Professional Documents
Culture Documents
C H A P T E R
Decision Making:
The Essence of the
Managers Job
Lecture Outline
77
S I X
Introduction
The Decision-Making Process
Step 1: Identifying a Problem
Step 2: Identifying Decision Criteria
Step 3: Allocating Weights to the
Criteria
Step 4: Developing Alternatives
Step 5: Analyzing Alternatives
Step 6: Selecting an Alternative
Step 7: Implementing the Alternative
Step 8: Evaluating Decision
Effectiveness
The Manager as Decision Maker
Making Decisions: Rationality,
Bounded Rationality, and Intuition
Assumptions of Rationality
Bounded Rationality
Role of Intuition
Types of Problems and Decisions
Structured Problems and
Programmed Decisions
Unstructured Problems and
Nonprogrammed Decisions
Integration
Decision-Making Conditions
Certainty
Risk
Uncertainty
Decision-Making Styles
Decision-Making Biases and Errors
Summing Up Managerial Decision
Making
Decision Making For Todays World
Everyone
in an organization makes
decisions, but decision making is
particularly important in a managers
job. Decision making is such an
important part of all four managerial
functions that decision making is said to
be synonymous with managing. The
complexity of managerial decision
making ranges from routine choices to
highly complicated issues. In Chapter
Six, students learn about the decisionmaking process and study models and
guidelines
for
making
effective
programmed
and
nonprogrammed
decisions.
The opening situation in A Managers
Dilemma
tells
of
Renee
Lums
challenge as a customer service
manager at American Savings Bank in
Hawaii. The bank has received very few
customer comments on the installation
of an interactive voice response system
designed to facilitate customers use of
its services. Students are asked to put
themselves in Lums position and
decide how they would evaluate the
effectiveness of the new system. What
decision criteria would they use? How
would they evaluate the effectiveness of
their decision? Can they foresee a
situation in which they might have to
retrace their steps in the decisionmaking process and begin again? How
might your students use the decisionmaking process in their lives at the
present time?
78
INTRODUCTION
Every manager should strive to make good decisions because
the overall quality of managerial decisions has a major influence
on organizational success or failure. The concept of decision
making is explored in this chapter.
NOTES
2.
NOTES
B.
NOTES
C.
NOTES
Q&A
6.1 How do decision makers know what weight to assign to the decision
criteria?
D.
NOTES
PRISM #12
E.
F.
NOTES
G.
NOTES
Q&A
6.2 What role, if any, do you think politics plays in organizational decision
making?
Passport
H.
NOTES
81
Q&A
6.3 What if the problem isnt solved by my decision? Did I make a bad
decision?
3.
A.
NOTES
82
2.
Q&A
6.4 Satisficing seems like settling for second best. Is that true?
b.
NOTES
Q&A
3.
NOTES
83
Q&A
B.
Q&A
2.
3.
NOTES
84
Q&A
Hiring a Friend?
C.
Decision-Making Conditions
1.
Certainty is a situation in which a manager can
make accurate decisions because all outcomes are
known. Few managerial decisions are made under
the condition of certainty.
2.
More common is the situation of risk, in which the
decision maker is able to estimate the likelihood of
certain outcomes. Exhibit 6-9 shows an example
of how a manager might make decisions using
expected value, considering the conditions of
risk.
Taking Risks
85
How will you approach your various career moves over the course of your lifetime?
Will you want to do what youve always done? Will you be willing to take chances?
How comfortable will you be about taking chances?
Responsible risk taking can make outcomes more predictable. One decision-making
technique involves making a list of the pros and the cons for each of the decision
alternatives. These lists are then compared to determine whether a clear choice is
apparent. Considering and answering the following questions may help in making
decisions under the condition of risk:
n
n
n
n
n
n
n
n
3.
NOTES
86
Managing IT
We know that many students in todays college classrooms have already gained
experience in the business world and are employed part time, and even full
time, while pursuing their degree. In this activity, ask students to use their
experience in the real world of business to discuss how they have observed
and used IT at work.
As students share this information, ask them to consider how IT is used in their
workplace to help their managers make better decisions. Your students should
enjoy and learn from hearing their classmates insight into the value of IT in
decision making in a variety of work environments.
You might expand the discussion by asking students to relate ways in which IT
is helping them to make better decisions in their daily lives.
D.
Decision-Making Styles
Managers have different styles in making decisions and
solving problems. One perspective proposes that people
differ along two dimensions in the way they approach
decision making.
1.
One dimension is an individuals way of thinking
rational or intuitive. The other is the individuals
tolerance for ambiguitylow or high.
2.
Diagramming these two dimensions lead to a
matrix showing four different decision-making
styles. (See Exhibit 6-12 and PowerPoint slide
6-33.)
a.
The directive style is characterized by low
tolerance for ambiguity and a rational way of
thinking.
b.
The analytic style is one characterized by a
high tolerance for ambiguity and a rational
way of thinking.
c.
The conceptual style is characterized by a
high tolerance for ambiguity and an intuitive
way of thinking.
d.
The behavioral style is characterized by a
low tolerance for ambiguity and an intuitive
way of thinking.
Self-Assessment Library
What did you find out about yourself in doing this exercise? Did
anything surprise you about your assessment?
How can you use this information in helping you refine your
decision-making skills?
How do you think this information could help you as a manager?
Q&A
Self-Assessment Library
Q&A
Exercise
Styles
in
Decision-Making
What did you find out about yourself in doing this exercise? Did
anything surprise you about your assessment?
How can you use this information in helping you refine your
decision-making skills?
How do you think this information could help you as a manager?
Workforce
?Managing
Diversity
88
Making good decisions can be tough! One important suggestion for making
better decisions is to tap into the diversity of the work group. Diverse
employees can provide fresh perspectives on issues, offer differing
interpretations on how a problem can be defined, be more open to trying new
ideas, be more creative in generating alternatives, and be more flexible in
resolving issues.
Even though diversity in decision making can be valuable, drawbacks exist.
Some drawbacks may include a lack of common perspective, which requires
more time required to discuss issues; communication challenges (particularly if
language barriers are present); and additional complexity, confusion, and
ambiguity as a result of diverse opinions.
Ask your students about an important decision such as deciding on a major. Did
they ask others for their opinions? Did they seek out advice from a variety of
people? As future managers in the business world, your students should
consider the value added through diversity in decision making.
E.
9.
10.
11.
12.
NOTES
F.
NOTES
4.
C.
D.
Self-Assessment Library
Responding
Change
to
Turbulent
n
n
n
Focus on Leadership
Cultural Differences in
Leaders Decision-Making
Styles
91
http://leadershipcrossroads.com/rs_quiz.htm
http://www.branchor.com/culturequiz.htm
http://channel.nationalgeographic.com/channel/worldsapart/
After completing the quizzes, ask students to discuss the following questions in
small groups of two or three students:
What
What
time and
What
study of
cultures?
1.
2.
3.
5.
6.
7.
TOGETHERTeam-Based
Fast Company
1.
3.
4.
5.
96