Slide 1: 1 By:
Kira n Nalluri,
Vishal Arogya Sampat.
firstname.lastname@example.org Decision Making Introduction : 2 Introduction Please introduce yourself by answering the following items:
Your name, age and work experience
The most important decision you have taken in your life
How did you take this decision? Importance of decision making: : 3 Importance of decision making: "Somewhere along the line of development
we discover what we really are,
and then we make our real decision
for which we are responsible.
Make that decision primarily for yourself
because you can never really live
anyone else's life."
Eleanor Roosevelt By the end of this session you will: : 4 By the end of this session you will: understand decision making and its importance in managerial situations,
know the factors affecting the difficulty level of decisions
be able to appreciate the different styles of decision making,
learn the steps in the decision making process
be able identify common biases and errors during decision making,
understand the need, strength & weaknesses of group decision making
learn different techniques of group decision making Decision & Decision Making : 5 Decision & Decision Making Decision is a judgment that affects a course of action. It necessarily involves choices from two or more alternatives
Decision Making is the process of identifying a set of feasible alternatives and from these, choosing a course of action
Decision making is not easy because:
It must be done amid
conflicting points of view
limited resources like time, men, money & material In the Misery
of Indecisiveness When decisions are needed : 6 When decisions are needed The current state of affairs has fallen short of a goal or ideal.
A problem or crisis may arise that requires managerial action.
An opportunity may present itself.
In order to maintain the status quo.
There is a need to be proactive as managerial entrepreneurs. Role of decisions in a manager’s life : 7 Role of decisions in a manager’s life Factors affecting difficulty level of decisions : 8 Factors affecting difficulty level of decisions Slide 9: 9 Factors affecting difficulty level of decisions Certainty
all the information the decision maker needs is fully available
decision has clear-cut goals
good information is available
future outcomes associated with each alternative are subject to chance
managers know which goals they wish to achieve
information about alternatives and future events is incomplete
managers may have to come up with creative approaches to alternatives
by far the most difficult decision situation
goals to be achieved or the problem to be solved is unclear
alternatives are difficult to define
information about outcomes is unavailable Termination of an employee who has been caught red-handed while stealing things from office. HR manual has recommended termination for such offences. Disciplinary action against an employee who has been alleged to have stolen cash from office. Eye witness evidence is available. Employee is Union Office Bearer. HR manual has recommended alternative punishments for such offences. Disciplinary action against an employee who has been alleged to have stolen cash from office. There is no mention of any course of action for such instances in the HR manual. Lot of unaccounted for cash has been stolen from the office. There is no clue as to how it has happened. Police complaint would lead to issues of tax evasion. No one knows how the owner will react to this. If the cash is not organized the monthly salary of employees will be on hold. Decision Making Process : 10 Decision Making Process Slide 11: Example of Decision-Making Process Problem
Identification “My employees
need new computers” Identification of
Decision Criteria Price
Screen size Allocation of
Criteria Reliability 10
Screen size 8
Screen type 3 Development of
of an Alternative Purchase of
Effectiveness Analysis of
Toshiba Selection of an
Toshiba Styles of decision making : 12 Styles of decision making Autocratic I—manager makes decision, seeks no input
Autocratic II—manager makes decision, asks for input
Consultative I—manager makes decision after consulting with individuals in the group
Consultative II—manager makes decision after consulting with the group
Group—manager accepts group input and implements plan or decision agreed to by group Which style when? : 13 Which style when? Turn to page 3 of your reading material.
Divide yourself into 7 groups.
Discuss the situation corresponding to your group No. and create a managerial example for the same.
One member of the group will present the example to the rest of the class. Common biases & errors during DM : 14 Common biases & errors during DM Overconfidence Bias
Believing too much in our own decision making competencies.
Fixating on early, first received information.
Using only the facts that support our decision.
Using information that is most readily available at hand. Common biases & errors during DM : 15 Common biases & errors during DM Escalation of Commitment
Increasing commitment to a previous decision in spite of negative information.
Trying to create meaning out of random events by falling prey to a false sense of control or superstitions.
Falsely believing to have accurately predicted the outcome of an event, after that outcome is actually known. Need for group decision making : 16 Need for group decision making Large groups facilitate the pooling of information about complex tasks.
Smaller groups are better suited to coordinating and facilitating the implementation of complex tasks.
Simple, routine standardized tasks reduce the requirement for group decision making. Why & why not group decision making : 17 Why & why not group decision making Strengths
More complete information
Increased diversity of views
Higher quality of decisions (more accuracy)
Increased acceptance of solutions Weaknesses
More time consuming (slower)
Increased pressure to conform
Domination by one or a few members
Ambiguous responsibility Barriers to group decision making : 18 Barriers to group decision making Groupthink
Phenomenon in which the norm for consensus overrides the realistic appraisal of alternative course of action.
A change in decision risk between the group’s decision and the individual decision that member within the group would individually make. It can be either toward a very cautious approach or much greater risk. Barriers to group decision making : 19 Barriers to group decision making Group members rationalize any resistance to the assumptions they have made.
Members apply direct pressures on those who express doubts about shared views or who question the alternative favored by the majority.
Members who have doubts or differing points of view keep silent about misgivings.
There appears to be an illusion of unanimity. Techniques of group decision making : 20 Techniques of group decision making Interacting Groups
Typical groups, in which the members interact with each other face-to-face.
Nominal Group Technique
A group decision-making method in which individual members meet face-to-face to pool their judgments in a systematic but independent fashion.
An idea-generation process that specifically encourages any and all alternatives, while withholding any criticism of those alternatives.
A meeting in which members interact on computers, allowing for anonymity of comments and aggregation of votes.