Key Topics

Introduction

The Decision-making process

Decision making stages

Decision-making models

Decision Styles

Decision Implementation

A discussion on Group Decisions






No sensible decision can be made any longer without
taking into account not only the world as it is, but the
world as it will be. . .

-Isaac Asimov
What is Decision Making?

Decision making is the cognitive process leading to the selection
of a course of action among alternatives.

Every decision making process produces a final choice . It can be
an action or an opinion .

It begins when we need to do something but we do not know
what.

Therefore, decision making is a reasoning process which can be
rational or irrational, and can be based on explicit assumptions or
tacit assumptions.

Examples: Shopping, deciding what to eat, What to wear, when to
sleep, etc..

Decision-making Process

1. Identifying a problem

2. Identifying decision criteria

3. Allocating weights to criteria

4. Developing alternatives

5. Analyzing alternatives

6. Selecting an alternative

7. Implementing the alternative

8. Evaluation (of decision effectiveness)

Problem Definition

Problem is a discrepancy (difference) between an existing and a
desired state.

Example:
The manager has resigned, and we need another manager
Here the phrase manager has resigned reflects the current state
while need another manager represents a desired state .

Identifying Decision Criteria

The word criteria, is defined as a standard by which something
can be judged . A decision criteria therefore, is the basis of a
decision, which outlines the relevant and important factors for a
decision. And implicitly, it also defines what is not important.


Developing Alternatives

Involves defining the possible alternatives (or choices) that would
resolve the problem.

In our case, the alternatives would be a list of candidates or job
applicants.

Analyzing Alternatives

Alternatives are rated and analyzed on the basis of the criteria

The rating can be based on a specified scale , say 1 5 etc.

Rating may be subjective in nature and thus, may depend on the
judgment of the individual(s)

Selecting an alternative

Involves choosing the best alternative, based on the above rating
and analysis

Generally implies selecting the alternative with the highest score.


Implementing the Alternative

Putting the decision into action

Involves clear communication of the decision to all concerned and
obtaining their commitment

Evaluation

Evaluation forms an integral part of any process

Involves evaluation of the outcome based on the desired goal and
criteria

Involves assessing the effectiveness and efficiency of the outcome
(or the entire process)

In case of any undesired results, each step of the process is
carefully reviewed to trace the root causes
6 C's of Decision Making

1. Construct.

2. Compile.

3. Collect.

4. Compare.

5. Consider.

6. Commit.

Construct a clear picture of precisely what must be
decided.

Compile a list of requirements that must be met.

Collect information on alternatives that meet the
requirements.

Compare alternatives that meet the requirements.

Consider the what might go wrong factor with each
alternative.

Commit to a decision and follow through with it.

Problem Analysis vs Decision Making

It is important to differentiate between problem analysis and
decision making. The concepts are completely separate from one
another. Problem analysis must be done first, then the information
gathered in that process may be used towards decision making.

Problem Analysis

Analyze performance, what should the results be against what
they actually are

Problems are merely deviations from performance standards

Problem must be precisely identified and described

Problems are caused by some change from a distinctive feature

Something can always be used to distinguish between what has
and hasn't been effected by a cause

Causes to problems can be deducted from relevant changes found
in analyzing the problem

Most likely cause to a problem is the one that exactly explains all
the facts

Decision Making

Objectives must first be established

Objectives must be classified and placed in order of importance

Alternative actions must be developed

The alternative must be evaluated against all the objectives

The alternative that is able to achieve all the objectives is the
tentative decision

The tentative decision is evaluated for more possible
consequences

The decisive actions are taken, and additional actions are taken
to prevent any adverse consequences from becoming problems
and starting both systems (problem analysis and decision making)
all over again

There are steps that are generally followed that result in a
decision model that can be used to determine an optimal
production plan


Decision-Making Stages
There are four stages that should be involved in all group decision
making. These stages, or sometimes called phases, are important
for the decision-making process to begin

1. Orientation stage- This phase is where members meet for the
first time and start to get to know each other.

2. Conflict stage- Once group members become familiar with
each other, disputes, little fights and arguments occur. Group
members eventually work it out.

3. Emergence stage- The group begins to clear up vague
opinions by talking about them.

4. Reinforcement stage- Members finally make a decision, while
justifying themselves that it was the right decision.

The Decision making model
Classify and define
problem or opportunity
Set objectives and
criteria
Generate creative and
innovative alternative
Analyze alternatives and
select the most feasible
Plan and implement
the decision
Control the decision
Decision-making Models

Model :
A simplified representation or description of a system
or complex entity

Examples :

1. Rational Model (Classical Model)
The decision maker attempts to use optimizingselecting
the best possible alternative.

2. Bounded Rationality Model
The decision maker uses satisficing selecting the first
alternative that meets the minimal criteria for solving the
problem.

Rational/Bounded Rational

So Rational and Bounded Rational Models are cognitive
models that describe how managers make rational
decisions

1. Define and
diagnose the
problem
2. Set goals
3. Search for
alternative
solutions
External and
internal Environ.
forces
4.
Compare
and
evaluate
solution
5. Choose
among
alternative
solutions
7. Follow up
and control
6. Implement
the solution
selected
Decision-Making Styles

Reflexive Style
Makes quick decisions without taking the time to get all
the information that may be needed and without
considering all the alternatives.

Reflective Style
Takes plenty of time to make decisions, gathering
considerable information and analyzing several
alternatives.

Consistent Style
Tends to make decisions without either rushing or
wasting time.

Decision-Making Steps

When in an organization and faced with a difficult decision, there are
several steps one can take to ensure the best possible solutions will
be decided. These steps are put into seven effective ways to go
about this decision making process .

The first step - Outline your goal and outcome. This will enable
decision makers to see exactly what they are trying to accomplish
and keep them on a specific path.

The second step - Gather data. This will help decision makers have
actual evidence to help them come up with a solution.

The third step - Brainstorm to develop alternatives. Coming up with
more than one solution enables you to see which one can actually
work.

The fourth step - List pros and cons of each alternative. With the
list of pros and cons, you can eliminate the solutions that have
more cons than pros, making your decision easier.

The fifth step - Make the decision. Once you analyze each
solution, you should pick the one that has many pros (or the pros
that are most significant), and is a solution that everyone can
agree with.

The sixth step - Immediately take action. Once the decision is
picked, you should implement it right away.

The seventh step - Learn from, and reflect on the decision
making. This step allows you to see what you did right and wrong
when coming up, and putting the decision to use.


Pareto analysis

This is the idea that 80% of tasks can be completed in 20% of the
disposable time. The remaining 20% of tasks will take up 80% of the
time. This principle is used to sort tasks into two parts.

The 80-20-rule can also be applied to increase productivity: it is
assumed that 80% of the productivity can be achieved by doing 20%
of the tasks. Similarly, 80% of results can be attributed to 20% of
activity. If productivity is the aim of time management, then these
tasks should be prioritized higher.

Pareto's Principle, the 80/20 Rule, should serve as a daily reminder to
focus 80 percent of your time and energy on the 20 percent of you
work that is really important. Don't just "work smart", work smart on
the right things

SWOT analysis (alternately SLOT analysis) is a strategic planning
method used to evaluate the Strengths, Weaknesses/Limitations,
Opportunities, and Threats involved in a project or in a business
venture.

It is also a powerful strategic planning tool used to evaluate a project
or in a business venture or in any other situation of an organization or
individual requiring a decision in pursuit of an objective.

It involves specifying the objective of the business venture or project
and identifying the internal and external factors that are favorable and
unfavorable to achieve that objective.

1. Internal factors The strengths and weaknesses internal to the
organization.

2. External factors The opportunities and threats presented by the
external environment to the organization.



SWOT Analysis Strategic Use

Orienting SWOTs to An Objective - If SWOT analysis does not start
with defining a desired end state or objective, it runs the risk of
being useless.

If a clear objective has been identified, SWOT analysis can be used
to help in the pursuit of that objective. In this case, SWOTs are:

Strengths
Attributes of the
organization that are helpful
to achieving the objective.
Weaknesses
Attributes of the
organization that are
harmful to achieving the
objective.
Opportunities
External conditions that are
helpful to achieving the
objective.
Threats
External conditions that are
harmful to achieving the
objective.
Strengths
How can we use each
Strength?

Weaknesses
How can we Stop
each Weakness?
Opportunities
How can we Exploit
each Opportunity?
Threats
How can we Defend
against each Threat?
SWOT Analysis Creative Use

Creative Use of SWOTs If the objective seems attainable, the
SWOTs are used as inputs to the creative generation of possible
strategies, by asking (usually in groups) and answering each of the
following four questions, many times:

SWOT Analysis Errors to Be Avoided

Conducting a SWOT analysis before defining and agreeing upon
an objective (a desired end state). SWOTs should not exist in the
abstract. They can exist only with reference to an objective.

Opportunities external to the company are often confused with
strengths internal to the company. They should be kept separate.

SWOTs are sometimes confused with possible strategies.
SWOTs are descriptions of conditions, while possible strategies
define actions.

Plan, Implement the Decision, and Control

Plan
Develop a plan of action and a schedule of implementation.

Implement the Plan
Communicate and delegate for direct action.

Control
Use checkpoints to determine whether the alternative is
solving the problem.

Avoid escalation of commitment to a bad alternative.

Implement and Monitor Your Solution or Course of
Action

Sometimes corrections need to be made
A choice doesnt mean that it is the only way to go

Remember, you need to monitor and evaluate your solution
throughout its progress to see how its working out

Circumstances change, and a good decision today may not
be the best for the future

Sometimes a self-destruct deadline may be a good option
It can help you to monitor what youre doing and you can
make a better decision once you begin nearing your
deadline
Group Decision-making

The factors requiring group decisions include:

1. Involving sensitive issues

2. High cost alternatives

3. Involving very high risk factor

4. Strategic impact

Group Decisions: Advantages

1. Acceptance of group members

2. Coordination is easier

3. Communication is easier

4. Existence of large alternatives

5. More information can be processed

6. Diversity of experience and perspectives


Group Decisions: Disadvantages

1. Take longer time

2. Group can be indecisive

3. Groups can compromise

4. Groups can be dominated

5. Groups can play games

6. Victim to Groupthink
Situational Factors for Group Decision


Data collection

Importance of acceptance

Importance of solution

Complex problem

Democratic process




Making Risk taking solution needed

Better understanding

Whole responsibility

Feedback required

Making Need for innovation and
creativity

Improving Group Decision-

Making Brainstorming

Nominal group techniques

Electronic meeting

Successful leaders have the courage to take action while
others hesitate. - John C. Maxwell
Barriers to Good Decision Making

1. Hasty - Making quick decisions without having much
thought.

2. Narrow - Decision making is based on very limited
information.

3. Scattered - Our thoughts in making decisions are
disconnected or disorganized.

4. Fuzzy - Sometimes, the lack of clarity on important
aspects of a decision causes us to overlook certain
important considerations.