Transcript Chapter Nine - University of Mississippi

Mgmt 371
Chapter Nine
Managing Decision Making and
Problem Solving
Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©
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Types of Decisions: Programmed
Decisions
 Programmed Decisions - A decision
that is a fairly structured decision or
recurs with some frequency or both.
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Matters of a routine nature that can be
predicted, hence virtually automatic
decisions can be made based on
established rules and guidelines.
Procedures
 SOPs
 Policies
 Rules
Examples
 Processing drop/add slips
destination.
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Types of Decisions: Nonprogrammed
Decisions
 Nonprogrammed Decisions - A
decision that is relatively unstructured
and occurs much less often a
programmed decision.
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Developing solution for complex,
unique, nonroutine problems
Procedures
 Creative problem-solving techniques
 Brainstorming, GDSS, focus groups
Examples:
 New product development
 Reengineering Processing drop/add
slips Example: Choosing a
vacation destination.
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Decision-Making Conditions
 Decision Making Under Certainty
 The decision maker knows with reasonable certainty
what the alternatives are and what conditions are
associated with each alternative.
 Decision Making Under Risk
 The availability of each alternative and its potential
payoffs and costs are all associated with risks.
 Think probability.
 Decision Making Under Uncertainty
 The decision maker does not know all the alternatives,
the risks associated with each, or the consequences of
each alternative.
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The Classical Model of Decision
Making
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The Rational Decision-Making
Process
Recognize & Define Decision Situation
Identify Alternatives
Evaluate Alternatives
Select Best Alternative
Implement the Chosen Alternative
Evaluate Results
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Recognizing Defining the Decision
Situation
 Problem Identification
 Deviation from past performance.
 Deviation from planned performance.
 Outside criticism.
 Avoid:
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Defining problems to meet preconceived
solutions.
Identifying symptoms as problems.
Losing hands.
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Types of Problems
 Opportunities
 Crisis Problems
 Routine Problems
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Identify Alternatives
 Managers develop several feasible
alternative courses of action.
 Too often managers get into a rut and fail to
develop creative alternatives.
 New perspectives and inputs from others may
be beneficial.
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Evaluate Alternatives
 Considerations
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Legality of the alternatives.
Ethicality (ethicalness) of the alternatives.
Economic feasibility of the alternatives.
Practicality of the alternatives.
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Choosing Among Alternatives
 The alternative which best fits the decision-
maker’s situation given consideration of the
risk or uncertainty is selected.

Assumes perfect and complete information is
available to the decision-maker.
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Evaluating the Results
 All effective managers attempt to ensure
that actual results meet planned results.
 Strive to learn from both your successes
and your mistakes.
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Determine why expected outcomes failed to
materialize.
Develop guidelines for future decision
making.
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Evaluating the Results
Intended Outcome
Actual Outcome
Determine Cause
of Deviation
Corrective Action
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Evaluating Alternatives in the
Decision-making Process
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The Administrative Model of
Decision Making
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Behavioral Aspects of Decision
Making
 Bounded Rationality
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Decision makers are limited by their values
and unconscious reflexes, skills, and habits.
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Limitations to our ability to interpret and process
information.
Incomplete and imperfect information.
Prevents optimal solutions.
 Satisficing
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The tendency to search for alternatives only
until one is found that meets some minimum
standard of sufficiency to resolve the problem.
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Behavioral Aspects of Decision
Making
 Coalition
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A positive or negative political force in decision
making which consists of an informal alliance
of individuals or groups formed to achieve
common goals.
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Decisions are subject to internal
politics/candidates/agendas.
Decisions among members must be consistent
with the coalition’s goals.
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Illogical & Irrational Decision
Processes
 Intuition – an innate belief about something
without conscious consideration.
 Escalation of Commitment – staying with a
decision even when it appears to be wrong
usually because resources or reputations
have been so heavily invested in its outcome.
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Group and Team Decision Making
in Organizations
 Forms of Group Decision Making
 Interacting group or team
 Consists of an existing group or newly formed team
interacting and then making a decision.
 Nominal groups
 Generating ideas through the individual contributions
of alternatives that are winnowed down to reach a
decision.
 Delphi groups
 Developing a consensus of expert opinion from a
panel of experts who individually contribute through a
moderator.
 Panelists do not have direct contact.
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Advantages of Group Decision
Making
 More information and knowledge are
available.
 More alternatives are likely to be generated.
 More acceptance of the final decision is likely.
 Enhanced communication of the decision
may occur.
 Better decisions are usually made.
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The Dark Side of Group Decision
Making
 More time consuming than individual decsion
making (more costly).
 Groups can be dominated and manipulated by
powerful individuals.
 Groupthink may occur.
 Compromises arising from indecision may
occur.
 Committees may dilute accountability.
 Groups may take greater risks than individuals.
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