment in vertical information systems. Instead of
processing information through the existing hierarchical
channels, the organization can establish vertical
information systems. In this case, the information flow for
a specific task (or set of tasks) is routed in accordance to
the applied business logic, rather than the hierarchical
The three principles of managing
• Information is only relevant, and therefore needed, if
it is used to make a decision. Since very few decisions
are made as a result of receiving management accounts,
sales forecasts, etc., should they be thrown into the
waste paper basket?
• Information is only required when decisions have to
be made. Since directors of a company make long term
decisions, should staff have to work overtime to produce
the information required for them “yesterday”?
• Information needs only to be sufficiently accurate to
make a decision. So no more quoting of forecast sales
for year 3 as “£926,369” i.e. to 0.0001%
The implications
• Since decisions cannot change the past,
only the future, information should
primarily be concerned with forecasting
• You need to communicate your objectives
to your information providers, so that they
can help you achieve them.
The practice

When deciding which information you need regularly:

• Determine what your objectives are
• Decide what decisions you need to make to achieve those
• Decide what information is necessary to support those decisions
• Determine when the decisions have to be made
• Decide on the accuracy necessary to make the decision
• When asking for information – tell the provider what decision you
wish to make or, if it is confidential, be clear in your own mind what it
• When asked to provide information, ask what decision is to be
made, based on it (assuming such a question won’t result in
termination of employment).
What is a decision?

• A decision is like a physical force. A force

changes the speed and/or direction of an
object, such as a block of wood sliding on
a table. A decision changes the speed
and/or direction of the events to which it is
applied. Unless it is a decision to do
Introduction to Decision Making
Levels of Decision Making
• Strategic Decision Making. These decisions are usually
concerned with the major objectives of the organization, such
as "Do we need to change the core business we are in?" They
also concern policies of the organization, such as "Do we want
to support affirmative action?“

• Management Control. These decisions affect the use of

resources, such as "Do we need to find a different supplier of
packaging materials?" Management-level decisions also
determine the performance of the operational units, such as
"How much is the bottleneck in Production affecting the overall
profit and loss of the organization, and what can we do about
• Knowledge-Level Decision Making. These
decisions determine new ideas or
improvements to current products or
services. A decision made at this level could
be "Do we need to find a new chocolate
recipe that results in a radically different
taste for our candy bar?"
• Operational control. These decisions
determine specific tasks that support
decisions made at the strategic or
managerial levels. An example is "How
many candy bars do we produce today?"
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Technical-rational or
• Basically views people as machines.
The manager's job is to keep the machine
running smoothly and in concert with all
the other machines. The manager is also
responsible for creating an administration
that keeps the machine well-oiled and
fixes any broken parts.
Behavioral Perspective

• We all know that humans aren't machines.

They don't work in isolation from other
humans, and there are many more factors
to take into consideration when managing
humans rather than machines. The
behavioral perspective takes these
important characteristics into account.
Just as humans are living, breathing,
ever-changing beings, so too are
The Cognitive Perspective and
Postmodern Era

• To be successful, the cognitive perspective

says an organization must create and use
information to its utmost advantage. The
organization must gather, create, store,
disseminate, and use information and
knowledge. The effective manager will make
sense of the situation, help the organization act
in its best interest, and create the proper
infrastructure for information- and knowledge-
processing to the advantage of the organization.
Types of Decisions

Types of Decisions and Types of
Stages of Decision Making
Individual Models of Decision
• The Rational Model-The rational model
of human behavior says that people
will evaluate the situation and
determine what they want the result
to be. They will determine the
alternative courses of action, know
the consequences of each course, and
then pick the course with the biggest
payoff. If it were only that easy!
• Think about some of the decisions
you've made recently. Did you have an
absolutely clear understanding of the
situation and know exactly what you
wanted the end result to be?
Probably not if you did not evaluate
the decision closely and thoroughly.
Bounded Rationality and
• Sometimes people will follow the rational
model to a certain extent, with a lot of
compromising throughout the decision-
making process, by using bounded
rationality. That is, they will look at
several alternatives, briefly evaluate the
consequences of the alternatives, and
then pick the solution that will get them
closest to where they want to be
Muddling Through
• Compromise is a very common occurrence in decision-
making. Your club needs to raise dues to pay for a new
piece of equipment. Some of your members don't
want to purchase the equipment and others want the
best brand on the market. A spirited discussion
takes place with each side presenting conflicting
opinions. After a while, you agree to purchase a used
piece costing only half of the original price. You
muddled through the decision-making process until
everyone agreed on the solution. As it turns out, the
decision was similar to one made several years before.
By following the previous decision, your group practiced
incremental decision making.
• An organization must examine the theory it most closely
follows and then design the information system to fit.
Above all, managers communicate. Make that
process easier, cheaper, faster, and more efficient
and you've increased the worth of that manager
tremendously. Increase the number of people and
entities the manager can communicate with, and you
reduce the number of managers required.
• You should remember that every decision causes
change and that people react to change in many
different ways. Some people embrace change;
others abhor it. But you can't make a decision
without causing a change somewhere.
• Understanding how an organization makes
decisions can help increase the success of the
decisions made.
• Using information systems in the decision-
making process should be a positive exercise.
That is,the system should help managers at all
levels make better decisions, more efficiently, to
the benefit of a greater number of people, and to
improve the organization.