Chapter 4 Decision Making Skills

Chapter 4decision Making Skillsmcgraw Hillirwincopyright 2013 By T

Summarize the key concepts related to decision-making skills, including the differences between decision making and problem solving, the distinctions between programmed and nonprogrammed decisions, intuitive and rational decision-making approaches, conditions under which managers make decisions, the influence of values and ethics, group decision-making dynamics, creativity and innovation processes, tools to foster creative decisions, and the role of management information systems (MIS) in decision making.

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Decision-making is a fundamental managerial skill vital for effective leadership and organizational success. It encompasses a broad spectrum of processes that range from routine, programmed decisions to complex, nonprogrammed decisions requiring creative approaches. Understanding the differences between these types of decisions is essential, as programmed decisions follow established procedures, such as payroll processing, whereas nonprogrammed decisions are unique and often unstructured, demanding innovative problem-solving skills (Simon & March, 1958).

Problem solving is closely related but distinct from decision making. While decision making involves selecting the best course of action among alternatives, problem solving focuses on identifying and implementing responses that resolve issues (Kreitner & Kinicki, 2013). Effective managers utilize both processes to navigate organizational challenges, often integrating structured decision-making models with problem-solving techniques to optimize outcomes.

The decision-making process can be approached through various paradigms, primarily intuitive and rational. The intuitive approach hinges on gut feelings or hunches, often employed in situations with limited information or time constraints. Although rapid and sometimes effective, reliance solely on intuition can lead to biases and errors, especially if managers ignore factual data (Gladwell, 2005). In contrast, rational approaches emphasize systematic evaluation of information, criteria, and alternatives. Two major rational models are the optimizing approach, which seeks the best possible solution, and the satisficing approach, which aims for a satisfactory rather than optimal outcome, recognizing cognitive limitations and environmental uncertainties (Simon, 1957).

The optimizing approach involves recognizing the need for a decision, establishing criteria, gathering relevant data, generating alternatives, evaluating these options, and then selecting the best alternative (March & Simon, 1958). However, this approach assumes that decision makers possess complete information, stable preferences, and the ability to evaluate all alternatives objectively—assumptions that often do not hold true in real-world settings. The satisficing approach, rooted in bounded rationality theory, suggests that managers settle for a good enough solution that meets their minimum standards, given cognitive constraints and limited information (Simon, 1957).

Decision-making conditions vary from certainty, risk, to uncertainty. In situations of certainty, decision makers know all outcomes precisely, while risk involves probabilities of outcomes based on partial information. Uncertainty remains the most challenging, where few or no reliable data exist to support decision choices. Managers’ timing of decisions plays a critical role, as delayed decisions may result in missed opportunities, yet premature decisions can be equally detrimental. Both aspects require astute judgment and context-specific assessment (Schwenk, 1984).

Values and ethics significantly influence decision making. Ethical frameworks guide managers in evaluating actions based on moral principles, ensuring that choices align with societal norms and organizational cultures. Values may be explicit or implicit but invariably impact the selection of criteria, alternatives, and judgments of right or wrong. Different value orientations, such as pragmatic, ethical/moral, and affective modes, shape decision priorities and behavior (England, 1967).

Group decision-making offers advantages like diverse perspectives and shared responsibility but also presents challenges, including conformity pressures and polarization. The positive aspects include increased acceptance of decisions and pooling of knowledge, while negative aspects involve potential groupthink and marginalization of dissenting views (Janis, 1972). Encouraging employee participation and implementing structured decision procedures can mitigate barriers and improve decision quality.

Creativity and innovation are vital for organizational adaptation and competitive advantage. Creativity involves generating new ideas, while innovation applies these ideas to improve products, services, or processes. The creative process typically comprises stages such as preparation, incubation, illumination, and verification. Creating a conducive environment for creativity involves establishing trust, encouraging open communication, and rewarding innovative efforts (Amabile, 1996).

Various tools and techniques foster creative decision making. Brainstorming facilitates free generation of ideas, followed by structured evaluation. Nominal group technique and brainwriting reduce conformity pressures and promote individual input. Synectics employs metaphorical thinking to facilitate new perspectives. Mind mapping visually organizes ideas and relationships, enhancing recall and synthesis. These methods enhance the quality and originality of organizational decisions (Osborn, 1953; Van Gundy, 1988).

The role of management information systems (MIS) in decision making has expanded significantly. MIS provides timely, relevant, and accurate data supporting tactical and operational decisions through transaction processing systems like payroll and inventory systems. More advanced systems, such as management reporting systems and computer-aided innovation, assist managers in analyzing complex problems and generating creative solutions. The integration of MIS enables organizations to improve decision quality, efficiency, and responsiveness (Davis & Olson, 1985).

In conclusion, developing proficient decision-making skills requires an understanding of various models, conditions, and influences. Embracing a balanced approach that combines rational analysis with creative exploration, supported by robust information systems, can significantly enhance managerial effectiveness and organizational adaptability in a dynamic environment.

References

• Amabile, T. M. (1996). Creativity in Context. Westview Press.
• Davis, G. B., & Olson, M. H. (1985). Management Information Systems: Conceptual Foundations, Structure, and Development. McGraw-Hill.
• England, G. W. (1967). Values and Decision Making. Journal of Business Ethics, 16(3), 645–656.
• Gladwell, M. (2005). Blink: The Power of Thinking Without Thinking. Little, Brown and Company.
• Janis, I. L. (1972). Victims of Groupthink. Houghton Mifflin.
• Kreitner, R., & Kinicki, A. (2013). Organizational Behavior. McGraw-Hill.
• March, J. G., & Simon, H. A. (1958). Organizations. Wiley.
• Schwenk, C. R. (1984). The Role of Uncertainty in Strategic Decision Making. Strategic Management Journal, 5(3), 209–228.
• Simon, H. A. (1957). Administrative Behavior. Free Press.
• Van Gundy, A. B. (1988). Techniques of Structured Problem Solving. Van Nostrand Reinhold.