Submitted to: Ms Tehzeeb Sakina Amir

By: Safdar bin zafar (2822)

Session.Fri 6:30 P.M

“DECISION MAKING”

We all make decisions of varying importance every day, so the idea that decision making can be
a rather difficult art may at first seem strange. However, studies have shown that most people
are much not as good as at decision making than they think. An understanding of what decision
making involves, together with a few effective techniques, will help produce better decisions.

What is Decision Making?

Decision-making is choosing between alternatives while having incomplete / unreliable

information about the scenario at hand and with uncertain and unpredictable outcomes
of the available alternatives, mainly for the sake of expediency.

I said incomplete and unreliable information – because if you have complete and reliable
information, you can make judgments.

Similarly, I said uncertain and unpredictable outcomes – again if you know the outcome and
its certainty, they would have been called judgments.

Quotes
If you don't design your own life plan, chances are you'll fall into someone else's plan.
And guess what they have planned for you? Not much. (Jim Rohn).

If you have accomplished all that you have planned for yourself, you have not planned
enough. (Edward Everett Hale).

In the long run, men hit only what they aim at. Therefore, though they should fail
immediately, they had better aim at something high. (Henry David Thoreau).

Classification of Decisions

1. Strategic & Periodic Decisions

2. Recurring Decisions
3. Planning Decisions
4. Organizing Decisions
5. Controlling Decision

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Decision Making Styles

Decision-making styles differ from person to person. It would help us to know the decision-
making styles so that we can understand our own style. It is also obvious that the same style of
decision making is not appropriate for every scenario. Even though individuals may have their
own style of decision-making, the knowledge of decision-making styles allows the flexibility to
contain our style and adopt the appropriate style that fits the scenario at hand. Now we can
look at the styles of decision-making.

1. Judgment / Hunch Based Decision Making – this style is utilized by experienced persons.
Experience builds knowledge and possible consequences that result from a decision. Some of us
also are inherently “convergent thinkers” – that is we look for one best solution for a situation.
Such “convergent thinkers” also use this type of decision making. This style is best suited in
situations when the experience/knowledge gap is wide between the decision-maker and the
decision-implementers. Some scenarios that come to mind are –

a. The decision implementers are trainees / novices and the decision maker is more experienced
/ knowledgeable
b. Army and battle like or fire-fighting scenario – that is emergency scenarios

2. Analytical Decision Making – this style implies that a thorough analysis is carried out in which
all possible alternatives are considered along with their costs and possible results are analyzed
and the optimal decision is selected. This is used by knowledgeable people and somewhat less
experienced in their field. The scenarios that come to mind where this style is appropriate are .

a. Strategic decisions which have long term impact – especially selection and design decisions
b. There is time available for making the decision

3. Precedence-based Decision Making – many a time we use established practices and policies for
making decisions. A well-repeated precedence is also called “Organizational Policy”. This style
is used to bring in uniformity between different decision makers – perhaps at different locations
too – in decision-making. The scenarios that come to mind are -

a. Senior Management sets the policy and middle managers make decisions
b. Headquarters sets the policy and branches make decisions.

4. Participative Decision Making – this is also sometimes called as Consultative Decision-making.

The decision maker consults the stakeholders to get their perspective to ensure that all concerns
are taken into consideration before making the decision so that those concerns can be addressed
in the decision. Possible scenarios are –

a. Target setting b. sequencing c. Scheduling d. Inventory control e. Preventive Maintenance

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5. Democratic Decision Making – in this style of decision-making, the decision maker simply let
the decision implementers make the decision. This is especially useful in public interfacing
scenarios. Decision maker formulates guidelines (or sets boundaries) and allow the decision
implementer make the decision. Especially in knowledge realms like Research and
Development, educational institutions, high-tech field, aid distribution work, field commanders
in a battle this style of decision making is appropriate. Some of the possible decisions are –

Kinds of Decisions.

There are several basic kinds of decisions:

This is the yes/no, either/or decision that must be made before we

1. Decisions whether.
proceed with the selection of an alternative. Should I travel this summer? Decisions
whether are made by weighing reasons pro and con. It is important to be aware of
having made a decision.

These decisions involve a choice of one or more alternatives from

2. Decisions which.
among a set of possibilities, the choice being based on how well each alternative
measures up to a set of predefined criteria.

These are decisions that have been made but put on hold until
3. Contingent decisions.
some condition is met.

For example. The need to select different menu items as part of an evening meal.

Techniques for Decision Making

This is a list of easy, practical techniques that can be applied to simple or complex decisions.
They share the assumption that circumspect analysis is the key to making good decisions. The
first three techniques are especially for whether-type decisions, those involving yes/no,
either/or, or two-possibility decisions.

1. T-Chart. A T-Chart is an orderly, graphic representation of alternative features or points

involved in a decision. In one form, it can be a list of positive and negative attributes
surrounding a particular choice.

2. Buriden’s Ass. This method of decision making is used when two or more equally attractive
alternatives are faced. (From an old fable of an ass placed between two equally nice bales of
hay. The ass couldn't decide which bale to turn to because they were both so attractive, and so it
starved to death from indecision.) The method is simply to list all the negative points or
drawbacks about each decision. That is, when two or more alternatives seem very desirable, we
become blinded to any drawbacks.

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3. Measured Criteria. With this technique, you list the criteria you want your decision to meet
and assign points to each criterion based on its relative importance in the decision. Then, each
alternative is given a certain number of points according to how fully it meets the criterion. For
points you can use a scale of 1 to 10, 1 to 100, or any other range that makes sense to you.

4.Cost Benefit Analysis. Cost Benefit Analysis is a relatively simple and widely used technique
for deciding whether to make a change. As its name suggests, you simply add up the value of
the benefits of a course of action, and subtract the costs associated with it.

Decision making Concept

1. Information This is knowledge about the decision, the effects of its alternatives, the probability
of each alternative, and so forth. A major point to make here is that while substantial
information is desirable, the statement that "the more information, the better" is not true. Too
much information can actually reduce the quality of a decision.

2. Alternatives.: These are the possibilities one has to choose from. Alternatives can be identified
(that is, searched for and located) or even developed (created where they did not previously
exist). Merely searching for preexisting alternatives will result in less effective decision making.

3. Criteria. These are the characteristics or requirements that each alternative must possess to a
greater or lesser extent. Usually the alternatives are rated on how well they possess each
criterion. For example, alternative Toyota ranks an 8 on the criterion of economy, while
alternative Buick ranks a 6 on the same criterion.

4. Goals. What is it you want to accomplish? Strangely enough, many decision makers collect a
bunch of alternatives (say cars to buy or people to marry) and then ask, "Which should I
choose?" without thinking first of what their goals are, what overall objective they want to
achieve.

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5. Value. Value refers to how desirable a particular outcome is, the value of the alternative,
whether in dollars, satisfaction, or other benefit.

6. Preferences. These reflect the philosophy and moral hierarchy of the decision maker. We could
say that they are the decision maker's "values," but that might be confusing with the other use of
the word, above. If we could use that word here, we would say that personal values dictate
preferences.

7. Decision Quality This is a rating of whether a decision is good or bad. A good decision is a
logical one based on the available information and reflecting the preferences of the decision
maker.

The Decision Making Process

Conclusion
All decision-making involves elements of risk and reward. For every decision there are risks. Many
organizations are structured so that major decisions are taken at the highest levels. This is because
decisions at the top can have major effects for the whole organization. At the tactical and operational
levels, the risks are smaller. We make decisions and therefore, we need to be aware of decision making
theory and master as many tools and techniques as possible. We must carry out a postmortem of our
decisions to learn lessons so that our decision quality can be improved.