Decision Making

Unit V
. Meaning
Decision making is the process of choosing the
best from among the alternative solutions
under a given set of circumstances.

Decision making involves 3 aspects of human

behaviour.
 Cognition Activities of mind associated with knowing
 Conation (willingness, Desire)
 Affection (Emotion , temperament)
 Decisions and Decision Making

Decision Making –
Decision - the process of
choice made Identifying problems
from available And opportunities and
alternatives Then resolving them.

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 CHARACTERISTICS OF
DECISIONS MAKINGS
Freedom to
Alternatives
chose

Goal Rational vs
Directed Judgmental
FACTORS AFFECTING
DECISION
 TYPES OF DECISION
Programmed and non-programmed
Programmed:-Programmed Decisions are routine
and repetitive and are made with the framework of
organizational policies and rule.

Non- Programmed:- Non- programmed

decisions are relevant for solving unique and unusual
problems in which various alternatives cannot be
decided in advance. Evaluation of Alternatives are not
possible fully.
Programmed vs. Non-programmed
Decisions
Characteristics Programmed decisions Non-programmed
decisions
Type of problem Structured Unstructured

Managerial level Lower level Upper level

Frequency Repetitive New,unusual

Information Readily available Ambiguous or incomplete

Time frame for solution Short Relatively long

Solution relies on Procedures,rules, and Judgment and creativity

policies
 TYPES OF DECISION
Strategic vs Operational

Strategic:-Strategic decisions are related to unified,

integrated and comprehensive issues of the
organization. E.g diversification, introduction to the
new product.

Operational:- Routine activities related decision

are operational decisions. E.g. sanction of increment,
paying of bill.
 TYPES OF DECISION
Major and Minor

Major:- Decisions affecting overall organization is

the major decision.

Minor:- Decisions affecting only specific functional

area is known as minor decision .
 TYPES OF DECISION
Simple and Complex
Simple:-Decisions involving less no of variables to be
considered.

Complex:-Large number of variables are

considered before taking the decision.
 TYPES OF DECISION
Long –run vs Short- run

Long-run:-Decisions taken for the long run plans.

E.g Selection of candidates for the permanent post.

Short-run:- Temporary employees selection is short

run.
 TYPES OF DECISION
Individual and Group
Individual:-Decisions taken by individual selector

Group:- Decision taken by panel

 Characteristics of an Effective
Decision-Making
 It focuses on what is important
 It is logical and consistent.
 It acknowledges both subjective and objective thinking and
blends analytical with intuitive thinking.
 It requires only as much information and analysis as is
necessary to resolve a particular dilemma.
 It encourages and guides the gathering of relevant information
and informed opinion.
 It is straightforward,reliable, easy to use, and flexible.
 Decision-Making Styles (cont’d)
Types of Decision Makers
* Directive
# Use minimal information and consider few alternatives.
* Analytic
# Make careful decisions in unique situations.
* Conceptual
# Maintain a broad outlook and consider many
alternatives in making decisions.
* Behavioral
# Avoid conflict by working well with others and being
receptive to suggestions.
 THE STAGES OF DECISION
MAKING
Identifying and
diagnosing
the problem
Generating
alternative
solutions

Evaluating
alternatives

Making the
choice

Implementing
the decision

Evaluating
3-15
the decision
Approaches to

Decision making
The Intuitive
The Rational
A Satisficing
Political Behavioural
Incremental Model
Garbage Model
 Approaches
Intuition
The ability of managers to be perfectly rational
in making decisions is limited by facts such as:
Inadequate information
Time and cost constraints
 cognitive capacity
Managers seek alternatives only until they find
one which looks satisfactory, rather than seeking
an optimal decision.

18
 What is Intuition ?
Their past experiences

Ethical values
and culture Experience-based Feelings or emotions
Decisions
Values or ethics- Affect-Initiated
based Decisions intuition Decisions

Subconscious Cognitive-Based
mental processing Decisions

Data from Skills,knowledge, and

subconscious mind training
Decision-maker takes decision based on intuitions
which is characterized by the use of hunches, inner
feelings or the gut-feeling of the decision-maker.
The decision maker working on this approach
practices management in the form of art.
He prefers habit or experience relative thinking and
instinct, using the unconscious cognitive process.
Tips to carry out this approach
Becoming more involved decision- making and
evaluation of taken decision.
Developing an awareness that hunches can help in
decision-making.
Becoming aware of biases.
Seek out independent opinions.
Rational Decision Making Approach
Decision maker is rational and
intelligent.
Fully aware of all available feasible
alternatives to maximize advantages.
Consider all possible choices
Decide the most optimal alternative that
can be adopted.
 An
Anoptimal
optimaldecision
decision
isispossible
possible

All
Allrelevant
relevantinformation
information
isisavailable
available Rational
Rational
All
Allrelevant
relevantinformation
informationisis Decision
Decision
understandable
understandable
Making
Making
All
Allalternatives
alternativesare
areknown
known

All
Allpossible
possibleoutcomes
outcomesknown
known
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Process
Recognize the need for a decision
Establish, Rank and weigh criteria,
Gather available information and data
Evaluate each alternative
Select the best alternative.
 Time
Timeconstraints
constraints

Limited
Limitedability
abilitytoto
understand
understandall
allfactors
factors
‘Satisficing’
‘Satisficing’
Inadequate
Inadequatebase
base
ofofinformation
information
decision
decision
Limited
making
making
Limitedmemory
memoryofof
decision-makers
decision-makers
Poor
Poorperception
perceptionofoffactors
factors
totobe
beconsidered
considered
inindecision
decisionprocess
process

26
Organizational Models of Decision-Making

Bureaucratic models of decision making

where decisions are shaped by the organization’s standard
operating procedures(SOPs).

Political models of decision making

where decisions result from competition and bargaining
among the organization’s interest groups and key leaders.

“Garbage can” model

where states that organizations are not rational and that
decisions are solutions that become attached to problems
for accidental reasons.
 THREE DECISION MAKING
MODELS

Political
 PoliticalModel
Model

Administrative
 AdministrativeModel
Model

Classical
 ClassicalModel
Model

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 CHARACTERISTICS OF CLASSICAL,
ADMINISTRATIVE, AND POLITICAL
DECISION-MAKING MODELS

Classical Model Administrative Model Political Model

Clear-cut problem and goals. Pluralistic; conflicting goals.
Vague problem and goals.
Condition of certainty. Condition of
Condition of uncertainty.
Full information about uncertainty/ambiguity.
Limited information about
alternatives and their Inconsistent viewpoints;
alternatives and their
outcomes. ambiguous information.
outcomes.
Rational choice by individual
Satisficing choice for resolving Bargaining and discussion
for maximizing outcomes. among coalition members.
problem using intuition.
CONSTRAINTS ON DECISION
MAKERS

Social
Political Economical

Organizational
Technical

Constraints
Environmental

Human Ethical
Group Decision
Making
 Degree Of Participation
Experiences
Expertise
Nature of Task
Difference of opinion
Openness of Group leader
Org Culture
Employee Empowerment and freedom
Methods of Group Decision making
The majority wins scheme
The truth wins scheme
Two third Majority scheme
First shift rule
Status Quo Rule.
 MANAGING GROUP DECISION
MAKING
Leadership Constructive Conflict
1. Avoid domination 1. Air legitimate
2. Encourage input differences
3. Avoid groupthink 2. Stay task-focused
and satisficing 3. Be impersonal
4. Remember goals 4. Play devil’s advocate

Effective Group
Decision Making

Creativity
1. Brainstorm
2. Avoid criticizing
3. Exhaust ideas
4. Combine ideas
Techniques in Group Decision Making