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© 2005 Prentice Hall Inc. All rights reserved.5–1 DECISION MAKING AND STRESS MGMT Anubha
© 2005 Prentice Hall Inc. All rights reserved.5–2 Phases of DM Identification Phase – identify problem –Recognize and Diagnose Development phase – Solution –Search and design Selection phase – Choice of solution –Judgment, Analysis & authorisation
© 2005 Prentice Hall Inc. All rights reserved.5–3 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)
© 2005 Prentice Hall Inc. All rights reserved.5–4 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
© 2005 Prentice Hall Inc. All rights reserved.5–5 Techniques used in steps of DM Brainstorming Synectics Delphi Technique
© 2005 Prentice Hall Inc. All rights reserved.5–6 Identify Problem The Decision-Making Process Select Alternative Implement Alternative Evaluate Results 1 Develop Alternatives Analyze Alternatives Develop Decision Criteria Allocate Weights to Criteria 23 45 6 7 8
© 2005 Prentice Hall Inc. All rights reserved.5–7 Step 2: Decision Criteria Factors that are relevant in making the decision Price Interior comfort Durability Repair record Performance Handling
© 2005 Prentice Hall Inc. All rights reserved.5–8 Determining the relative priority of each of the criteria Step 3: Allocating Weights
© 2005 Prentice Hall Inc. All rights reserved.5–9 Problem: To purchase a new car CriterionWeight Price10 Interior comfort8 Durability5 Repair record5 Performance3 Handling1
© 2005 Prentice Hall Inc. All rights reserved.5–10 Assessing the value of each alternative by making a value judgment of the feature Step 5: Analyzing Alternatives
© 2005 Prentice Hall Inc. All rights reserved.5–11 Concluding Steps in Making a Decision Step 6: Select the “best” Step 7: Implement decision Step 8: Evaluate decision
© 2005 Prentice Hall Inc. All rights reserved.5–12 Assumptions Of Rationality Rational Decision Making Problem is clear and unambiguous Single, well- defined goal is to be achieved All alternatives and consequences are known Preferences are clear Preferences are constant and stable No time or cost constraints exist Final choice will maximize payoff © Prentice Hall, 2002 Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 4.12
© 2005 Prentice Hall Inc. All rights reserved.5–13 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
© 2005 Prentice Hall Inc. All rights reserved.5–14 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
© 2005 Prentice Hall Inc. All rights reserved.5–15 Bounded Rationality Uncertainty Risk Satisfying Focusing on highly visible choices
© 2005 Prentice Hall Inc. All rights reserved.5–16 Errors in Decision-Making Process Heuristics –Availability –Representative Escalation of commitment
© 2005 Prentice Hall Inc. All rights reserved.5–17 Well-Structured vs. Ill-Structured Problems Straightforward Familiar Easily-defined New or unusual Ambiguous information Incomplete information
© 2005 Prentice Hall Inc. All rights reserved.5–18 Categories of Decisions Programmed Non-programmed
© 2005 Prentice Hall Inc. All rights reserved.5–19 Procedure Rule Policy Programmed Decision
© 2005 Prentice Hall Inc. All rights reserved.5–20 Programmed Decisions Non-programmed Decisions Relationship of Problems, Decisions, and Level Type of Problem Level Ill-Structured Well-Structured Top Lower
© 2005 Prentice Hall Inc. All rights reserved.5–21 Decision-making and Technology Information technology can help support decision-making Types of software include –Expert systems –Neural networks –Groupware
© 2005 Prentice Hall Inc. All rights reserved.5–22 Analytical BehaviouralDirective Conceptual Decision-Making Styles RationalIntuitive Way of Thinking Low High Tolerance for Ambiguity Source: S. P. Robbins, Supervision Today (Upper Saddle River, NJ: Prentice Hall, 1995), page 111.
© 2005 Prentice Hall Inc. All rights reserved.5–23 Advantages of Group Decision-Making More complete information Diversity of experience Generation of more alternatives Solutions more likely to be accepted by those concerned
© 2005 Prentice Hall Inc. All rights reserved.5–24 Disadvantages of Group Decision-Making Time-consuming Domination by a few Pressure to conform
© 2005 Prentice Hall Inc. All rights reserved.5–25 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
© 2005 Prentice Hall Inc. All rights reserved.5–26 Ways to Improve Group Decision-Making Brainstorming Nominal group technique Electronic meetings
© 2005 Prentice Hall Inc. All rights reserved.5–27 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
© 2005 Prentice Hall Inc. All rights reserved.5–28 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.
© 2005 Prentice Hall Inc. All rights reserved.5–29 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.
© 2005 Prentice Hall Inc. All rights reserved.5–30 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.
© 2005 Prentice Hall Inc. All rights reserved.5–31 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.
© 2005 Prentice Hall Inc. All rights reserved.5–32 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
© 2005 Prentice Hall Inc. All rights reserved.5–33 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.
© 2005 Prentice Hall Inc. All rights reserved.5–34 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
© 2005 Prentice Hall Inc. All rights reserved.5–35 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.
© 2005 Prentice Hall Inc. All rights reserved.5–36 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.
© 2005 Prentice Hall Inc. All rights reserved.5–37 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.
© 2005 Prentice Hall Inc. All rights reserved.5–38 STRESS MANAGEMENT
© 2005 Prentice Hall Inc. All rights reserved.5–39 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.
© 2005 Prentice Hall Inc. All rights reserved.5–40 Work Stress and Its Management Constraints Forces that prevent individuals from doing what they desire. Demands The loss of something desired.
© 2005 Prentice Hall Inc. All rights reserved.5–41 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
© 2005 Prentice Hall Inc. All rights reserved.5–42 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)
© 2005 Prentice Hall Inc. All rights reserved.5–43 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.
© 2005 Prentice Hall Inc. All rights reserved.5–44 Consequences of Stress High Levels of Stress Physiological Symptoms Behavioral Symptoms Psychological Symptoms
© 2005 Prentice Hall Inc. All rights reserved.5–45 Managing Stress Individual Approaches –Implementing time management –Increasing physical exercise –Relaxation training –Expanding social support network
© 2005 Prentice Hall Inc. All rights reserved.5–46 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
© 2005 Prentice Hall Inc. All rights reserved.5–47 A Model of Stress
© 2005 Prentice Hall Inc. All rights reserved.5–48 Managing Stress Individual Approaches –Implementing time management –Increasing physical exercise –Relaxation training –Expanding social support network
© 2005 Prentice Hall Inc. All rights reserved.5–49 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
© 2005 Prentice Hall Inc. All rights reserved.5–50 Inverted-U Relationship between Stress and Job Performance OPTIMAL ALERTANXIETY SLEEP DISORGANISED
Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 4.1 Chapter 4 Foundations of Decision Making.
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