Transcript Management 10e. - Coastline Community College

* Chapter 6: Making Decisions
PowerPoint
Presentation by
Charlie Cook
The University of
West Alabama
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for use as permitted in a license distributed with a certain product or service or otherwise on a password–protected
website for classroom.
*Learning Objectives
After reading and studying this chapter, you should be
able to:
1.
Recognize that decision making is performed at
all management levels
2.
Distinguish between formal and informal
approaches to decision making
3.
4.
List the steps in the decision-making process
5.
Describe the personal attributes of a manager
that influence decision making
Identify the environmental factors that
influence decision making
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permitted in a license distributed with a certain product or service or otherwise on a password–protected website for classroom.
6–2
*Learning Objectives (Cont.)
After reading and studying this chapter, you should
be able to:
6.
Discuss the value of group decision
making, and identify three techniques of
group decision making
7.
Explain three quantitative techniques for
decision making, and describe the
situations in which each is appropriate
8.
Determine strategies a manager can use
to create a more effective decisionmaking environment
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permitted in a license distributed with a certain product or service or otherwise on a password–protected website for classroom.
6–3
*Decision Making Defined
Decision
Making
The process of identifying problems and
opportunities, developing alternative solutions,
choosing an alternative, and implementing it
Problem
The difference between the current and desired
performance or situation
Opportunity
A chance, occasion, event, or breakthrough that
requires a decision to be made
Electronic
Commerce
All forms of business transactions involving both
organizations and individuals that are based
upon the processing and transmission of
digitized data
1
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6–4
*
Figure 6.1 Decision making in the five management functions
Planning
What is the mission of the organization? What should it be?
What are the needs of the customers?
What are the organization’s strengths, weaknesses, threats, and opportunities?
What are the strategic, tactical, and operational goals?
What strategies will achieve the goals?
Organizing
What organizational option will best achieve the objectives?
What type of departmental structure will result in teamwork?
How many employees should report to a manager?
When should a manager delegate authority? How much?
Staffing
How many employees will we need this year?
What skills are necessary to do this job?
What type of training will best prepare the employee?
How can we improve the quality of the performance appraisal system?
Leading
What can we do to have motivated employees?
What style of leadership is the most effective with an individual?
What strategies are available to manage conflict?
How can we build teams?
Controlling
What tasks in the organization need to be controlled?
Which control technique is the most effective for monitoring finances?
What is the effect of controls on employee behavior?
How do we establish acceptable standards of performance?
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6–5
*Approaches to Decision Making
Nature of the Situation
Programmed
Decisions
Nonprogrammed
Decisions
involve organizational
problems or situations that
have reoccurred often
enough that both the
circumstances and
solutions are predictable
are made in response to
problems and
opportunities that have
unique circumstances,
unpredictable results, and
important consequences
for the company
2
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6–6
*
Figure 6.2 A
programmed decision
outline for completing a
routine payroll
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6–7
*
Figure 6.3 The decision making process
3
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6–8
*
Figure 6.4 The
funnel
approach to
defining a
problem
Symptom
Signals that something is wrong
and draws the manager’s attention
to finding the cause—that is, the
problem
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6–9
*Developing Potential Alternatives
Alternatives (potential solutions to the problem)
should…
Eliminate the problem
Limiting Factors
Correct the problem
Those constraints that rule
out certain alternative
solutions; one common
limitation is time
Neutralize the problem
Maximize the opportunity
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6–10
*
Figure 6.5 Analyzing alternatives
Selecting the Best
Alternative
• Offers the fewest serious disadvantages
and the most advantages
• Does not create other problems
• May require a combination of alternatives
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6–11
* Establishing a Control and Evaluation System
Control and Evaluation Systems should…
Provide feedback on how well the decision is being implemented
Identify positive and negative results
Be capable of adjustments to get the desired results
Identify outcomes that create new problems or opportunities
Provide a step-by-step roadmap for decision making
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6–12
*
Figure 6.6 How to translate decisions into action
1. Persuade the hostile guns and the foot-draggers.
From preliminary discussions you know who gave in grudgingly—perhaps after
open opposition. Go out of your way to conciliate and persuade.
2. Determine who needs to be informed and how best to do it.
Make sure the list absolutely includes people who “need to know.” Be sure to let
people know the why of the decision. Select the best method—written or verbal—
and tune the vocabulary and tone to the reader or listener.
3. Check for loose ends.
Double-check to make sure clear assignments have been made and that everyone
has the resources to perform the task.
4. Do a good job of selling the decision.
Practically none of your decisions will be implemented by you alone. Seek
authorization and permission if needed. Provide encouragement to everyone.
5. Have courage and patience.
Stand fast when people say, “it can’t be done” . . . ”it’s too costly” . . . ”it’s too soon”
. . . ”it’s too late.”
6. Arrange for feedback.
Establish a system that will wave red flags when you are heading into trouble—
early enough to do something about it.
Source: Reprinted from Carl Heyel, “From Intent to Implement: How to Translate Decisions into Action,” Management Review (June 1995), p.
63. © 1995 American Management Association International. Reprinted by permission of American Management Association International,
New York. All rights reserved. Permission conveyed through The Copyright Clearance Center.
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permitted in a license distributed with a certain product or service or otherwise on a password–protected website for classroom.
6–13
*
Figure 6.7 Degrees for ambiguity and potential for failure in decision-making
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6–14
*Degree of Certainty
Certainty
Risk
Uncertainty
•
•
•
•
•
Manager has perfect knowledge
The decision has been made before
There are known alternatives
Consequences are understood
Ambiguity and fear of failure do not exist
• Is a more complex environment
• The manager knows what the problem is and what the
alternatives are
• Cannot be sure of the consequences of each alternative
• Ambiguity and risk are associated with each alternative
•
•
•
•
Most difficult condition for a manager
Exact outcomes cannot be determined
May not be able to identify all alternatives
High ambiguity and possibility for failure
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6–15
*Imperfect Resources
Maximize
Managers want to make the perfect decisions
Satisfice
The difference between the current and desired
performance or situation
Information
Supplies
Equipment
Ideal
Resources
Time
Personnel
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6–16
* Influences in the Internal Environment
Superiors
Subordinates
Internal
Environment
Undue Emphasis
on Results
4
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6–17
*
Figure 6.8 Five levels of subordinate involvement
1. The manager makes the decision himself or herself, using information
available to him or her at that time. Employees provide no input or
assistance.
2. The manager obtains the necessary information from subordinates, and
then makes the decision. When obtaining information from them, the
manager may or may not tell the subordinates what the problem is.
3. The manager shares the situation with relevant subordinates individually,
getting their ideas and suggestions without bringing them together as a
group. Then the manager makes the decision, which may or may not
reflect the subordinates’ influence.
4. The manager shares the situation with the subordinates as a group;
collectively obtains their ideas and suggestions. Then the manager makes
the decision, which may or may not reflect the subordinates’ influence.
5. The manager shares the situation with the subordinates as a group.
Together they generate and evaluate alternatives and attempt to reach
agreement (consensus) on a solution.
Source: Reprinted from Organizational Dynamics (Spring 1973), Victor H. Vroom, “A New Look at Managerial Decision Making,” p. 67. Copyright
1973 with permission from Elsevier Science.
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6–18
*
Figure 6.9
Applying
the Vroom
and Yetton
decision
tree for
choosing a
decisionmaking
style
Source: Adapted and
reprinted from Leadership and
Decision-Making by Victor H.
Vroom and Philip W. Yetton,
by permission of the
University of Pittsburgh Press.
© 1973 by University of
Pittsburgh Press.
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6–19
* Influence of Managerial Style on Decision Making
Degree of creativity
Decision-making
approaches
Outside-the-box thinking - To
adopt a new perspective and
see it work; not get caught up in
the old ways
Previous
commitments
Personal
Attributes of
Managers
Ability to set
priorities
Timing of
decisions
Tunnel vision –
having a narrow
viewpoint
5
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6–20
* Personal Decision-Making Approaches
Rational/Logical
Decision Model
Intuitive
Decision Model
DecisionMaking
Approach
Predisposed
Decision Model
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permitted in a license distributed with a certain product or service or otherwise on a password–protected website for classroom.
6–21
* Personal Decision-Making Approaches (cont’d)
Rational/Logical
Decision Model
• Focuses on facts and logic
• Minimizes intuitive judgments
• Relies on decision tools
Intuitive
Decision Model
• Relies on feelings and hunches
• Could be potentially disastrous
Predisposed
Decision Model
• Decides on solution before gathering information
• Favors specific alternatives
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6–22
* Group Decision-Making Approaches
Nominal Group
Technique
Brainstorming
Group
Decision-Making
Delphi
Technique
6
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6–23
*Brainstorming
Brainstorming Elements
Gather 6 to 12 people in a comfortable setting
Give participants the problem with directions that no idea is ridiculous
Have facilitator encourage the free flow of ideas
Have a designated scribe record the ideas on a board
Have ideas later sorted and examined in more detail by the manager or
another group
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6–24
*
Figure 6.10 Steps in the nominal group technique
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6–25
*Delphi Technique
Delphi Process
The problem is stated to a group of experts through a questionnaire. Each
person is asked to provide solutions. The experts do not interact.
Each participant completes the questionnaire and returns it.
A summary of opinions is developed from the answers received. The
summary is distributed to the experts along with a second questionnaire.
The experts complete the second questionnaire. Participants have the
benefit of other people’s opinions and can change their suggestions to
reflect this.
The process continues until the experts reach consensus.
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6–26
*Group Decision Making
Advantages
•
•
•
•
•
Broader perspective
Diversity broadens the view
More satisfactory decision
Opportunity for discussion
Less uncertainty
Disadvantages
• Compromise
• Groupthink – Group members
becoming so committed to the
group that they become
reluctant to disagree
• Difficulty in performing certain
tasks
• Difficulty in taking the initiative
• No one person has the
responsibility for final decision
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6–27
* Quantitative Decision-Making Techniques
Decision Trees
Payback Analysis
Quantitative
Decision-Making
Simulations
7
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6–28
*
Figure 6.11 Decision tree with chains of activities and events
Source: Adapted and reprinted by permission of Harvard Business Review. An exhibit from “Decision Trees for Decision Making,” by
John F. Magee (July–August 1964), p. 129. Copyright © 1964 by the Harvard Business School Publishing Corporation. All rights
reserved.
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6–29
*
Figure 6.12 An example of a payback analysis
A technique that ranks alternatives according to
how long each takes to pay back its initial cost
Payback Analysis
Computerized Printing System
A
B
$14,000
$12,000
$17,000
Year 1
0
500
2,000
Year 2
1,000
1,000
3,000
Year 3
1,500
1,500
5,000
Year 4
2,000
2,500
7,000
Year 5
2,500
3,000
Year 6
3,000
3,500
Year 7
4,000
Initial Cost
Revenues
$14,000
Payback Period
———
$2,000
$12,000
= 7.0
C
$17,000
——— = 6.0
———
$2,000
$4,250
= 4.0
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6–30
*Simulations
Simulation
A model of a real activity or process
See the results more quickly
Anticipate competitive responses
Make decisions under a variety of changes
Avoid the interruptions of normal business operations
Avoid time loss and expense
Avoid annoying the customers and taking facilities out of service
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6–31
*Simulation Techniques
Queuing Models
or Waiting-line
Models
Models that help managers decide what length of waiting
line or queue would be optimal
Just-in-time
Inventory
Delivery of raw materials or other kinds of normal
inventories to correspond to production schedules, leading
to the elimination of the need to warehouse items
Game Theory
Attempts to predict how people or organizations will behave
in competitive situations
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6–32
*
Creating an Environment for Effective Decision Making
1. Provide time for decisions to be made
2. Have self-confidence
3. Encourage others to make decisions
4. Learn from past decisions
5. Recognize the difference in decision-making situations
6. Recognize the importance of quality information
7. Make the tough decisions
8. Know when to hold off
9. Be ready to try things
10.Be ready to ask for help
8
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6–33
*Key Terms
* alternatives
* brainstorming
* decision
* decision making
* decision tree
* Delphi technique
* Electronic commerce
* game theory
* groupthink
* just-in-time inventory
* limiting factors
* maximize
* nominal group technique
* nonprogrammed decisions
* opportunity
* outside-the-box thinking
* payback analysis
* problem
* programmed decisions
* queuing models
* satisfice
* simulation
* symptom
* tunnel vision
* Vroom and Yetton
decision tree
* waiting-line models
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permitted in a license distributed with a certain product or service or otherwise on a password–protected website for classroom.