Chapter 8 Flashcards
(20 cards)
Decision Making Process
Identifying (a problem, decision criteria & allocating weights to the criteria)
Developing (analyzing & selecting ana alternative that can resolve the problem)
Implementation (the selected alternative)
Evaluation (the effectiveness of the decision)
Characteristics of Problems
A problem is recognized awareness
There is pressure to solve the problem
The manager must have the authority, information, or resources needed to solve the problem
Principles of Problem Diagnostics
Suspending Judgement
Problem vs. Symptom
Multicausality
Interrelationship
Identification of Decision Criteria
Cost (That will be incurred)
Risk (likely to be encountered Chance of failure)
Outcome (That are desired)
Allocation of Weights to Criteria
Assigning weight to each item place the item in the correct priority order of their importance in the decision making process
Development of Alternative
Alternatives are listed that can resolve the problem (without evaluation)
Analyse Alternatives
An alternatives appraisal is based on its ability to resolve the issues identified in steps 2 and 3
Select an Alternative
Typically the alternative with the highest total weight is chosen
If the individual finds that the best alternative does not seem like the right alternative the decision maker news to decide if a review of the criteria is necessary before implementing the alternative
Implementing the Alternative
Conveying the decision to those affected by it and gaining their commitment to it
Evaluating a Decision
How effective was the problem resolved by outcomes resulting from the chosen alternatives
If the problem was not resolved, what went wrong?
Bounded Rationality
Will not seek out or have knowledge of all alternatives
Will satisfice (accept solution that are good enough)
Can be influenced by escalation of commitment (Increased commitment to a previous decision despite evidence that it might have been wrong)
Role of Intuition
Intuitive decision making
Making decision on the basis of experience, feelings, and accumulated judgement
One third of managers and other employees said they emphasize “gut feeling” over cognitive problem solving.
Evidence Based Management
The systematic use of he best available evidence to improve management practice
Structured Problems
Problems that are straightforward and easily defined
Programmed Decision
A repetitive decision that can be handled by a routine approach (Standard Operating procedure)
Unstructured Problems
Problems are new and unusual
Non Programmed Decisions
Decisions are unique and nonrecurring
Conditions of Decision Making
Certainty
Accurate decisions because the outcome of every alternative is known
Risk
Decision maker is able to estimate the likelihood of certain outcomes
Selective perceptions
Selecting, organizing, and interpreting events based o the decision makers biased perceptions
Confirmation Bias
Seeking out information that reaffirms past choices and discounting contradictory information
Availability Bias
Decision makers tend to remember events that are the most recent in vivid in their memory
Representative Bias
Decision makers assess the likelihood of an event based on how closely it resembles other events or sets of events
Sunk-Cost error
Decision makers forget that current choices cannot correct the past They incorrectly fixate on past expenditures of time, money, or effort in assessing choices rather than future consequences
Randomness Bias
Describes the action of decision makers who try to create meaning out of random events.
Self-Serving Bias
Decision makers who are quick to take credit for their successes and blame the failure on outside factors
Guidelines for making effective decisions
Understand cultural differences
Create standards for good decision making
Know when it’s time to call it quits
Use an effective decision making process
BUild an organisation that can spot the unexpected and quickly adapt to a changed environment.
Habits of highly reliable organisations
Are not tricked by their success
Defer to the experts on the front line
Let unexpected circumstances provide the solution
Embrace complexity
Anticipate, but also anticipate their limits.
