BUILDING DECISION SKILLS

Dr. V. THANIKACHALAM

Decision Skills• All management work is accomplished

by decision making.• Most basic skill of all management skills.• Most studied by management

practitioner and researcher.• Eliminate some common errors.• Lead to better performance.• Lead to improvements in creative

decision making.

Levels of Decision Making

• Individual Level• Organizational Level

Individual Level• Rational or normative decision process.• Recognizing the issues and potential

problems.• Classifying decisions.• Errors in decision making.• Thinking processes and styles.• Individual creativity and choosing

alternatives.• Risk taking.

Organizational Level• Creating the right environment.• Timely decisions are to be made.• Involvement of all management levels.• Managing group decision processes.• Effective in dealing with uncertainty.

Common Errors in Decision Making

• Timidity• Lack of time limits• Failure to separate symptoms and problems• Failure to define conditions, criteria and

objectives.• Making inferences from unreliable sources.• Lack of awareness of factors affecting

judgment.• Not using a systematic model.• Emotions cloud the process.• Failure to implement.

Normative Decision Process

• Classifying and defining the problem.• Developing criteria for a successful

solution.• Generating alternatives.• Comparing alternatives to criteria.• Choosing an alternative.• Implementing the decisions.• Monitoring the decision and getting

feedback.

Classifying the Problem• Recurring problems those that occur

regularly.• Unique problems for the manager –

recurring in nature.• Unique problems.• A unique problem that will become

recurring.

Recurring Problems• Recurring Regularly

- Seasonal problems- Seasonal hiring of employees / contractors- Seasonal shortage of electric power- Seasonal demands for good and services- Plant shutdowns for maintenance- Recurring customer complaints.

Unique Problems for the Manager – Recurring in Nature• Job choices• Merger with another organization• Installation of a computerized inventory

system / MIS.

Unique Problems• The plant burned down due to fire, earth

quake, Tsunami…• Insolvency• War• Products produced created a bad impact

due to explosion of poisoned gas.

A Unique Problem that will become Recurring

• Consumer complaints about the new products.

• Plant explosion• Fire, sabotage• Fuel crisis

Programmable Problems

• Routine and Generic could be negotiated• Recurring• Routine solutions are available as per

the rules

Unprogrammable Problems

• Unique, unstructured, complex.• Require new approaches for solution• Information channels undefined• Decision criteria unknown• Outcome preferences uncertain

Recurring Problem Solving

• Proceduralized• Predictable• Cause and effect relationships• Amenable to existing technology• Definite decision criteria• Reliance upon rules and principles• Habitual reactions• Uniform processing• Standardized method of handling.

Deciding What Problems to work on

• Problem classification and definition allow managers to rank problems in terms of their priority.

Prioritizing Problems• The consequences of the problem• The impact of the problem on the

organization• Time pressures and urgency• The best utilization of the manager’s

skills and times.• Problem attractiveness.• The lifespan of the problem.

Developing criteria for a successful solution

•Must criteria•Want criteria

Creative People• Sports• Experience in the fields• Creativity to solve complexity and novelty• Less conforming• Good sense of humor• Flexible• Independent• Take risks

Creative Process• Motivation• Saturation• Deliberation• Incubation• Illumination• Accommodation

Improving Creativity• Define the problem thoroughly• Approach the problem from different

angle.• Don’t jump to conclusions to quickly.• Generate several alternatives• Critically evaluate one.• Remove perceptual blocks.• Don’t worry about being practical too

early in the process.

Improving Creativity…• Focus on the critical attributes of the

problem.• Avoid conformity.• Question all ideas and standards if they

have drawbacks.• Be alert for good solutions.• Talk to outside experts.• Take breaks.

Comparing Alternatives to Criteria

• Must criteria• Want Criteria

Decision Trees• Used for comparing criteria to

alternatives• Convenient way to display the various

parts of a given decision.• Useful when the decision maker has to

deal with uncertainty.• Where there are some parts of the

decision that are out of the decision makers control or due to chance.

• Listing the alternatives

Decision Trees…• Listing events that might possibly occur.• They provide clarity and preciseness and

point to the alternatives about which you need to get some more information.

• Decision trees reveal alternatives about which your want to avoid because of a high possibility of potential loss.

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Choosing an alternative• Usually considered the high point

of decision making.• Superior alternative.• Meets the most of the criteria.• To be selected.

Choice Behaviours• Maximize • Looking at all possibilities• Making the best possible decisions• Choosing best of the solutions

Satisfiers• Stop when they found a

satisfactory alternative.• That is feasible in the light of the

criteria.• More common than maximizing.

Incrementing or Muddling through

• Make a series of small decisions• All aimed at their main objective• Rather than make the decision that

gets them there all at once• Incrementing takes longer than

maximizing or satisfying• But risks less resources at any time.

Adaptive Choice

• Simply building the capacity to make decisions

• Respond quickly to a competitor’s action

• Avoid making a major decision for a while

• Works very well where there is so much uncertainty and difficulty to estimate any probabilities

Risk Taking and Choice• People and company vary in taking risks• There is a risky possibility with a high

potential pay off• Large companies, for example, are often

characterized as being more risk average than small entrepreneurial firms.

• Group decisions tend to be riskier than those individuality.

• The risk is spread over a number of people.

The Role of Judgment in Decision making

• Judgment must be made regarding how current management values fit with the decision, the ethics of the decision, and organizational politics.

• The extent to which the decision will be accepted by those around you is extremely important.

• Without help from peers, subordinates, and the boss, decisions are virtually impossible to implement.

The Role of Judgment in Decision making…

• None of these factors can be qualified accurately enough to fit in decision models like decision trees.

• These factors must be weighed with judgment gained through years of experience.

Implementing the Decision

• One of the biggest mistake – “Assume that action based on a decision will automatically follow the making of the decision.

• Avoiding potential conflicts.• Keeping people interested and motivated

in the decision.• Assigning individuals with proper ability to

carry out various implementation tasks.

Steps in Implementation

• A schedule of events• Steps needed to put the solution into

action• Assessing the abilities• Assigning responsibilities• Reporting relationships• Coordinating the implementation work• Avoiding conflicts of interests.

Monitoring the Decision and Getting Feedback

• A mechanism for getting periodic reports on how implementation is going.

• A system for finding out about mistakes and successes.

• Correction and reward• Control function• Setting standards and measuring

performance against them• Prevent problems before they occur• First hand information.

DecideJudge,

Implement andMonitor

THANK YOU DECISION MAKER!

Your Questions, please

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