DecisionMoments of decision are critical because they shape our destinyA judgment that affects a course of action

Decision makingThe process of identifying a set of feasible alternatives and from these, choosing a course of action.

When Decisions are NeededThe current state of affairs has fallen short of a goal or ideal.A problem or crisis may arise that requires managerial action.An opportunity may present itself.In order to maintain the status quo.There is a need to be proactive as managerial entrepreneurs.

Decision MakingIntelligence gatheringDefinition of problemData gathered on scopeConstraints identifiedDesign phaseAlternatives identified and assessedChoiceSelection of an alternativeImplementationMonitoring

Decision Making, Choice Making, and Problem SolvingFIGURE 91

Decision CharacteristicsDegree of Certainty and Decision Making

FIGURE 92

Degree of Certainty and Decision Making

Problem StructureStructured problemA problem whose nature and context are well defined.The desired end state is clear and the course of action to get to the end state is clear.Unstructured problemA problem characterized by a lack of problem and context definition.The desired end state is not clearly understood, and therefore the appropriate course of action is unknown.

Types of DecisionsProgrammed decisionRoutines (predetermined courses of action) employed to deal with frequently occurring situations.Nonprogrammed decisionThe process of addressing unique or novel situations confronting the organization.

Decision Characteristics (contd)

Decision Characteristics (contd)Sources of conflicts in decision making

The psychological make-up (i.e., history, biases, preferences, etc.) of decision makers can create intra-individual conflicts with job requirements.

Interpersonal (individual-to-individual and group-to-group) conflicts may require compromises in the decision making process.

Decision Characteristics (contd)PoliticsThe use of power to achieve and/or protect ones self-interests in the presence of other interest groups through:Building coalitionsBargainingTrading support across issues at different points in timeWorking to achieve control of key organizational positionsControlling critical organizational resources

Types of DecisionsMeans decisionConcerns, procedures or actions undertaken to achieve particular goals; it specifies how a goal is to be reached.Ends decisionFocuses on the articulation of a desired goal (outcome).

Types of Decisions (contd)Other Types of DecisionsFunctional decisionrelates to one of the organizations functions marketing, production, etc.)

Job content decisionrelates to the inherent nature of the work performed by an individual or work group.

Job context decisionrelates to issues that surround the job, but are not part pf the job per se.

Decision levelsStrategic decisionidentifies the ends and means associated with the positioning of an organization in its external task environment.Managerial (tactical) decisionspecifies how an organization intends to integrate its institutional level with its technical core, and how it will coordinate the diverse work systems within the technical core.Operating decisiondeals with the day-to-day operation of an organization.

Decision StrategiesFIGURE 93

Contingency Approaches to Decision MakingThompson and Tudin ModelComputation decision-making approachreliance on an expert for guidanceJudgmental decision-making approachreliance on the majority rule of expertsCompromise decision-making approachreliance on a decision negotiated among competing groupsInspirational decision-making approachreliance on creativity and intuition (inspiration)

Problems in the Decision-Making ProcessMisunderstanding a situationIncomplete or poorly organized informationDifficulty in applying meaning to abstract informationLimited or selective perception of the situationMistaking symptoms for the problem itselfRushing the decision-making processLimiting the search for alternativesInadequately evaluating courses of actionUsing the wrong decision-making process

Models of Individual Decision MakingA classical (rational/economic) decision making model.Objective rationalitythe notion that decision makers are completely informed of all alternatives and their probabilities and consequences, are infinitely sensitive, and therefore they will make decisions based on fact and rational thought.

Models of Individual Decision MakingA behavioral (administrative) decision making model.Bounded rationalitythe tendency of decision makers to behave rationally within the limits of their information processing capabilities and within the context of their attitudes and emotions.They cannot be aware of all alternatives, consequences and probabilities, and therefore will make satisficing decisions by choosing the first satisfactorysolution that they identify.

Other Approaches to Decision MakingMuddling throughUsing an incremental approach to decision making by making small adjustments to the status quo over longer periods of time.Garbage can approachManagers haphazardly mix problems, solutions, alternatives,and participants together in hopes that they will connect on some level.

Individual Differencesin Decision MakingDecisionMaking

Control- and Involvement-Oriented Management and OrganizationalDecisionMakingFIGURE 99

Decision MakingThe funny side

Six Thinking Hats"Six Thinking Hats" is a technique that helps you look at important decisions from a number of different perspectives. It helps you make better decisions by pushing you to move outside your habitual ways of thinking. As such, it helps you understand the full complexity of a decision, and spot issues and opportunities which you might otherwise not notice.

White Hat:With this thinking hat, you focus on the data available. Look at the information you have, and see what you can learn from it. Look for gaps in your knowledge, and either try to fill them or take account of them.

This is where you analyze past trends, and try to extrapolate from historical data.

Red Hat:

Wearing the red hat, you look at the decision using intuition, gut reaction, and emotion. Also try to think how other people will react emotionally, and try to understand the intuitive responses of people who do not fully know your reasoning.

Black Hat:When using black hat thinking, look at things pessimistically, cautiously and defensively. Try to see why ideas and approaches might not work. This is important because it highlights the weak points in a plan or course of action. It allows you to eliminate them, alter your approach, or prepare contingency plans to counter problems that arise. Black Hat thinking helps to make your plans tougher and more resilient. It can also help you to spot fatal flaws and risks before you embark on a course of action. Black Hat thinking is one of the real benefits of this technique, as many successful people get so used to thinking positively that often they cannot see problems in advance, leaving them under-prepared for difficulties.

Yellow Hat:The yellow hat helps you to think positively. It is the optimistic viewpoint that helps you to see all the benefits of the decision and the value in it, and spot the opportunities that arise from it. Yellow Hat thinking helps you to keep going when everything looks gloomy and difficult.

Green Hat:The Green Hat stands for creativity. This is where you can develop creative solutions to a problem. It is a freewheeling way of thinking, in which there is little criticism of ideas.

Blue Hat:The Blue Hat stands for process control. This is the hat worn by people chairing meetings. When running into difficulties because ideas are running dry, they may direct activity into Green Hat thinking. When contingency plans are needed, they will ask for Black Hat thinking, and so on.

Situation too complicated . . . ?Just stop thinking !