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Decision Making
Decisionmakingisanintegralfunctionofmanagement.Decisionmakinginvolvesselectingorchoosinga particularcourseofactionfromamongthevariousalternativesavailableinthedecisionmaking situation.Theprocessdecisionmakinginvolves3phases. 1. Intelligenceactivityphaseidentificationoftheproblem. 2. Designactivityphasedeveloping&analysingvariouscourseofactions. 3. Choiceactivityphasechoosingthebestcourseofaction.
consequencesandhencemakerationaldecisions. Butitisverydifficultformanagerstobecompletelyrationalintheirdecisionmaking,sincedecisionsare takenkeepingthefutureinmindandthefutureisveryuncertain.Itisverydifficulttodetermineallthe alternativecourseofactionthatmightbefollowedtoaccomplishagoal. Classicaldecisiontheorymaynotfitwellinachaoticworld.Itcanbeusedtowardsthebottomofmany firms. BehavioralDecisionTheory Behavioraldecisiontheoryrecognizesthathumanbeingsoperatewithcognitivelimitationsandbounded rationality.Abehavioraldecisionmakerfacesaproblemthatisnotclearlydefined&hehasonlylimited knowledgeofpossiblealternativesandtheirconsequences.Theselimitationsforcehimtochoosea satisfactoryalternative. Behavioraldecisiontheoryfitwithachaoticworldofuncertainconditionsandlimitedinformation.Andthis modelencouragessatisficingdecisionmaking.However,keepinmindthattheirdecisionmakingisalso likelyinfluencedbytheorganizationsculture,internalpolitics,powerconsiderations,andbyaphenomenon calledescalationofcommitment,whichisanincreasedcommitmenttoapreviousdecisiondespite evidencethatitmayhavebeenwrong. GarbageCanModel Amodelofdecisionmakingthatviewsproblems,solutions,participantsandchoicesituationsasmixed togetherinthegarbagecanoftheorganization.Garbagemodelofdecisiontheoryismoreappropriatein dynamicsettings. IncrementalModel Anotherapproachtodecisionmakingistheincrementalmodel.Theincrementalmodelstatesthatthe managersputintheleastpossibleeffortonlyenoughtoreducetheproblemtoatolerancelevel. Managersaremoreconcernedaboutashorttermsolution.Thismodeldoesnotrequiremanagersto processagreatdealofinformationinordertotakeadecision.
Scanninginvolvesmonitoringtheworkenvforchangesthatmayindicatetheemergenceofaproblem.
Heuristics
Aheuristicisamentalshortcutthatallowspeopletosolveproblemsandmakejudgmentsquicklyand efficiently.Theseruleofthumbstrategiesshortendecisionmakingtimeandallowpeopletofunction withoutconstantlystoppingtothinkabouttheirnextcourseofaction.Whileheuristicsarehelpfulinmany situations,theycanalsoleadtobiases. Whileheuristicscanspeedupourproblemanddecisionmakingprocess,theycanintroduceerrors.Just becausesomethinghasworkedinthepastdoesnotmeanthatitwillworkagain,andrelyingonanexisting heuristiccanmakeitdifficulttoseealternativesolutionsorcomeupwithnewideas. Availabilityheuristictendencyforthepeopletobasetheirjudgmentsoninformationthatis readilyavailabletothemratherthancompletedata..
Suggestionsforintegratingethicaldecisionmakingintothefirm. Developacodeofethicsandfollowit. Establishproceduresforreportingviolations. Involveemployeesinidentifyingethicalissues. Monitorethicalperformance. Rewardethicalbehavior. Publicizeethicalefforts. Implicationsofethicsfordecisionmaking. Moralityisinvolvedin: Choosingproblems. Decidingwhoshouldbeinvolvedinmakingdecisions. Estimatingtheimpactsofdecisionalternatives. Selectinganalternativeforimplementation. Moralconductdoesnotarisefromafterthefactembarrassment.
Greaterpoolofknowledge Differentperspective Increasedacceptance Trainingground. Themostcommonformsofgroupdecisionmakingareinteractinggroup,delphigroupsandnominal groups. Interactivegroupsisadecisionmakinggroupinwhichthemembersopenlydiscuss,argueandagreeon thebestalternative.Inthisformofgroupdecisionmaking,anexistinggroupslikeastandingcommitteeor anewlydesignatedgroupsuchasanadhoccommitteeortaskforceisentrustedwiththetaskoftakinga decision.Thediscussionisopenandinteractiveandgrouparrivesatadecisionafterdiscussingthepros andconsofvariousalternatives.Anadvantageofthismethodisthattheinteractionbetweenpeoplebrings forthmanynewideasandimprovesunderstandingbetweenthemembersofthegroup.However,amajor disadvantageofthisformofgroupdecisionmakingisthatpoliticalfactorscaninfluenceittoagreat extent. Someofthedisadvantagesofgroupdecisionmakingare Socialpressure Dominationbyavocalfew. Logrollingpetprojectorvestedinterestisatstake. Goaldisplacementsecondaryconsiderationstakepreference. Groupthinkcompromise DelphiGroup Thisistechniqueissimilartothenominalgrouptechnique,butdiffersfromitinthatthedecisionmakersdo notactuallymeetatacommonplace.Thevariousstagesindelphitechniqueare Asmallgroupisformedcomprisingofindividualswithreasonableexpertiseinthedecisionmaking situation.However,theydonothavefacetofaceinteractionwitheachother. Eachexpertissentaquestionnaireconsistingofquestionsrelevanttothedecisionmaking situation.Theexpertadviceofeachindividualdecisionmakerissought. Thesummarisedresultorfeedbackofthesurveyisthensentbacktotheexpertsseekingtheir responsetotheresults. Theprocessisrepeatedseveraltimesuntilaconsensusamongtheexpertsisobtained. Thismethodhasthebenefitofovercomingpersonalbiasesofdecisionmakers.Researchshowsthatorg implementingthistechniquehavebeensuccessfulingeneratinginnovativeideastotheproblemsituation. Thismethodisnotusedforeverydayroutinedecisionsbecauseitistimeconsumingandexpensive. NominalGroupsInanominalgrouptechnique,thegroupofmembersareactuallybroughttogether,but theydontinteractasfreelyasthemembersofinteractivegroup.Thistechniqueisgenerallyusedwhen creativeorinnovativeideasarerequired.
BrainstormingAideagenerationprocessthatspecificallyencouragesanyandallalternativeswhile withholdinganycriticismofthosealternatives.
theJapaneseorganizationalsystem,adecisionmakerarrivesatadecisioninconsensuswithothers.This styleisculturallyorientedandmakesimplementationofthedecisionmucheasiersinceeverybody participatesinthedecisionmakingprocess.InAmerica,onthecontrary,thedecisionmakingstyleis generallyindividualisticwiththehelpofdecisionmodelsandquantitativetechniques. Escalation of Commitment Anincreasedcommitmenttoapreviousdecisiondespitenegativeinformation.Individualsescalate commitmenttoafailingcourseofactionwhentheyviewthemselvesasresponsibleforthefailure.Thatis, theythrowgoodmoneyafterbadtodemonstratethattheirinitialdecisionwasnotwrongandtoavoid havingtoadmittheymadeamistake.Manyorganizationshavesufferedlargelossesbecauseamanager wasdeterminedtoprovehisorheroriginaldecisionwasrightbycontinuingtocommitresourcestowhat wasalostcausefromthebeginning.