2. Objectives 1. A fundamental understanding of the term decision
2. An understanding of each element of the decision situation
3. An ability to use the decision-making process
4. An appreciation for the various situations in which decisions are made
6. Insights into groups as decision makers

3. Fundamentals of Decisions

4. Definition of a Decision
A Decision: is a choice made between two or more available alternatives
Decision Making: is the process of choosing the best alternative for reaching objectives.
Managers make decisions in all managerial functions (in planning, organizing, influencing, & controlling).
Some decisions affect a large number of organization members, cost more, or have a long-term effect on the organization. But other decisions are not.

5. Types of Decisions
Programmed Decisions: are routine and repetitive, and the organization typically develops specific ways to handle them.
Non-programmed Decisions: are one-shot decisions that are usually less structured than programmed decisions
Programmed decisions typically require less time and effort as compared to nonprogrammed decisions

6. Types of Decisions

7. Types of Decisions
Some decisions are neither programmed nor nonprogrammed, but actually falling somewhere between the two.
(Check the Decision Programming Continuum in the next slide)

8. Types of Decisions

9. The Responsibility for Making Organizational Decision
Organizational decisions are so varied, that’s why Who will make a decision in an org is based on two factors:
Scope of the decision: is the proportion of the total management system that the decision will affect
(the greater this proportion, the broader the scope of the decision is)
Level of management: are simply lower-level management, middle-level management, and upper-level management
(the broader the scope of a decision, the higher the level of the manager responsible for making that decision)

10. The Responsibility for Making Organizational Decision

11. The Responsibility for Making Organizational Decision
Decision makers can ask the advice of other managers or subordinates, or use groups to make certain decisions.
Consensus: is an agreement on a decision by all the individuals involved in making that decision
It occurs after lengthy deliberation and discussion by members of the decision group, Who are they?
Sometimes the group is unable to arrive at a consensus/decision, because:
Lack of technical skills, or
Poor interpersonal relations
(What should a manager do in this case?)
What are some of the advantages and disadvantages of Consensus?

12. Elements of the Decision Situation
The Decision Makers (more details in the next slide)
Goals to Be Served
Relevant Alternatives (what is a relevant alternative?)
Ordering of Alternatives (how?)
Choice of Alternatives

13. Elements of the Decision Situation
The Decision Makers
The individuals or groups that actually make the choice among alternatives
The four orientation of weak (bad) decision makers:
Receptive orientation
Exploitative orientation
Hoarding orientation
Marketing-oriented
(what does each mean?)
The ideal decision maker are free of these four qualities, plus:
Realize the organization and the decision maker potential
Try to use all their talents such as reason and sound judgment

14. The Rational Decision-Making Process
The Rational Decision-Making Process: The steps the decision maker takes to arrive at this choice
If managers use an organized and systematic decision making process, most probably they will make a sound (good) decision
This model is based on three assumptions (for optimal decisions):
Human are economic beings with the objective of maximizing satisfaction or return
All alternatives and their possible consequences are known
Decision makers have some priority system to guide them in ranking each alternative
In real life, one or more of these assumptions is often not met!  less optimal decisions

15. The Rational Decision-Making Process
Identify an existing problem
List possible alternatives for solving the problem
Select the most beneficial of these alternatives
Implement the selected alternatives
Gather feedback to find out whether the implement alternative is solving the identified problem.

16. The Rational Decision-Making Process

17. The Rational Decision-Making Process
Identifying an Existing Problem
Decision making is a problem-solving process that eliminates barriers to organizational goal attainment
Problems are brought to the attention of managers by:
1. Orders issued by managers’ supervisors
2. Situations relayed to managers by their subordinates
3. The normal activity of the managers themselves

18. The Rational Decision-Making Process
Listing Alternative Solutions
Limitations on the number of problem-solving alternatives available:
1. Authority factors
2. Biological or human factors
3. Physical factors
4. Technological factors
5. Economic factors
More explanation in the book

19. The Rational Decision-Making Process

20. The Rational Decision-Making Process
Managers should be aware of the negative effects of generating too many alternatives.
It seems to lead to more effective decision making, BUT:
Having too many alternatives → demotivate decision makers → harms decision making → “Paradox of Choice”

21. The Rational Decision-Making Process
Selecting the Most Beneficial Alternative - After Evaluation
Alternatives evaluation steps:
1) List the potential effects of each alternative
2) Assign a probability factor to each of the potential effects
3) Compare each alternative’s expected effects
and the respective probabilities of those effects
Implementing the Chosen Alternative
Gathering Problem-Related Feedback
Feedback determines implemented alternative’s effect on problem
If problem is not solved, seek out and implement another alternative

22. Advantages and Disadvantages of Using Groups to Make Decisions:
Group Decision Making
Advantages and Disadvantages of Using Groups to Make Decisions:
Advantages:
More and better decision alternatives (Why?)
Members will support the implementation of the decision more
They will perceive the decision as their own, so they will strive to implement it successfully
(What are other advantages?)
Disadvantages:
Longer time
More cost
Can be of lower quality if they are affected by Groupthink: compromising the quality of a decision to maintain friendly relationships within a group

23. Group Decision Making Processes for Making Group Decisions:
Brainstorming
Nominal Group Technique
Delphi Technique

24. Processes for Making Group Decisions
Brainstorming:
A group decision-making process in which negative feedback on any suggested alternative by any group member is forbidden until all members have presented alternatives that they perceive as valuable

25. Processes for Making Group Decisions

26. Processes for Making Group Decisions
Nominal Group Technique:
It is designed to ensure that each group member has equal participation in making the group decision
Step 1— Each group member writes down individual ideas
Step 2— Each member presents individual ideas orally, and are written on a board
Step 3— After members present ideas, entire group discusses ideas simultaneously, unstructured and spontaneous
Step 4— When discussion completed, a secret ballot is taken. The idea with most votes is adopted and implemented

27. Processes for Making Group Decisions
Delphi Technique:
Involves circulating questionnaires on a specific problem among group members, sharing the questionnaire results with them, and then continuing to recirculate and refine individual responses until a consensus regarding the problem is reached.
Group members don’t need to meet face to face

28. Processes for Making Group Decisions
Delphi Technique:
Step 1—A problem is identified
Step 2—Group members are asked to offer solutions to the problem anonymously (secretly) by answering a questionnaire
Step 3—Responses of all group members are compiled and sent out
Step 4—Members are asked to generate a new individual solution
Step 5 – Steps 3 and 4 are repeated until a consensus is reached

29. Evaluating Group Decision-Making Processes
Brainstorming
Nominal Group Technique
Delphi Technique
Advantages
Encourage expression and contribution from all members
Provide many valuable alternatives
No fear of recrimination
Useful for too geographically separated group members ,or busy to meet face to face
Disadvantages
Wasting time
No way to know why they voted that way
Unable to ask questions of one another