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Learn m De ning Decision Making
Decision making is the mental process of selecting a course of action
from a set of alternatives. LEARNING OBJECTIVES Identify the steps and analyze alternatives in a decisionmaking process KEY TAKEAWAYS Key Points Decision making is a process of choosing between
alternatives.
Problem solving and decision making are distinct but
related activities.
Time pressure and personal emotions can a ect the
quality of decision-making outcomes. -… 2/11 11/8/2020 Decision Making in Management | Boundless Management Key Terms Problem: A di culty that has to be resolved or dealt with. Decision making is the mental process of choosing from a set of
alternatives. Every decision-making process produces an outcome that
might be an action, a recommendation, or an opinion. Since doing
nothing or remaining neutral is usually among the set of options one
chooses from, selecting that course is also making a decision. Di erence Between Problem Analysis and Decision Making
While they are related, problem analysis and decision making are
distinct activities. Decisions are commonly focused on a problem or
challenge. Decision makers must gather and consider data before
making a choice. Problem analysis involves framing the issue by de ning
its boundaries, establishing criteria with which to select from alternatives,
and developing conclusions based on available information. Analyzing a
problem may not result in a decision, although the results are an
important ingredient in all decision making. Steps in Decision Making
Decision making comprises a series of sequential activities that together
structure the process and facilitate its conclusion. These steps are:
Establishing objectives
Classifying and prioritizing objectives
Developing selection criteria
Identifying alternatives
Evaluating alternatives against the selection criteria
Choosing the alternative that best satis es the selection criteria
Implementing the decision -… 3/11 11/8/2020 Decision Making in Management | Boundless Management Analysis of Alternatives
A major part of decision making
involves the analysis of a de ned
set of alternatives against
selection criteria. These criteria
usually include costs and
bene ts, advantages and
disadvantages, and alignment
with preferences. For example,
when choosing a place to
establish a new business, the
criteria might include rental costs, Many choices: Too many choices
increase the di culty of making a
decision. availability of skilled labor, access
to transportation and means of
distribution, and proximity to customers. Based on the relative
importance of these factors, a business owner makes a decision that
best meets the criteria.
The decision maker may face a problem when trying to evaluate
alternatives in terms of their strengths and weaknesses. This can be
especially challenging when there are many factors to consider. Time
limits and personal emotions also play a role in the process of choosing
between alternatives. Greater deliberation and information gathering
often takes additional time, and decision makers often must choose
before they feel fully prepared. In addition, the more that is at stake the
more emotions are likely to come into play, and this can distort one’s
judgment. Decision-Making Styles
Decisions are driven by psychological, cognitive, and normative styles,
each of which take into account varying in uences on the nal decision. LEARNING OBJECTIVES Recognize the various factors which in uence a leader’s -… 4/11 11/8/2020 Decision Making in Management | Boundless Management decision-making style KEY TAKEAWAYS Key Points The ability to make e ective decisions that are rational,
informed, and collaborative can greatly reduce
opportunity costs while building a strong organizational
focus.
A psychological style to decision-making favors
individual values, desires, and needs to determine the
best course of action.
A cognitive style to decision-making is heavily
in uenced by external factors and repercussions, such
as how a given course of action will impact the broader
environment in which the organization functions.
Normative decision-making relies on logic and
communicative rationality, aligning people based upon
a logical progression from premises to conclusion.
Regardless of the style or perspective, managers, and
leaders must create organizational alignment in
decision-making through building consensus.
Key Terms communicative rationality: A theory or set of theories which describes human rationality as a necessary
outcome of successful communication. Why Decision-making Matters
Decision-making is a truly fascinating science, incorporating
organizational behavior, psychology, sociology, neurology, strategy,
management, philosophy, and logic. The ability to make e ective -… 5/11 11/8/2020 Decision Making in Management | Boundless Management decisions that are rational, informed, and collaborative can greatly
reduce opportunity costs while building a strong organizational focus. As
a prospective manager, e ective decision-making is a central skill
necessary for success. This requires the capacity to weigh various paths
and determine the optimal trajectory of action. Decision-making Styles
There are countless perspectives and tactics to e ective decisionmaking. However, there are a few key points in decision-making theory
that are central to understanding how di erent styles may impact
organizational trajectories. Decision-making styles can be divided into
three broad categories:
Psychological: Decisions derived from the needs, desires,
preferences, and/or values of the individual making the decision.
This type of decision-making is centered on the individual
deciding.
Cognitive: This is an integrated feedback system between the
individual/organization making a decision, and the broader
environment’s reactions to those decisions. This type of decisionmaking process involves iterative cycles and constant assessment
of the reactions and impacts of the decision.
Normative: In many ways, decision making (particularly in groups,
such as within an organization) is about communicative rationality.
This is to say that decisions are derived based on the ability to
communicate and share logic, using rms premises and
conclusions to drive behavior. Cognitive Theories
While the above styles give a general sense of the logic that drives
choices, it is more useful to recognize that each of these three styles can
play a role in any individual’s decision-making process. From the
cognitive perspective, there are a few speci c stylistic models that are
useful to keep in mind: -… 6/11 11/8/2020 Decision Making in Management | Boundless Management Optimizing vs. Satis cing
Decision-making is limited to the nite amount of information an
individual has access to. With limitations on information, true objectivity
is impossible. Decisions are therefore intrinsically awed. A satis cer will
recognize this necessary imperfection, and prefer faster but less perfect
decisions while a maximizer will take a longer time trying to nd the
optimal choice. This can be viewed as a spectrum, and each decision
(depending on the risk of a mistake) can be viewed with varying levels of
perfection. Intuitive vs. Rational
Daniel Kahneman puts forward the idea of two separate minds that
compete for in uence within each of us. One way to describe this is a
conscious and a subconscious perspective. The subconscious mind
(referred to as System 1) is automatic and intuitive, rapidly consolidating
data and producing a decision almost immediately. The conscious mind
(referred to as System 2) requires more e ort and input, utilizing logic
and rationale to make an explicit choice. Combinatorial vs. Positional
This relationship was put forward by Aron Katsenelinboigen based on
how the game of chess is played, and an individual’s relationship with
uncertainty. A combinatorial player has a nal outcome, making a series
of decisions that try to link the initial position with the nal outcome in a
rm, narrow, and concrete way (i.e. certainty). The positional decisionmaking approach is ‘looser’, with a sense of setting up for an uncertain
future as opposed to pursuing a concrete object. Each move from this
type of player would maximize options as opposed to pursue an
outcome. -… 7/11 11/8/2020 Decision Making in Management | Boundless Management Consensus Flowchart: Regardless of perspective or
style, all leaders must make decisions that create
consensus. This model underlines how a manager or
leader can discuss various options within a group
setting, make proposals for action, and iterate until
agreement is reached. Types of Decisions
Three approaches to decision making are avoiding, problem solving and
problem seeking. LEARNING OBJECTIVES Di erentiate between the three primary decision-making
approaches: avoiding, problem solving, and problem seeking -… 8/11 11/8/2020 Decision Making in Management | Boundless Management KEY TAKEAWAYS Key Points One approach to decision making is to not make a
choice—that is, to avoid making a decision altogether.
Identifying and selecting a solution to a problem is a
frequent type of decision outcome.
Sometimes decision making results in the need to
restate the purpose and subject of the choice; this is
known as problem seeking.
Key Terms problem seeking: The process of clarifying, understanding, and restating the problem.
problem solving: Problem solving involves using generic or ad hoc methods, in an orderly manner, for
nding solutions to speci c problems. Every decision-making process reaches a conclusion, which can be a
choice to act or not to act, a decision on what course of action to take
and how, or even an opinion or recommendation. Sometimes decision
making leads to rede ning the issue or challenge. Accordingly, three
decision-making processes are known as avoiding, problem solving, and
problem seeking. Avoiding
One decision-making option is to make no choice at all. There are
several reasons why the decision maker might do this:
. There is insu cient information to make a reasoned choice
between alternatives. -… 9/11 11/8/2020 Decision Making in Management | Boundless Management . The potential negative consequences of selecting any alternative
outweigh the bene ts of selecting one.
. No pressing need for a choice exists and the status quo can
continue without harm.
. The person considering the alternatives does not have the
authority to make a decision.
One example of avoiding a decision occurs routinely at the Supreme
Court of the United States (as well as other appellate courts). The
Supreme Court will decline to hear a case because, in their judgment,
the issues have not been su ciently considered in lower courts. Problem Solving
Most decisions consists of problem-solving activities that end when a
satisfactory solution is reached. In psychology, problem solving refers to
the desire to reach a de nite goal from a present condition. Problem
solving requires problem de nition, information analysis and evaluation,
and alternative selection. Problem Seeking
On occasion, the process of problem solving brings the focus or scope
of the problem itself into question. It may be found to be poorly de ned,
of too large or small a scope, or missing a key dimension. Decision
makers must then step back and reconsider the information and analysis
they have brought to bear so far. We can regard this activity as problem
seeking because decision makers must return to the starting point and
respecify the issue or problem they want to address. … 10/11 11/8/2020 Decision Making in Management | Boundless Management Previous Next Privacy Policy … 11/11 ...
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