By Tahir Muhammad

Final Prof (E)Session 2010-

2015

DECISION MAKING IN AN

ORGANIZATION

• Introduction:

• Ways of thinking About Decision making:

• Types Of Decision Making:

• Levels Of Decision Making:

• Styles Of Decision Making:

• Decision Making Under Diff Conditions:

• Steps In The Decision Making Process:

Includes

Decision-Making Process:

The sequence of events taken by management to solve the problems

A systematic process.

Introduction

Analysis reveals that virtually every manager makes decisions

This points to decision-making as the common function of managers

Some writers have used the term "decision-maker" in place of manager

Linear Thinking: Each problem has a single solution, will only affect the

problem area, not the rest of the organization, Once implemented, will remain valid and should be

evaluated only for how well it solves the problem. Problems are conceived of as discrete, singular, and unique.

Ways Of Thinking About Decision Making:

Fast-food restaurants Not an effective Problems with this

type…

Systems Thinking:

More broad approach to problem-solving. Problems are complex and related to a situation Solutions not only solve the problem but will also impact on

the rest of the organization Situations change problems evolve and new solutions are

necessary

Programmed Decisions:Characterize those problems that are Well understood Highly structured Routine & Repetitive and That lend to systematic procedures

and rules.

Each time decision is made similar to every other time.

May lend themselves to linear thinking

Use of Artificial Intelligence (AI)

Types Of Decision Making

Nonprogrammed Decisions:Nonprogrammed decisions are those problems that are Not well understood Not highly structured Tend to be unique And do not lend to routine or systematic

procedures. Happens so rarely

Rely heavily on the decision-making abilities of managers

There is no routine solution available

Use of data from past problems

Strategic Administrative Operational Strategic Decision-Making: Determine the goals of the entire

organization, its purpose and direction. The task of top management & has the "big

picture" How relate to external environments

Levels Of Decision Making

Entire business must be made at the highest level

Goals are not very specific & nonprogrammer in nature

E.g To produce a breakfast or to enter a new market

Administrative Decision-Making: Those made on a lower level Usually made by midlevel management concerns the development of tactics to

accomplish the strategic goals defined by top management. specific & departmental. E.g To produce a specific kind of cereal, in this

case a fruit-and-fiber breakfast cereal.

Operational Decision-Making: Made on the lowest or supervisory level Concerns the course of daily operations determine the manner in which operations are

conducted Most effective and efficient way to accomplish

the goals stated on the administrative level. E.g breakfast cereal, to produce each week

10,000 boxes holding 12 ounces.

As there are different kinds of decisions, there are different kinds of decision-making styles.

* Types Of Manager On The Basis Of Styles Of Decision Making: The "Smoother" or Problem Avoider: The Problem Solver: The Problem Seeker:

Styles Of Decision Making

The Smoother or Problem Avoider

(PA) : The PA seeks to preserve the status quo Acts to keep from making changes

to maintain current conditions Difficulty smooth over or ignore it

completely PA may appear blind to difficulties If the business is dynamic, changing

environment active approach will be more effective.

The Problem Solver:• Most common managerial style • No hesitation to make changes when good and

necessary.• Expect problems and solve in the normal

course of doing business. No prior commitment to make changes Accepts conditions of risk and uncertainty. Preoccupied & always in a reactive mode.

The Problem Seeker: Actively seeks out problems and attempts to deal with them

before they emerge as major difficulties for a business. Future planning and contingencies creation are involved Believes to anticipate, not merely to react Uses the data analysis, to understand the present, to

project the future. Efficient way to deal with small problems before they

become big ones. But may lead to a neglect of current needs and situations

Problem Seeker Manager

Conditions Of Certainty:• Results are known in advance• No unanticipated results are there• Decisions made under this are programmed • Possible in the most simple situations• Encounters a degree of risk

Conditions Of Risk:• Results are not definitely known• But will probably fall within a known range• Risk in terms of probability• A fraction between the two extremes. • Use past data estimate the probabilities of

specific outcomes

Decision Making Under Diff Conditions

Conditions Of Uncertainty:

Cannot predict the outcome of a decision There is no past data upon which to make a

prediction. May be due to the following factors: too many variables in the situation not enough knowledge about the variables or both

1) Situational Analysis:• First examine the data of the current

situation.• External consultant accurate approach to

situation• Focus on:

The internal factors (Organizational Audit) The external factors (environmental scan) Relationship between these two SWOT

analysis

Steps In The Decision Making

2) Setting Performance Standards:• Whether the goal is achieved or not• Accountability

3) Generation Of Alternatives:• “do something” or “do nothing”.

Do nothing - If goal is achieving/ Doing creates problems

Do Something - To creatively generate all sorts of alternatives

• Brainstorming • Ideas are recorded on a chart or chalkboard • Selection action alternative consequence analysis

Consequences Evaluation: When Implemented Should be Evaluated Best alternative selection

Does this alternative achieve the organizational goal?

Any undesirable consequences or side effects?

Can the organization afford this alternative?

5) Pilot-Testing And Full Implementation:• Once an alternative is chosen, the alternative (s) must be

pilot-tested• Should not proceed to full implementation • Final chance to modify (feedback)• After pilot test, fully implemented• After a period of time measured and evaluated.

The decision-making process, complete with a feedback loop

• So Be Ready …….