Decision-Making Perspectives in Management

Evaluating Decision Effectiveness

• Assess the outcome of decisions to determine if the initial problem was resolved.

Four Perspectives on Decision Making

• Rationality: Objective and logical decisions to maximize organizational goals.
• Bounded Rationality: Decisions made in a rational manner but limited by information processing capabilities, leading to satisficing instead of maximizing.
• Role of Intuition: Decisions based on experience and feelings rather than solely empirical data.
• Evidence-Based Management (EBMgt): Utilizes the best available evidence to improve management practices systematically.

Types of Problems and Decisions

• Structured Problems: Clear, familiar situations easily defined.
• Programmed Decisions: Routine, repetitive decisions handled through established protocols including:
  • Procedures: Sequential steps for addressing structured problems.
  • Rules: Explicit guidelines on what actions are permissible.
  • Policies: Framework for guiding decision-making.

Decision Types Characteristics

• Nonprogrammed Decisions: Unstructured, novelty-oriented, and rely on creative judgment.
• Programmed Decisions: Structured, routine, and short-term with clear information and procedures.

Decision-Making Conditions

• Certainty: All outcomes of alternatives are known.
• Risk: Decision-maker can estimate the likelihood of outcomes.
• Uncertainty: Lack of certainty or probability estimates.

Decision Making Styles

• Distinctions between linear and nonlinear thinking styles inform how different managers approach decision-making.
• Example: William D. Perez at Nike relied on data while Phil Knight favored intuition.

Decision Making Biases and Errors

• Common biases include:
  • Overconfidence
  • Immediate gratification
  • Anchoring effect
  • Selective perception
  • Confirmation bias
  • Framing bias
  • Availability bias
  • Representation bias
  • Randomness bias
  • Sunk costs error
  • Self-serving bias
  • Hindsight bias

Decision Making Process

• Involves identifying options, evaluating them, selecting the best alternative, implementing the decision, and assessing its effectiveness for future improvement.
• Influencing factors include decision-making approaches, problem types, conditions, and styles.

Effective Decision Making in Today's World

• Managers should:
  • Understand cultural differences.
  • Know when to pivot from a decision.
  • Utilize effective decision-making processes.
  • Foster adaptive organizational structures.

Foundation of Planning

• Planning involves setting goals, strategies for achievement, and coordinating activities within an organization.

Recruitment and Selection

• Recruitment methods include:
  • Internet
  • Employee referrals
  • Company websites
  • Professional recruiting organizations

Decruitment

• Approaches to control labor supply through decruitment include:
  • Firing
  • Layoffs
  • Early retirements
  • Job sharing
  • Transfers

Selection Process

• Selection involves screening candidates to predict future success.
• Valid tools show a proven relationship to job performance; reliable tools yield consistent measurements.

Employee Training and Skills Development

• Orientation introduces new hires to their roles, covering work units and organizational culture.
• Training types include general skill development and specific job-related training.
• Effective training methods encompass on-the-job learning, mentoring, job rotation, and technology-based resources.

Employee Performance Management

• Performance management systems set standards to evaluate employee effectiveness.
• Methods include:
  • Management By Objectives (MBO)
  • 360-degree feedback appraisals
  • Skill-based pay and variable pay systems.

Managing Downsizing

• Downsizing is a strategic approach to improve profitability through workforce reduction.
• Common reasons for downsizing include economic pressures, market share declines, and operational failures.
• Long-term consequences may include loss of institutional knowledge, decreased morale, and increased rehiring costs.
• Effective communication and support for remaining employees are crucial during downsizing.

This quiz evaluates four key perspectives on how managers make decisions, focusing on rationality and bounded rationality. You will assess the effectiveness of decision outcomes to understand how decisions can resolve problems in organizational contexts.