Decision-Making Skills

Prepared by: Lidiya T. ( Assistance Professor, PhD fellow)

05/21/2024 Prepared by: Lidiya T. ( MSN, PhD fellow) 1

 Objectives
 Decision and Decision Making
 Characteristics Of Managerial Decisions
 Decision-Making Models
 Decision Styles
 Ways of decision making
 The Decision-Making Process
 Factors Influencing Decision Making
 Decisions in the Management Functions

05/21/2024 Prepared by: Lidiya T. ( MSN, PhD fellow) 2

 Objectives
At the end of this presentation the audience will
be able to:
Define decision and decision making

 Identify Decision-Making Models, Decision

Styles and Ways of decision making

 Characterize managerial decisions

 Describe the decision making stages

 Identify factors influencing decision making

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 1. Decision and Decision Making
Decision = choice made from available
alternatives
Decision Making
The process of identifying problems and
opportunities and resolving them
The process of developing and analyzing
alternatives and choosing from among
them.

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 2. Characteristics Of Managerial
Decisions

Risk Uncertainty

Lack of
Conflict
Structure

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 Characteristics Of Managerial
Decisions(cont.)
Lack of structure
Programmed decisions - decisions that have
been encountered and made in the past
have objectively correct answers

are solvable by using simple rules, policies, or

numerical computations
Non-programmed decisions - new, novel,
complex decisions having no proven answers
decision maker must create or impose a

method for making the decision

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 Characteristics Of Managerial
Decisions(cont.)
Uncertainty
certainty - have sufficient information to
predict precisely the consequences of one’s
actions
uncertainty - have insufficient information to
know the consequences of different actions
cannot estimate the likelihood of various

consequences of their actions

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 Characteristics Of Managerial
Decisions(cont.)

Risk
 available information permits estimation of the
likelihood of various consequences
probability of an action being successful is

less than 100 percent, and losses may occur

good managers prefer to manage risk

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 Characteristics Of Managerial
Decisions(cont.)
Conflict
opposing pressures from different sources
occurs at two levels
psychological conflict - individual decision
makers:
perceive several attractive options

perceive no attractive options

conflict between individuals or groups

few decisions are without conflict

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 3. Decision-Making Models

 Classical Model

 Administrative Model

 Political Model

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 3.1. Classical Model
 Logical decision in the organization’s best
economic interests
 Decision maker operates to accomplish goals
that are known and agreed upon
 Decision maker strives for condition of
certainty – gathers complete information
 Criteria for evaluating alternatives are known
 Decision maker is rational and uses logic

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 3.2. Administrative Model
How non-programmed decisions are made-
uncertainty/ambiguity
 Decision goals often are vague, conflicting and
lack consensus among managers;
 Rational procedures are not always used
 Managers’ searches for alternatives are limited
 Managers settle for a satisficing rather than a
maximizing solution
 intuition, looks to past experience

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 3.3. Political Model
 Closely resembles the real environment in
which most managers and decision makers
operate
 Useful in making non-programmed decisions
 Decisions are complex
 Uncertainty of con
 Disagreement and conflict over problems and
solutions are normal

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 Summary of Decision Making Models
Classical Model Administrative Political Model
Model
Clear-cut problem Vague problem Pluralistic; conflicting
and goals and goals goals
Condition of Condition of Condition of
certainty uncertainty uncertainty/ambiguit
y
Full information Limited Inconsistent
about alternatives information about viewpoints; ambiguous
and their outcomes Alternatives and information
their outcomes

Rational choice by Satisficing Bargaining and

individual for choice for discussion among
maximizing resolving coalition members
14 outcomes problem using
05/21/2024 Prepared by: Lidiya T. ( MSN, PhD fellow)
 4. Decision Styles
Differences among people with respect to how
they perceive problems and make decisions
Not all managers make decisions the same
Directive style
Analytical style
Conceptual style
Behavioral style

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 4.1. Directive Style

People who prefer simple, clear-cut solutions

to problems
Make decisions quickly

May consider only one or two alternatives

Efficient and rational

Prefer rules or procedures

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 4.2. Analytical Style

Complex solutions based on as much data as

they can gather
Carefully consider alternatives

Base decision on objective, rational data from

management control systems and other
sources
Search for best possible decision based on
information available

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 4.3. Conceptual Style
Consider a broad amount of information

More socially oriented than analytical style

Like to talk to others about the problem and

possible solutions
Consider many broad alternatives

Relay on information from people and systems

Solve problems creatively

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 4.4. Behavioral Style
Have a deep concern for others as individuals
Like to talk to people one-on-one
Understand their feelings about the problem and
the effect of a given decision upon them
Concerned with the personal development of
others
May make decisions to help others achieve
their goals

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 5. Ways of decision making
• Individual Decision Making : the leader make
the decision alone
• Decision Making Through Consultation : the
leader shares the issue with one or more people, but
the final decision may or may not be influenced by
it.
• Group Decision Making : the leader and others
work together until they reach a consensus
decision.
• Delegating the Decision : the leader sets the
parameters, then allows one or more others to
make the final
05/21/2024
decision.
Prepared by: Lidiya T. ( MSN, PhD fellow) 20
6. The Decision-Making Process
6.1. The Stages Of Decision Making
Identifying and
diagnosing
the problem
Generating
alternative
solutions

Evaluating
alternatives

Making the
choice

Implementing
the decision

Evaluating
the decision
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 Stages Of Decision Making(cont.)

1. Identifying and diagnosing the problem

recognize that a problem exists and must be
solved
problem - discrepancy between current state
and past performance, current performance
of other organizations or future expected
performance

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 Stages Of Decision Making(cont.)

2. Generating alternative solutions

ready-made solutions - ideas that have been
tried before
may follow the advice of others who have faced

similar problem
custom-made solutions - combining new ideas
into solutions

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 Stages Of Decision Making(cont.)

3. Evaluating alternatives
What are the advantages and disadvantages of
each alternative?
Managers should specify criteria, then evaluate
contingency plans - alternative courses of action
that can be implemented based on how the future
unfolds.

05/21/2024 Prepared by: Lidiya T. ( MSN, PhD fellow) 24

Criteria’s for evaluating alternative….
Criteria

Legality Is the alternative legal and will not violate any

domestic and international laws or
government regulations?

Ethicalness Is the alternative ethical and will not bring

harm stakeholders unnecessarily?

Economic Feasibility Can organization’s performance goals sustain

this alternative?
Practicality Does the management have the capabilities
and resources required to implement the
alternative?

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 Stages Of Decision Making(cont.)
4. Making the choice
Rank the various alternatives and make a decision

A decision can be to:

maximize - a decision realizing the best possible
outcome
optimize - achieving the best possible balance
among several goals
satisfies - choose an option that is acceptable
although not necessarily the best or perfect

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 Stages Of Decision Making(cont.)
5. Implementing the decision
those who implement the decision must:
understand the choice and why it was made and
be committed to its successful implementation
can’t assume that things will go smoothly during
implementation
identify potential problems

identify potential opportunities

always expect the unexpected

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 Stages Of Decision Making(cont.)

6. Evaluating the decision

collecting information on how well the decision is
working
evaluation is useful whether the feedback is positive or
negative
if decision appears inappropriate, the process cycles
back to the first stage
The best decision?
nothing can guarantee a “best” decision
must be confident that the procedures used are likely
to produce the best decision given the circumstances
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 6.2. How To Make Better Decisions
1. Increase Your Knowledge
 Ask questions, Get experience, Use consultants,
Do your research.
 Force yourself to recognize the facts when you see
them (maintain your objectivity).
2. Use Your Intuition
 A cognitive process whereby a person instinctively
makes a decision based on his or her accumulated
knowledge and experience.

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 How To Make Better Decisions (cont’d)
3. Weigh the Pros and Cons
 Quantify realities by sizing up your options, and
taking into consideration the relative importance
of each of your objectives.
4. Don’t Overstress the Finality of Your Decision
 Knowing when to quit is sometimes the smartest
thing a manager can do.
 Remember that few decisions are forever.
5. Make Sure the Timing Is Right

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7. Factors Influencing Decision Making
Decision makers attribute
Knowledge, experience, and judgment
The Situation
Urgency of solution and time pressures
Magnitude and importance
Structure, uncertainty and risk
Cost benefit

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 Factors Influencing Decision
Making(cont.)

Environmental Constraints
External- E.g. Social realities(many decisions

result from intensive social interactions, bargaining,

and politicking)
Internal- E.g. Psychological biases(biases that

interfere with objective rationality)

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8. Decisions in the Management Functions

05/21/2024 Prepared by: Lidiya T. ( MSN, PhD fellow) 33

 Summary
Characteristics Of
Influencing factors Managerial Decisions
situation, Risk, Lack of structure,
environmental, uncertainty, conflict
personal attribute
Decision-Making
Models classical,
The Stages Of administrative,
Decision Making political.
1. identifying
Decision
problem, 2. making
developing Decision Styles
alternatives soln, directive, analytical,
3. evaluating conceptual and
alternative, behavioral.
4. making choice, Ways of decision
5. implementation, making individual,
consultation, group,
6. evaluation. delegating.
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 Summary cont’d

planning

controlling
organizing
Decision
making

Directing
staffing

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 References

1. Barrett R.(2004).The Six Modes of Decision-Making, Barrett

value center.
2. Crandall M.(2006). The decision making. LIS 580.Module 3.
3. Managerial decision making. McGraw-Hill, inc. 2003.
4. Managerial decision making. South-Western. 2005.
5. Jones G., George J.(2008).Contemporary management. Fifth
edn. McGraw-Hill, Inc.

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05/21/2024 Prepared by: Lidiya T. ( MSN, PhD fellow)