Decision Making

Engr. Robert A.G. Montales

February 21, 2020
What is a decision?
• A choice made from available alternatives.

What is decision making?

• The process of identifying problems and
opportunities and then resolving them.
Types of Decisions and Problems
• Programmed Decision
 A decision made in response to a situation that has
occurred often enough to enable decision rules to be
developed and applied in the future.

• Nonprogrammed Decision
 A decision made in response to a situation that is
unique, is poorly defined and largely unstructured, and
has important consequences for the organization.
Factors affecting decision making
• Certainty
 All the information the decision maker needs is fully
available.

• Risk
 A decision has a clear-cut goals and good information
is available, but the future outcomes associated with
each alternative are subject to chance.
Factors affecting decision making
• Uncertainty
 Managers know which goals they wish to achieve, but
information about alternatives and future events is
incomplete.

• Ambiguity
 The goals to be achieved or the problem to be solved is
unclear, alternatives are difficult to define, and
information about outcomes is unavailable.
Decision-Making Models
A) Classical Model
 A decision-making model based on the assumption that
managers should make logical decisions that will be in the
organization’s best economic interest.

Normative – an approach that defines how a decision maker

should make decisions and provide guidelines for reaching an
ideal outcome for the organization.

Classical model represents an ideal model of decision

making.
Decision-Making Models
B) Administrative Model
 A decision-making model that describes how managers actually
make decisions in situations characterized by nonprogrammed
decisions, uncertainty, and ambiguity.

Bounded Rationality – The concept that people have the time

and cognitive ability to process only a limited amount of
information on which to base decisions.

Satisficing – To choose the first solution alternative that satisfies

minimal decision criteria regardless of whether better solutions
are presumed to exist.
Decision-Making Models
• Administrative Model (Con’t)
Descriptive – An approach that describes how managers
actually make decisions rather than how they should.

Intuition – The immediate comprehension of a decision

situation based on past experience but without
conscious thought.
Decision-Making Models
C) Political Model
 Closely resembles the real environment in which most
managers and decision makers operate. Decisions are
complex and involved many people, information is often
ambiguous, and disagreement and conflict over problems
and solutions are normal.

Useful for making nonprogrammed decisions when the

conditions are uncertain, information is limited and there is
disagreement among managers about what goals to pursue
or what course of action to take.
Decision-Making Models
C) Political Model (Con’t)
 Coalition – An informal alliance among managers who
support a specific goal.
Six Steps in the Managerial Decision Making Process
1) Recognition of Decision Requirement
 A problem occurs when the organizational
accomplishment is less than the established goals.

Awareness of a problem or opportunity is the first step

in the decision sequence and requires surveillance of
the internal and external environment for issues that
merit executive decision.
Six Steps in the Managerial Decision Making Process
2) Diagnosis and Analysis of Causes
 Once the problem or opportunity has come to a
manager’s attention, the understanding of the situation
should be refined.

Diagnosis – is the step in the decision-making process in

which managers analyze underlying causal factors
associated with the decision situation.
Six Steps in the Managerial Decision Making Process
3) Development of Alternatives
 Generate possible alternative solutions that will respond
to the needs of the situation and correct the underlying
causes.

For programmed decision, feasible alternatives are easy to

identify and already available within the organization’s
rules and procedures.

For nonprogrammed decision, it requires developing new

courses of action that will meet the company’s need.
Six Steps in the Managerial Decision Making Process
4) Selection of Desired Alternative
 Decision choice is the selection of the most promising of
several alternative courses of action. The best
alternative is one in which the solution best fits the
overall goals and values of the organization and achieves
the desired results using the fewest resources.

5) Implementation of Chosen Alternative

 This involves the use of managerial, administrative, and
persuasive abilities to ensure that the chosen alternative
is carried out.
Six Steps in the Managerial Decision Making Process
6) Evaluation and Feedback
 Decision makers gather information that tells them how
well the decision was implemented and whether it was
effective in achieving its goals.

Feedback is important because decision making is a

continuous, never-ending process. It is the part that
assess whether a new decision needs to be made.
Decision Styles
1) Directive Style
 Used by people who prefer simple, clear-cut solutions to
problems. Managers who used this style often make
decisions quickly because they do not like to deal with a
lot of information and may consider only one or two
alternatives. People who prefer the directive style
generally are efficient and rational and prefer to rely on
existing rules or procedures for making decision.
Decision Styles
2) Analytical Style
 Like to consider complex solutions based on as much
date as they can gather. These individuals carefully
consider alternatives and often base their decisions on
objective, rational data from management control
systems and other sources. They search for the best
possible decision based on the information available.
Decision Styles
3) Conceptual Style
 Style adopted by managers having a deep concern for
others as individuals. Managers using this style like to
talk to people one-on-one and understand their feelings
about the problem and the effect of a given decision
upon them. People with a behavioral style usually are
concerned with the personal development of others
and may make decisions that help others achieve their
goals.
Decision Styles
4) Behavioral Style
 Like to consider to consider a braod amount of
information.However, they are more socially oriented
than those with an analytical style and like to talk to
others about the problem and possible alternatives for
solving it. Managers using a conceptual style consider
many broad alternatives, rely on information from both
people and systems, and like to solve problems
creatively.
What is your Decision Style?
Read each of the following questions and chose the
answer that best describes you. Think about how you
typically act in a work or school situation and mark the
answer that first comes to mind. There are no right or
wrong answers.
1. In performing my job or class work, I look for:
a) practical results
b) the best solution
c) creative approaches of ideas
d) good working conditions
What is your Decision Style?
2. I enjoy jobs that:
a) are technical and well defined
b) have a lot of variety
c) allow me to be independent and creative
d) involve working closely with others

3. The people I most enjoy working with are:

e) energetic and ambitious
f) capable and organized
g) open to new ideas
h) agreeable and trusting
What is your Decision Style?
4. When I have a problem, I usually:
a) rely on what has worked in the past
b) apply careful analysis
c) consider a variety of creative approaches
d) seek consensus with others

5. I am especially good at:

e) remembering dates and facts
f) solving complex problems
g) seeing many possible solutions
h) getting along with others
What is your Decision Style?
6. When I don’t have much time, I:
a) make decisions and act quickly
b) follow established plans or priorities
c) take my time and refuse to be pressured
d) ask others for guidance

7. In social situations, I generally:

e) talk to others
f) think about what’s being discussed
g) observe
h) listen to the conversation
What is your Decision Style?
8. Other people consider me:
a) aggressive
b) disciplined
c) creative
d) supportive

9. What I dislike most is:

e) not being in control
f) doing boring work
g) following rules
h) being rejected by others
What is your Decision Style?
10. The decisions I make are usually:
a) Direct and practical
b) Systematic or abstract
c) Broad and flexible
d) Sensitive to others’ needs
Management Aptitude Questionnaire
• Scoring Instructions
 Subtract your scores for questions 6, 10, 14,and 17
from the number 6, and then add the total points for
the following sections:
1, 3, 6, 9, 12, 15 : Conceptual Skills total Score ____
2, 5, 8, 10, 14, 17 : Human Skills total score ____
4, 7, 11, 13, 16, 18 : Technical Skills total score ____
Interpretation of results:
• These skills are three abilities needed to be a good
manager. Ideally, a manager should be strong
(though not necessarily equal) in all three.
• Anyone noticeably weaker in any of the skills ahould
take courses and read to build up that skills.
End of Presentation