Decision Making Skills

1
 What is Decision Making in Management
• Management decision is an important part of managing any organization.
• To make a choice between two or more options is the process of Decision making in
management
• This involves evaluating the pros and cons of various choices and choosing the best option
to achieve a desired outcome
• It is about acting in a way that meets organizational goals and objectives
• It allows managers to set goals and figure out
• What actions are needed to meet those goals
• Evaluate whether those actions are working as intended.
• It refers to managers guiding their organizations down the right path toward success

E.g., Business manager may decide to invest in marketing to attract new customers.
This decision could involve analyzing the costs, benefits, and risks involved with each
possible course of action and choosing the best course of action for the organization.
1) Doctor
2)Actor
3)Pregnant Lady
4)Pregnant lady’s 3-year old
son
5)Saint
6)National swimmer
7)Prime minister

4
Decision Making

Effective
Efficient
Decision
Making

Endorsed
5
3Es of Decision making

Effective: Is the decision the most effective way to achieve the desired result? Is it a rational
and logical approach, based on available information?

Efficient: How many resources are needed to implement this decision and who all are
involved? To what extent does it affect the people involved?

Endorsed: Do people accept the decision? Do you have the support and the commitment?

The very first step in decision making is to identify whether it should be a team or an
individual decision. To do this you first need to know what the different decision making
styles are.
Decision Making Process
1. Establishing Objectives

• Establishing objectives is among the crucial decision-making steps in management.

• Without clear objectives, it can be difficult to make effective decisions that will help the organization meet
its goals.

• Establishing objectives involves setting specific goals that need to be achieved within a certain timeframe.

For example,

If you are the HR of an e-commerce start-up with the expanding business, you would want to hire the right
employees for various roles.

At first , you would have to establish your objectives regarding which parts of your business you would need
to hire new people.
2. Identify the Decision

• Identifying the issues that needs to be addressed.

• Once the issue has been identified, the manager will gather information about
possible solutions.
• This may involve consulting with others, doing research, or running simulations.
• After weighing the pros and cons of each option, the manager will choose the
course of action that they believe is most likely to succeed.
E.g.,
• After establishing the objectives regarding which parts of your business need new
recruits, you would have to identify the course of action with others to recruit the
ideal employees for the various job roles.
3. Gather Appropriate Information

• This process of gathering information is known as information gathering

• The different sources of information that managers can use include
surveys, interviews, focus groups, observation, and secondary data sources
such as articles and reports.
• After gathering this information, managers must then analyze it to
determine which is the best option
• E.g., After identifying the course of action for the new recruits, you, along
with your team, have to gather proper information about the various
hiring trends and how to recruit the ideal talents.
4. Identify the Alternatives

• One of the most important aspects of the decision-making process in

management is identifying the alternatives.
• Without knowing what your options are, it can be difficult to make an
informed decision. There are a number of different ways to identify the
alternatives, but some of the most common methods include
brainstorming, research, and consultation.
• E.g., After gathering the appropriate information on how to recruit the
ideal talents, identify what alternatives you can offer to attract talents.
• You can offer remote working or a hybrid working model?
5. Weigh the Evidence

• When we define decision making in management One key step in this

process is known as 'weighing the evidence’.
• This simply means taking the time to consider all of the available
information before making a final decision.
• This can include things like market research, financial data, and even gut
instinct.
• By taking the time to weigh the evidence, managers can make better-
informed decisions that are more likely to lead to success.
• For example, after identifying what alternatives you can offer to attract new
recruits, consider all the options to understand which would be the most
profitable for your business. For this, you can take insights from market
research, financial data, and even gut instinct.
7. Take Action
• There are many approaches to decision making, but one of the most popular is the "take
action" approach.
• This approach involves taking decisive action in response to a issues, without overthinking
or second-guessing yourself.
• While this approach can lead to quick results, it also carries the risk of making impulsive
decisions that may not be in the best interest of the company.
• E.g., After choosing the most profitable ways to hire new talents, take the course of action
of searching and interviewing the individuals.
8. Review the Decision
• Finally, after a decision has been made, it is important to review the results and make any
necessary adjustments.
• E.g., After hiring the new recruits, review the whole process to see where you can make
some changes to make the process more efficient.
Decision Making Model
Leaders are expected to be decisive
Many a times people with well-developed leadership skills may find the decision-making
process tricky ,particularly when working under a tight deadline.
A decision-making model can help guide you toward effective solutions
• A decision-making model is a process that takes individuals and/or teams through a
series of steps to help them arrive at a decision.
• Decision-making models can be structured and collaborative, involving a wide range of
stakeholders and resulting in greater buy-in.
• When a decision has to be made quickly, they are more informal. Then, the decision-
making process may fall to the leader, who may rely on expertise, experience, and “gut
instinct” to solve a problem.
Rational Decision-Making Model
The title alone hints that this might be a smart way to arrive at a decision.
In an article on decision-making models
Atlassian, a global software development company, outlines the six-step process:
1. Define the problem

2. Identify the criteria you will use to judge possible solutions

3. Decide how important each criterion is

4. Generate a list of possible alternatives

5. Evaluate those alternatives

6. Determine the best solution

Intuitive Decision-Making

• In their study “Intuitive Decision Making,” researchers Kurt Matzler, Franz Bailom, and
Todd Mooradian explain that intuition is, in fact, “a highly complex and highly developed
form of reasoning that is based on years of experience and learning, and on facts,
patterns, concepts, procedures and abstractions stored in one’s head.”4
• Experience is the key to finding business success with this decision-making model,
researchers say.
• A study published in the journal Organizational Behaviour and Human Decision
Processes, and reported in ScienceDaily, found the following :
“People can trust their gut and rely on intuition when making a broad evaluation—one that
doesn’t include a subset of additional decisions—in an area where they have in-depth
knowledge of the subject, also referred to as domain expertise.”
Decision Making Styles

Autocratic: you make the decision and inform

others of it

Autocratic 1 (A1) Autocratic 2 (A2)

You use the You ask team members for specific
information you already information and once you have it,
have and make the you make the decision. Here you
decisions don’t necessarily tell them what the
information is needed for

16
Decision Making Styles

Consultative: You gather information from the team

and others and then make the decision

Consultative1 (C1) Consultative 2 (C2)

You inform team members of what You are responsible for making the
you doing and may individually ask decision, however, you get together
opinions, however, the group is not as a group to discuss the situation,
brought together for discussion. You hear other perspectives, and solicit
make the decision. suggestions.
17
17
Decision Making Styles

Collaborative: You and your team work

together to reach a consensus

Group (G2)
The team makes a decision together. Your
role is mostly facilitative and you help the
team come to a final decision that everyone
agrees on.

18
18
The Vroom-Yetton-Jago Decision Model
• Quality Requirement (QR): How important is the technical quality of the decision?

• Commitment Requirement (CR): How important is subordinate commitment to the decision?

• Leader's Information (LI): Do you (the leader) have sufficient information to make a high quality decision on
your own?

• Problem Structure (ST): Is the problem well structured (e.g., defined, clear, organized, lend itself to solution,
time limited, etc.)?

• Commitment Probability (CP): If you were to make the decision by yourself, is it reasonably certain that your
subordinates would be committed to the decision?

• Goal Congruence (GC): Do subordinates share the organizational goals to be attained in solving the problem?

• Subordinate conflict (CO): Is conflict among subordinates over preferred solutions likely?

• Subordinate information (SI): Do subordinates have sufficient information to make a high quality decision?
Select and Implement the Best Solution

21
Implementing the Solution

Select and implement the best

solution

Identify and evaluate possible

solutions

Analyze the issue

Define and identify the issue

22
PMI Technique: Edward de Bono developed the PMI tool

PLUS MINUS INTERESTING

Example :Imagine Shivam is a IT specialist. He lives in Greater Noida and works in Gurgaon. He is working on a project that
involves long working hours. However, the long commute is affecting his health and he has decided to relocate to Gurgaon.
23
 PLUS MINUS INTERESTING

Lesser travel time No local transport Meet new people

(+4) (-5) (+1)
Lesser tiring journey Higher living expenses Better societies, modern
(+4) (-5) constructions around
(+3)

More time for self Away from relatives Away from railway stations,
(+4) (-3) famous Delhi markets
(-2)

Lower rent More malls

(+4) (+1)
+16 -13 3

24
Paired Comparison Analysis
• It is a systematic approach for evaluating a small range of options by comparing them
against each other. It helps when :
• When the criteria are subjective in rating and ranking alternatives
• When priorities are not clear enough
• When alternatives are completely different from one another
• When there is little objective data to base our decision on, we make use of this analysis
Paired comparison is often used to choose the most compelling problem to solve, or to
select the alternative that will be the most effective.
• It is useful in a wide range of applications as :
• Selecting the concept design for a new product before it goes into production
• Deciding the skills and qualifications when hiring people for a new position
Decisions like these are more difficult to make than
• Comparing which investment to take
• Which vendor to select
As the selection would be based on based on quality, price, and delivery speed.
Implementing a Paired Comparison Analysis

1.Need to work with your team

2.Identify the options to be evaluated
3.Identify the evaluation criterion to help you make the decision (e.g. the most
important, the most interesting, or the easiest to implement).
4.List all the options on the left hand column and on the top row of the matrix.
5.In each blank cell, compare the option in the row with the option in the column, then
write in the cell the option that better meets the evaluation criterion.
6.Repeat the process until all possible pairs are evaluated.
7.Count the number of times each option has been chosen.
8.Rank the options based on their count.
9.Consider the options with the highest ranking.

Note: Further solutions can be developed by mixing the positive aspects of a number of
solutions.
Example :
You need to decide how to spend your upcoming summer holidays, and you have four
ideas under consideration.

A:Write a book B: Take a course C:With family D:Long walks

A:Write a
book
B:Take a
course
C: With
family

D:Long
walks
Example :
You need to decide how to spend your upcoming summer holidays, and you have four ideas
under consideration.

The highest rank is the third option, that is, spending time with family
Paired Comparison Analysis

• Make a list of all of the options that you want to compare. Assign each option a letter (A, B, C, D, and so on) and note
this down.

• Mark your options as both the row and column headings on the worksheet.

• Within each of the blank cells, compare the option in the row with the option in the column. Decide which of the two
options is most important.

• Write down the letter of the most important option in the cell. Then, score the difference in importance between the
options, running from zero - three

• Finally, consolidate the results by adding up the values for each of the options. You may want to convert these values
into a percentage of the total score.

Prominent psychometrician L. L. Thurstone first introduced a scientific

approach to using pairwise comparisons for measurement in 1927
29
Paired Comparison Analysis

A: Overseas B: Local C: D:
Development Education University Disaster
Relief
A: Overseas Development

B: Local Education

C: University

D: Disaster Relief

30
Paired Comparison Analysis

A: Overseas B: Local C: D:
Development Education University Disaster
Relief

A: Overseas Development
A,2 C,1 A,1

B: Local Education C, 1 B,1

C: University C,2

D: Disaster Relief

31
31
The following is an example that uses the paired comparison analysis to
identify and rank the top motivators for a team

The team has selected ‘appreciation’ to be their top motivator, followed by ‘financial benefits.’
Decision Matrix
• The Pugh Matrix-by Stuart Pugh
• Decision Matrix is also called decision grid, Pugh matrix, problem selection matrix,
selection matrix, criteria-based matrix, problem matrix, solution matrix, opportunity
analysis, and criteria rating form.

• A decision matrix is a decision-making tool/method that assesses and prioritizes a list

of options.

• At first, a list of weighted criteria is formulated, and each option is assessed against
that criterion.

• The options are listed as rows on a table and the factors as columns
Pugh's Matrix
• Suppose your manager assigns you the task of selecting a new software
supplier.
• You will begin your research and shortlist several good options.
• How would you make the final decision, considering several factors such as
technology, service levels, contract lengths, and more?
• Such situations can be handled efficiently by employing a decision matrix.
Given the above-mentioned decision matrix example, we can say that a decision matrix is
generally used when:

• Comparing multiple similar options

• A list of options has to be narrowed to one choice
• The decision is to be made based on several criteria
• You have to approach the decision from a logical viewpoint rather than an intuitive or
emotional one.

Example: You have to launch a website and look for agencies that could
create content and design.
You find three decent agencies and have to choose on amongst them.
 How to Create a Decision Matrix?

Evaluate the best option between alternatives based on various crucial factors and their relative
importance, employing the following steps:

Step 1: Finding the Alternatives

• Decision matrices help decide the best option amongst a set of promising choices.
• Therefore, identifying the options is the first step before building decision matrices.
Example: You have to launch a website and look for agencies that could create content and design.
You find three decent agencies and have to choose one amongst them.
Step 2: Identifying Crucial Points
• Next, you must identify the important considerations to factor into your decision.
• These critical considerations help strike the optimal decision without any subjectivity.

• Considering the example mentioned above, you will now acknowledge some important criteria for selection as
pricing customer support, experience, and customer reviews.
Step 3: Creating a Decision Matrix
Preparing a grid for comparing important considerations between options requires you to list all of
your options as the row labels on the table. Include the list of factors as the column headings.

Pricing Customer Experience Customer Score

Support Reviews

Agency 1

Agency 2

Agency 3
Step 4: Filling the Decision Matrix
• The next step in building a decision matrix is to rate every consideration on a
predetermined scale.
• For little variations among options, use a scale of 1-3.
• For more options, opt for a 1-5 scale, where the highest number is the best.
• This step adds all the logical reasoning to your decision.
• As each option comes with its pros and cons, rating them is the best way to avoid the
struggles of strategic decision- making
• You must remember that it is not essential to have a number for each option
• If none of them is good for a factor under consideration, you can rate them
0 for that factor.
 Pricing Customer Experience Customer Score
Support Reviews

Agency 1 3 4 2 5

Agency 2 5 2 3 3

Agency 3 1 5 3 4
Step 5: Including Weight

Often, some factors are more important than others. Use a weighted decision matrix in that case.

For example, continuing our example, suppose you cannot exceed your budget, so the pricing is a critical factor. To add
weight to your decision matrix, you will now assign a number (between 1-3 or 1-5) to each consideration.

Custome Custom
Pricin Customer Customer
r Experience Score Pricing Experience er Score
g Reviews Support
Support Reviews

Weight Weights (4) (1) (3) (2)

(4) (1) (3) (2)
s

Agency
3×4= 5×2=
3 4 2 5 Agency 1 4×1=4 2×3=6
1
12 10

Agency 5×4= 3×2=

5 2 3 3 Agency 2 2×1=2 3×3=9
2 20 6

Agency 1×4= 4×2=

1 5 3 4 Agency 3 5×1=5 3×3=9
3 4 8
Step 6: Multiplying Weighted Score

To proceed further, you will multiply the weight by each consideration. This way, more important
considerations are given more weight.

The decision matrix for our example will be as follows:

Pricing Customer Support Experience Customer Score

Reviews

Weights (4) (1) (3) (2)

Agency 1 3 × 4 = 12 4×1=4 2×3=6 5 × 2 = 10

Agency 2 5 × 4 = 20 2×1=2 3×3=9 3×2=6

Agency 3 1×4=4 5×1=5 3×3=9 4×2=8

Step 7: Estimating the Total Score
After multiplying the weighted score, add up all of the considerations for every row. A clear number-based answer
will tell you the best decision.

Considering our decision matrix example, we will have the following grid:

Customer Customer
Pricing Experience Score
Support Reviews

Weights (4) (1) (3) (2)

Agency 1 3 × 4 = 12 4×1=4 2×3=6 5 × 2 = 10 32

Agency 2 5 × 4 = 20 2×1=2 3×3=9 3×2=6 37

Agency 3 1×4=4 5×1=5 3×3=9 4×2=8 26

Results: We can see that Agency 2 has the highest score, and therefore, it is the best decision based on the
factors taken into consideration. Although Agency 1 had the best customer reviews, the combination of
reviews, experience and cost make Agency 2 a better option.
The Pugh Matrix-by Stuart Pugh
Payment
Factors: Cost Quality Location Reliability Total
Options
Weights:
Supplier 1 1 0 0 1 3
Supplier 2 0 3 2 2 1
Supplier 3 2 2 1 3 0
Supplier 4 2 3 3 3 0

Payment
Factors: Cost Quality Location Reliability Total
Options
Weights: 4 5 1 2 3
Supplier 1 4 0 0 2 9 15
Supplier 2 0 15 2 4 3 24
Supplier 3 8 10 1 6 0 25
Supplier 4 8 15 3 6 0 32

43
 6 Thinking Hats

44
 6 Colors

White : Neutral, Objective

Red : Emotional, angry

Black : Serious, somber

Yellow : Sunny, positive

Green : Growth, fertility

Blue : Cool, sky above

45
 …and 6 Hats

: Objective facts & figures

: Emotions & feelings

: Cautious & careful

: Hope, positive and speculative

: Creativity, ideas and lateral thinking

: Control and organization of thinking

46
The White Hat: The Logical Hat

Information
Facts

Imagine…
White piece of paper to write
facts
Data

Who, what, when, where

why?

47
The White Hat

White Hat Thinking:

• Focus on data available
•Neutral, objective information
• Look at the information you have, and see what
you can learn from it •Facts & figures

• Look for gaps in your knowledge, and either try •Questions – what do we know, what do
to fill them or take account of them we not know, what do we need to know

•Excludes opinions, hunches, judgments

• This is where you analyze past trends, and try
to extrapolate from historical data •Removes feelings and impressions

48
The Red Hat: The Emotional Hat

Emotion

Feelings

Imagine…
Red heart for feeling and
emotion

Intuition

What are my feelings now?

What does my intuition tell me?
What’s my gut reaction?
49
 The Red Hat

• Focus : feelings, emotions, intuition

Red Hat Thinking depends on :
• Look at problems using intuition, ‘gut reaction’ and
•Emotions and feelings
emotion
•Hunches, intuitions, impressions
• Trying to think how other people will react emotionally
•Doesn’t have to be logical or
• Trying to understand the responses of people who do not consistent
fully know your reasoning
•No justifications, reasons or basis

•All decisions are emotional in the end

50
The Black Hat: Conservative Hat

Caution Careful of…

Imagine…
Black judge’s robe representing
caution, wisdom!

Risk
Words of Wisdom

What could be the potential problems?

What could some of the difficulties be?
What are the points of caution and risk?
51
The Black Hat:

• Focus : cautious and defensive – why it may Black Hat Thinking:

not work?
• Decisions coming from wearing this hat might •Cautious and careful
be logical and truthful, but not necessarily fair
•Logical negative – why it won’t
• It allows you to eliminate problems/risks, work
alter them, or prepare contingency plans to
counter them •Critical judgment , pessimistic
view
• Identifies risks, obstacles, weaknesses to
overcome •Separate logical negative from
emotional
• It helps to make your plans ‘tougher’ and
more resilient •Focus on errors, evidence,
conclusions

52
The Yellow Hat: Focuses on the advantages

What are the benefits?

Optimism What are the positives
Benefits
and values?
Is there a concept in the
idea that makes it
Imagine… attractive?
Yellow sun representing
benefits of a sunny day!
Value

The good in it

53
The Yellow Hat

• Focus : think positively! Yellow Hat Thinking:

• Sees all the benefits in a decision •Positive and speculative
• Sees the value in a decision •Positive thinking, optimism,
opportunity
• Sees the opportunities in a decision
•Views the benefits of a situation

•Best-case scenarios

•Exploration

54
The Green Hat: It focuses on innovation.

Creativity
Alternatives

Imagine…
Green grass for constant
creation of new ideas

New Ideas
Possibilities

55
The Green Hat: Creativity

• Focus : creativity Green Hat Thinking:

• New ideas and outlooks •New ideas, concepts,

perceptions
• Develop creative solutions to a problem
•Deliberate creation of new ideas
• Be unconstrained by practicality
•Alternatives and more
• Don’t criticize ideas alternatives

•New approaches to problems

•Creative and lateral thinking

56
The Blue Hat :Facilitator

Concluding
Process
Summarizing
Imagine…
Blue sky for thinking from a What is our agenda?
new perspective – like a bird in What is our next step and next
hat?
the air looking down at the What is our decision?
earth
Organizing
Thinking about thinking

57
The Blue Hat: Process Control

• Focus : process control Blue Hat Thinking:

• Worn by people leading/facilitating •Thinking about Thinking

meetings
•Instructions for thinking
• Setting the focus
•The organization of thinking
• Making summaries
•Control of the other hats
• Overviews, conclusions, action plans
•Discipline and focus

58
The Role of the Blue Hat

Control of Thinking and the Process

Opening the session … & Closing the session
•Why are we here? •What we have achieved?
•What are we thinking about? •Outcome
•Definition of the situation or •Conclusion
problem •Design
•Alternative definitions •Solution
•What do we want to achieve •Next steps
•Where do we want to end up
•The background to the thinking
•A plan for the sequence of hats

59
The 6 Hats

Managing The Thinking

Control & Organization of
thinking
Setting The Focus
Making Summaries
Overviews • Conclusions
Information & Data Action Plans
Objective Facts & Figures
Neutral & Objective Why It May Not Work
Checked & Believed Facts Cautious & Careful
Missing Information & Cautions • Dangers
Where To Source It Problems • Faults
Logical Reasons
Must Be Given

Why It May Work

Hope, positive & speculative Feelings & Intuition
Values & Benefits Emotions & Feeling
(Both Known & Potential)
Emotions Or Hunches
The Good In It
“At This Point”
Logical Reasons
No Reasons or Justification
Must Be Given Creative Thinking Keep It Short
Creativity, Ideas & Lateral Thinking
Possibilities • Alternatives
New Ideas • New Concepts
Overcome Black Hat Problems &
60 Reinforce Yellow Hat Values
Using the Hats

• Use any hat, as often as needed

• Focus the thinking – only one hat at one time

• Sequence can be preset or evolving

• Not necessary to use every hat

• Time under each hat should generally be short(red hat generally very brief)

• Requires discipline from every person in the group

• Can be used by individuals and groups

61
General Hat Issues

• Direction, not description

• Not categories of people

• A constructive form of highlighting one’s thinking ability

• Use in whole or in part

62
6 Hats in Group Activities

• Everyone needs to consider a problem with the same hat on

• The intention should be to reach a conclusion without confrontations

• All hats should be treated seriously by everyone

63
6 Hats for An Individual

• Put different thinking hats on in turns, until you’ve considered

the problem from all angles

• Avoid getting “stuck in a rut” i.e.. – thinking in only one way

• Iterate around the hats until all your thinking is done

64
Using the 6 Hats – Facilitator Role

• Define the focus of your thinking

• Plan the sequence and timing of the thinking

• Ask for changes in the thinking if required

• Handle requests from the group for changes in the thinking

• Form periodic or final summaries of the thinking, for consideration by the team

65
Using the 6 Hats – Participants Role

• Follow the lead of the 6 Hats Thinking facilitator

• Stick to the hat(type of thinking) that is in current use

• Try to work within the time limits

• Contribute honestly and fully under each of the hats

66
 Case Study

67
 Implement the Solution

The Value of an idea lies in the implementation

of it…

68
 Action Plan

• Identify your improvement areas on the basis of the assessment taken on Problem solving
and your managers assessment during the pre work

• Mention the steps that you will take to improve on those area on the basis of what you have
learnt from the program

• This will be sent to you and your manager as an action plan for you

• Your manager will gauge your improvement on the basis of your action plan 30 days from
now.

69