Chapter 6 Decision Making
Our focus in Part 3 is on Management Strategy and Decision Making. Planning and
the formulation of strategy establish broad objectives for an organization so that manager scan
set priorities and deadlines and marshal resources to accomplish short and long-term goals. In
Chapter 5 we explored managing the planning process. We will explore the topic of decision
making in this chapter. Planning (Chapter 5) and decision making run parallel to one another
and managers should incorporate both when trying to establish a strategic direction for their
Decision making is the process of identifying problems and opportunities and
resolving them, as individual employees, teams, and managers. A programmed decision has
established routines and procedures for resolving the issue; a non-programmed decision
occurs in a unique situation where no previously established routines or procedures apply.
Management decisions are made under conditions of uncertainty and risk. When there are
opposing goals, scarce resources, or differences of opinion regarding priorities, management
decision making is often characterized by conflict. Decisions are made at strategic, tactical,
and operational levels.
The six stages of decision making are: (1) identifying and diagnosing the problem; (2)
generating alternative solutions; (3) evaluating alternatives; (4) selecting the best
alternative(s); (5) implementing the decision; and (6) evaluating the decision. Criteria used to
evaluate and select alternatives should include quality and acceptance. Optimizing is finding
the best alternative. Satisficing is selecting the first alternative that meets a minimum
Some of the factors that limit decision making quality include: (1) organizational
politics, (2) emotions and personal preferences, (3) the illusion of control, (4) intuition, and
(5) escalation of commitment to a failing course of action. Group decisions share the
advantages of increased acceptance, pooling of knowledge and differing perspectives, and
other benefits, if problems of undue social pressure, minority domination, politics, and
groupthink can be avoided. Effective leaders facilitate quality group decision making
processes. To stimulate creativity, brainstorming, storyboarding, the nominal group technique,
and the Delphi technique may help. Also, effective time management skills, delegation, and
proactive decision making can lead to quality decisions.
Following this chapter on decision making, we will explore the topic of strategic
management in Chapter 7.
Gomez-Mejia, Management, Third Edition