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Managing organizations and people (Subject) / decision making (Lesson)
- The decision-making process 1. Identification of a problem: → Most problems are not obvious and have to be identified → It is important to differentiate problems from their symptoms → Problem identification is subjective 2. Identification of decision criteria → Determine what is relevant in making a decision 3. Allocation of weights to the criteria → The criteria have to be weighted from lowest to highest (1-10) in order to give them the right priority 4. Development of alternatives → List all the alternatives that could solve the problem 5. Analysis of alternatives → Appraise the criteria of each alternative → Multiply each alternative by its weight and sum up these scores 6. Selection of alternatives → Choose the alternative that generates the highest total 7. Implementation of alternatives → Involve people in the implementation of a decision → Consider environmental changes that could affect the decision, especially if it takes long time to implement the decision 8. Evaluation of decision effectiveness → Evaluate the outcome of the decision in order to see if the problem has been resolved
- Types of problems and conditions Well-structured problems are straightforward, familiar and easily defined. A programmed decision is a repetitive decision that can be handled by a routine. Unstructured problems are new or unusual for which information is ambiguous or incomplete. Non-programmed decisions are unique decisions that require custom-made solutions.
- Decision making conditions Certainty: Outcome of every alternative is known à Manager can make accurate decisions Risk: Outcome of every alternative is measurable since probabilities are known Uncertainty: Outcome of alternatives is not measurable
- Decision-making styles - A person has a preference for using external facts and data (rational) → Linear thinking style- A person has a preference for using internal sources (intuitive) → Non-linear thinking style
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