WEEK9 - Decision making in organisations Flashcards
Basic decision-making model
Step 1: Identify and diagnose the problem
Many people faced with a decision tend to wade right in without thinking too much about it. A frequent mistake is to observe the symptoms of a problem and treat them as the underlying causes.
Step 2: Develop alternatives
The search for alternatives will be greatly influenced by the way you go about defining and thinking about the problem.
Step 3: Evaluate alternatives
Remember that an alternative might have more than a single outcome. It is necessary to understand not only the benefits and how they might bring about the objective of the decision, but also the potential costs of each alternative.
Step 4: Make the decision and implement it
Effective decision-making does not stop when the decision is made. It also entails good follow-through and implementation. Many good decisions are ruined by the ineffective implementation, but the decision-maker is still responsible.
Step 5: Evaluate the decision results.
Evaluating whether the implementation of the decision is proceeding smoothly and achieving the desired results is the ‘control’ function of management.
Group decision making is:
Being fair to all members of the group
A means of getting together different attitudes
Letting members say what they think should be done to solve a problem
Group discipline through social pressure and persuasion
Solving problems co-operatively
Group decision making is not:
Giving each individual what they want
Manipulating group members to reach the right decision
Selling the ideas of the superior manager to other members of the group
Throwing discipline to the wind and permitting anarchy
Seeking mere advice through consultative supervision
Advantages of decision making
- In development of objectives, groups provide a greater amount of available knowledge
- In developing alternatives, individual efforts of group members can enable a broader search in the functional area of the organisation
- In evaluating alternatives, groups have a wider range of viewpoints
- In selecting alternatives, groups are likely to accept more risks than individual decision-makers
- Because of their participation in the decision-making process, group members are more likely to be motivated to carry out the decision
- Greater creativity results from the interaction of individuals with different viewpoints
Disadvantages of decision making
- The implementation of a decision, whether it is by the group or not, has to be accomplished by individual managers; groups cannot be held responsible — can lead to ‘buck-passing’
- Group discussions are costly, considering how valuable time is as an organisational resource
- Group decision making is inefficient if a decision is needed promptly
- Group decisions may be the result of compromise and indecision on the part of the group members
- If superiors are present, or one member has a dominant personality, a decision may not be a group decision at all
Strategic decisions are:
are basic long-term decisions which:
determine the organisation’s relationship with its environment, notably in terms of its product or services and its markets;
set the principal goals and objectives of an organisation, including major policy statements;
tend to be non-routine and non-repetitive;
are usually complex, especially in terms of the number of variables which have to be considered.
Operating decisions:
are short-term decisions which:
settle issues such as output levels, pricing and inventory levels;
are routine and repetitive;
involve fewer variables than strategic decisions;
tend to assume priority over others because of their volume and ability to show results in the short term.
Administrative decisions:
arise from, and are subject to, the conflicting demands of strategic and operational problems;
are essentially concerned with an organisation’s structure, e.g. establishing lines of authority and communication.
decision-making steps
Step 1, ‘Identify and diagnose’
Step 2, ‘Develop alternatives’
Step 3, ‘Evaluate alternatives’,
Step 4, ‘Make the decision and implement it’,
Step 5, ‘Evaluate the decision results’,
Mintzberg - decision-making process
Identification – problem recognition can be seen to depend on the behaviour of individuals, conditioned by the culture and politics of the organization;
Development – managers look into their experience for solutions. This will be a step-by-step process, beginning with the easiest (‘it worked before’) less innovative search solution, rather than considering a large number of alternatives;
Selection – the decision has to be authorized involving a number of behavioural, political and learning issues. Simplistic views tended to predominate in order to sustain the idea of being ‘in control’. This often led to repetition of past decisions resulting in strategic drift.
Decision tree is:
a mathematical technique enables the decision-maker to grasp the factors that will affect the outcome of a decision
