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Decision Making The Essence of Manager's Job

The document outlines an 8-step decision making process that includes identifying a problem, selecting alternatives, and evaluating the decision. It also discusses types of problems and decisions like structured vs unstructured problems. Different decision making conditions like certainty, risk, and uncertainty are explained. Common decision making biases that can negatively impact decisions such as overconfidence bias, anchoring effect, and confirmation bias are also summarized.

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45 views21 pages

Decision Making The Essence of Manager's Job

The document outlines an 8-step decision making process that includes identifying a problem, selecting alternatives, and evaluating the decision. It also discusses types of problems and decisions like structured vs unstructured problems. Different decision making conditions like certainty, risk, and uncertainty are explained. Common decision making biases that can negatively impact decisions such as overconfidence bias, anchoring effect, and confirmation bias are also summarized.

Uploaded by

Fndng Smone
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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DECISION MAKING

The Essence Of Manager's Job


Group Members
Hafiz Syed maaz Agha
Hafiz Syed Raheel Agha
Mohammad Nabeel Khan
Mohammad Umer Khan
Mohsin Aslam Khan
Decision Making Process

A set of eight steps that include identifying a


problem, selecting an alternative, and evaluating the
decision’s effectiveness
The Decision Making Process
STEP 1: Identifying A Problem
The decision making process begins with the existence of a
PROBLEM or , more specifically, a discrepancy between an
existing and a desired state of affairs.

STEP 2: Identifying Decision Criteria


Once a manager has identified a problem that needs attention, the
decision criteria important to resolving the problem must be
identified.
STEP 3: ALLOCATING WEIGHTS TO THE CRITERIA

• The criteria identified in Step 2 aren’t equally important so the


decision maker must weight the items in order to give them the
correct priority in the decision.

STEP 4: DEVELOPING ALTERNATIVES:


• The fourth step requires the decision maker to list the variable
alternatives that could solve the problem. No attempt is made in
this step to evaluate the alternatives, only to list them.
STEP 5: ANALYZING ALTERNANTIVES:
• Once the alternatives have been identified, the decision maker
must critically analyze each one. After analyzing each criteria
or from this comparison of alternatives the strength &
weaknesses of each alternative becomes evident.

STEP 6: SELECTING AN ALTERNATIVE:


• The sixth step is the important act of choosing the best
alternative from among those considered.
STEP 7: IMPLEMENTING THE ALTERNATIVE
Although the choice process is completed in the previous step

STEP 8: EVALUATING DECISION EFFECTIVENESS


Appraising the outcome of the decision to see if the problem
has been resolved . Did the alternative chosen and
implement accomplish the desired result.
Making Decisions : Rationality ,
Bounded Rationality, and intuition
Rational Decision Making:
Decision-making behavior where choices are
consistent and value-maximizing within specified
constraint.
Bounded Rationality:
Decision-making behavior that’s rational , but
limited(bounded)by Individual ability to process
information.
Intuitive Decision Making:
Making Decision on the basis of experience,
feelings, and accumulated judgment.
Types Of Problems and Decisions
Structured Problems and Programmed Decisions:
• Some problems are straight forward. The goals of
decisions makers are clear, the problems is familiar and
information about the problems is easily defined and
complete.
Unstructured problems and nonprogrammed
Decisions:
• In this situation the problems are new or unusual for
which the information is ambiguous or in complete.
Integration:
• The difference between programmed and non
programmed decisions backed by organization
Decision-Making Conditions
•Managers within organizations make decisions and permeates
everything an organization does.

•Decisions are the means by which organizations turn ideas into


action and can have a positive or a negative impact.
Decision-Making Conditions

Certainty
A situation in which a
manager can make an
accurate decision because the
outcome of every alternative
choice is known.
Risk
A situation in which the
manager is able to estimate
the likelihood (probability) of
outcomes that result from the
choice of particular
alternatives.
Uncertainty
Limited information prevents estimation of
outcome probabilities for alternatives
associated with the problem and may force
managers to rely on intuition, hunches, and
“gut feelings”.
Decision-Making Styles
Dimensions of Decision-Making Styles

Ways of thinking
 Rational, orderly, and consistent

 Intuitive, creative, and unique

Tolerance for ambiguity


 Low tolerance: require consistency and order

 High tolerance: multiple thoughts simultaneously


Types of Decision Makers
Directive
 Have low tolerance for ambiguity and are
rational in their way of thinking. Use
minimal information and consider few
alternatives.
Analytic
 Have grater tolerance for ambiguity and
are rational in their way of thinking.
Make careful decisions in unique
situations.
Conceptual
 Maintain a broad outlook and consider
many alternatives in making decisions.
Good at finding Creative solutions.
Behavioral
 Avoid conflict by working well with
others and being receptive to suggestions.
Decision-Making Biases and Errors
Overconfidence Bias
When decision makers tend to think they know more than they
do or hold unrealistically positive views of themselves and
one’s performance.

Immediate Gratification Bias


Decision makers who tend to want immediate rewards and that
to avoid immediate costs. For these individuals decision
choices that provide quick payoffs are more appealing than
those in the future.
Anchoring Effect
Fixating on initial information as a starting point and the once
set fail to adequately adjust for subsequent information.
Selective Perception Bias
When decision makers Selectively organize and interpret
events based on their biased perceptions they are using
Selective Perception Bias
Confirmation Bias
Seeking out information that reaffirms past choices and
discount information that contradicts past judgments exhibit the
confirmation bias.
Framing Bias
When decision makers Select and highlight certain aspects
of a situation while excluding others. By drawing
attention to specific aspects of a situation and highlighting
them while at the same time omitting other aspects

Availability Bias
When decision makers tend to remember events that are the
most recent and vivid in their memory.
It distorts their ability to recall events in an objective
manner and results in distorted judgments.
Representation Bias
When decision makers assess the likelihood of an event based
on how closely it resembles other events or set of events.
Managers exhibiting this bias draw analogies and see
identical situations where don’t exist

Randomness Bias
They do this because most decision makers have difficulty
dealing with chance even though random events happen to
everyone & there is nothing that can be done to predict them
Sunk Costs Errors
Forgetting that current actions cannot influence past events and
relate only to future consequences.

Self-Serving Bias
Taking quick credit for successes and blaming outside factors for
failures.

Hindsight Bias
Is the tendency for decision makers to falsely believe that they
would have accurately predicted the outcome of an event once
that outcome is actually known
Thank You!

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