Decision Making

The Eight steps in decision making process

1. Identification of a problem
2. Identification of decision criteria
3. Allocation of weights to criteria
4. Development of alternatives
5. Analysis of alternative
6. Selection of alternative
7. Implementation
8. Evaluation

Identification of a
Problem

Identification of decision
Criteria

Allocation of weights to
criteria

Development of
alternatives

Analysis of Alternatives

Selection of Alternative

Implementation
Approaches to decision making

Rationality
Rational decision-making that is they make clear and rational decisions to maximize value.

Bounded Rationality
Bounded rationality states that managers make rational decisions but are restricted by their ability to
process information.

Intuition
Its decision-making based on experience, feelings, and judgment accumulated.

What we use in HBL

At HBL, decisions are mostly rational and based on intuition, while most of them are bounded
rationality. We judge from HBL branch managers that they follow the top manager’s command. As well
as their branch managers are bound to follow the instructions. Thus employees cannot take decisions on
the basis of their experience or feelings.

Role of Intuition:

Experience-based
decisions

Affect-initiated
Values or ethics-
decisions
based decisions

Intuition

Subconscious Cognitive-based
mental processing decisions
Types of Decisions:

Structured Problem and Programmed decision:

Structured Problem:
Problem that is straight forward, familiar and quick to identify.

Programmed Decision:
Repetitive decisions which can be done consistently.

Unstructured problems and Non programmed decision:

Unstructured problem:
New or unusual problems for which the information is unclear or incomplete.

Non-programmed Decision:
Special and non-recurring decision requiring a personalized solution.

Types of problems in HBL:

The middle managers at HBL usually face structured problems, and they have the authority to handle
them without consulting the top managers. Besides this programmed or more complex problem are
solved by the top executives.
Common decision-making Biases in an organization:

Overview of Managerial Decision-Making: