BUILDING DECISION SKILLS
Dr. V. THANIKACHALAM
Decision Skills • All management work is accomplished by decision making. • Most basic skill of all management skills. • Most studied by management practitioner and researcher. • Eliminate some common errors. • Lead to better performance. • Lead to improvements in creative decision making.
Levels of Decision Making • Individual Level • Organizational Level
Individual Level • • • • • • •
Rational or normative decision process. Recognizing the issues and potential problems. Classifying decisions. Errors in decision making. Thinking processes and styles. Individual creativity and choosing alternatives. Risk taking.
Organizational Level • • • • •
Creating the right environment. Timely decisions are to be made. Involvement of all management levels. Managing group decision processes. Effective in dealing with uncertainty.
Common Errors in Decision Making • • • • • • • • •
Timidity Lack of time limits Failure to separate symptoms and problems Failure to define conditions, criteria and objectives. Making inferences from unreliable sources. Lack of awareness of factors affecting judgment. Not using a systematic model. Emotions cloud the process. Failure to implement.
Normative Decision Process • • • • • • •
Classifying and defining the problem. Developing criteria for a successful solution. Generating alternatives. Comparing alternatives to criteria. Choosing an alternative. Implementing the decisions. Monitoring the decision and getting feedback.
Classifying the Problem • Recurring problems those that occur regularly. • Unique problems for the manager – recurring in nature. • Unique problems. • A unique problem that will become recurring.
Recurring Problems • Recurring Regularly - Seasonal problems - Seasonal hiring of employees / contractors - Seasonal shortage of electric power - Seasonal demands for good and services - Plant shutdowns for maintenance - Recurring customer complaints.
Unique Problems for the Manager – Recurring in Nature • Job choices • Merger with another organization • Installation of a computerized inventory system / MIS.
Unique Problems • The plant burned down due to fire, earth quake, Tsunami… • Insolvency • War • Products produced created a bad impact due to explosion of poisoned gas.
A Unique Problem that will become Recurring • • • •
Consumer complaints about the new products. Plant explosion Fire, sabotage Fuel crisis
Programmable Problems • Routine and Generic could be negotiated • Recurring • Routine solutions are available as per the rules
Unprogrammable Problems • • • • •
Unique, unstructured, complex. Require new approaches for solution Information channels undefined Decision criteria unknown Outcome preferences uncertain
Recurring Problem Solving • • • • • • • • •
Proceduralized Predictable Cause and effect relationships Amenable to existing technology Definite decision criteria Reliance upon rules and principles Habitual reactions Uniform processing Standardized method of handling.
Deciding What Problems to work on • Problem classification and definition allow managers to rank problems in terms of their priority.
Prioritizing Problems • The consequences of the problem • The impact of the problem on the organization • Time pressures and urgency • The best utilization of the manager’s skills and times. • Problem attractiveness. • The lifespan of the problem.
Developing criteria for a successful solution • Must criteria • Want criteria
Creative People • • • • • • • •
Sports Experience in the fields Creativity to solve complexity and novelty Less conforming Good sense of humor Flexible Independent Take risks
Creative Process • • • • • •
Motivation Saturation Deliberation Incubation Illumination Accommodation
Improving Creativity • • • • • • •
Define the problem thoroughly Approach the problem from different angle. Don’t jump to conclusions to quickly. Generate several alternatives Critically evaluate one. Remove perceptual blocks. Don’t worry about being practical too early in the process.
Improving Creativity… • Focus on the critical attributes of the problem. • Avoid conformity. • Question all ideas and standards if they have drawbacks. • Be alert for good solutions. • Talk to outside experts. • Take breaks.
Comparing Alternatives to Criteria • Must criteria • Want Criteria
Decision Trees • Used for comparing criteria to alternatives • Convenient way to display the various parts of a given decision. • Useful when the decision maker has to deal with uncertainty. • Where there are some parts of the decision that are out of the decision makers control or due to chance. • Listing the alternatives
Decision Trees… • Listing events that might possibly occur. • They provide clarity and preciseness and point to the alternatives about which you need to get some more information. • Decision trees reveal alternatives about which your want to avoid because of a high possibility of potential loss.
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Choosing an alternative • Usually considered the high point of decision making. • Superior alternative. • Meets the most of the criteria. • To be selected.
Choice Behaviours • • • •
Maximize Looking at all possibilities Making the best possible decisions Choosing best of the solutions
Satisfiers • Stop when they found a satisfactory alternative. • That is feasible in the light of the criteria. • More common than maximizing.
Incrementing or Muddling through • Make a series of small decisions • All aimed at their main objective • Rather than make the decision that gets them there all at once • Incrementing takes longer than maximizing or satisfying • But risks less resources at any time.
Adaptive Choice • Simply building the capacity to make decisions • Respond quickly to a competitor’s action • Avoid making a major decision for a while • Works very well where there is so much uncertainty and difficulty to estimate any probabilities
Risk Taking and Choice • People and company vary in taking risks • There is a risky possibility with a high potential pay off • Large companies, for example, are often characterized as being more risk average than small entrepreneurial firms. • Group decisions tend to be riskier than those individuality. • The risk is spread over a number of people.
The Role of Judgment in Decision making • Judgment must be made regarding how current management values fit with the decision, the ethics of the decision, and organizational politics. • The extent to which the decision will be accepted by those around you is extremely important. • Without help from peers, subordinates, and the boss, decisions are virtually impossible to implement.
The Role of Judgment in Decision making… • None of these factors can be qualified accurately enough to fit in decision models like decision trees. • These factors must be weighed with judgment gained through years of experience.
Implementing the Decision • One of the biggest mistake – “Assume that action based on a decision will automatically follow the making of the decision. • Avoiding potential conflicts. • Keeping people interested and motivated in the decision. • Assigning individuals with proper ability to carry out various implementation tasks.
Steps in Implementation • • • • • • •
A schedule of events Steps needed to put the solution into action Assessing the abilities Assigning responsibilities Reporting relationships Coordinating the implementation work Avoiding conflicts of interests.
Monitoring the Decision and Getting Feedback • A mechanism for getting periodic reports on how implementation is going. • A system for finding out about mistakes and successes. • Correction and reward • Control function • Setting standards and measuring performance against them • Prevent problems before they occur • First hand information.
Decide Judge, Implement and Monitor
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