Decision Making/Tools in Management PDF

“DECISION MAKING/TOOLS IN MANAGEMENT” Effective Decision: What is Decision Making? ⮚ Decision making is the fundamental process of management. ⮚ Decision-making is only one of the manager's task. It is but a small fraction of his time. ⮚ Decision is...

“DECISION MAKING/TOOLS IN MANAGEMENT” Effective Decision: What is Decision Making? ⮚ Decision making is the fundamental process of management. ⮚ Decision-making is only one of the manager's task. It is but a small fraction of his time. ⮚ Decision is a judgement. It is a choice between alternatives. It is a choice of right or wrong “Managers who make effective decisions know that one does not start with a fact, one start with opinions.” “Right decisions are made in the conflict and arguments between opinions and competing alternatives.” “THE FIRST RULE IN DECISION MAKING:” “One does not make decisions unless there is disagreement” What is an Effective Manager? ⮚ Effective managers are supposed to make effective decisions with significant impact on the entire organization, its performance and results, defines the manager “THE MAIN TASK OF MANAGER IS NOT THE ADMINISTRATION, BUT THE MAKING OF POLICY AND THE MAKING OF RIGHT DECISIONS” Decision Processes: Effective Decision are made through a systematic process defining clearly the elements in a distinct sequence of steps. Most successful decision follows a process this are.  1. Identify the problem 2. Specify objectives and decision criteria. 3. Develop alternatives 4. Analyze and compare alternatives 5. Select the best alternatives 6. Implement the chosen alternative 7. Monitor results to ensure the desired results are achieved Reasons for Poor Decision “THE FIRESTONE AND FORD TIRE CONTROVERSY” The Firestone and Ford tire controversy, which peaked in 2000, centered on a high number of accidents involving Ford Explorer SUVs equipped with Firestone tires. The core issues were 1. Tire Failures: Firestone's ATX, ATX II, and Wilderness AT tires experienced tread separations, blowouts, and failures at an alarming rate, especially when used on Ford Explorers. 2. Safety Concerns: These tire failures often led to rollovers and accidents, resulting in numerous injuries and fatalities. 3. Design Flaws: Investigations pointed to potential design and manufacturing flaws in Firestone tires, such as weak adhesion between the tire components and issues with the rubber compound. 4. Vehicle Design: The Ford Explorer’s design was also scrutinized. Its high center of gravity made it more prone to rollovers, especially when tire failures occurred. 5. Corporate Responses: Both companies initially blamed each other. Firestone argued that Ford's recommended low tire pressure contributed to the failures, while Ford highlighted defects in Firestone’s manufacturing process. 6. Recall: Ultimately, Firestone recalled millions of tires, and Ford replaced millions more. The recall was one of the largest in automotive history. 7. Long-term Impact: The controversy damaged the reputations of both companies, led to numerous lawsuits, and prompted changes in safety regulations and corporate practices. “THE DENVER INTERNATIONAL AIRPORT” The Denver International Airport (DIA) faced numerous problems during its construction and early operations, which became widely known. Here are the main issues  Delays and Cost Overruns: Originally scheduled to open in October 1993, DIA faced a series of delays, finally opening in February 1995. The project also went significantly over budget, costing around $4.8 billion instead of the estimated $2.9 billion Baggage Handling System: A highly automated baggage handling system, designed by BAE Systems, was intended to be state-of-the-art but turned into a major fiasco. The system experienced frequent mechanical problems, including misrouted bags, shredded luggage, and system jams, leading to its eventual abandonment. Operational Challenges: Early operations were plagued with issues such as runway problems, insufficient staffing, and difficulties in coordinating the movement of aircraft and passengers, resulting in long delays and a poor initial reputation. Design Controversies: The airport's unique design, featuring a tent-like roof structure, sparked debates over its practicality and the effectiveness of its construction. The extensive use of automated systems was also criticized for being overly ambitious and poorly executed. PAUL C. NUTT Failures such as the Ford–Firestone feud and the design of the Denver International Airport are “decisions with bad practice producing big losses that become public” (Nutt, 2003). As might be expected, not all poor decisions lead to failure; they lead instead to wasted time, unnecessary costs, lost opportunities, a poor reputation, damaged relations, and other undesirable outcomes. “REASONS FOR POOR DECISION” 1. Selecting the Wrong Process or Mismanaging the Process 2. Generating too few, too many, or useless alternatives 3. Selecting Inappropriate or Irrelevant Objectives 4. Evaluate Alternatives Using Outdated, Incomplete or Incorrect Information 5. select inferior alternatives 6. implement the chosen alternative poorly 7. fail to learn from these types of mistakes Elements of Decision Process: “There are five elements in the process of decision making”  1. See if the problem was generic and could only be solved through a decision established by a rule or principle. 2. Define the specifications which the answer to the problem had to satisfy of the boundary conditions. 3. The thinking through what is right in the solution which will satisfy the specifications before attention is given to the compromises, adaptations, and concessions needed to make the decision acceptable. 4. The building into the decision of the action to carry it out. 5. The feedback which tests the validity and effectiveness of the decision against the actual course of events Budgeting the Time TIME BUDGETING- The process of planning and allocating specific amounts of time to various tasks and activities to maximize productivity and achieve goals efficiently FACTORS AFFECTING TIME IN A PROJECT; o Staffing levels o Organizational Size o Meeting Frequency o Knowledge worker dynamic STRATEGIES FOR EFFECTIVE TIME BUDGETING; o Prioritize planning o Optimize Staffing level o Facilitate communication o Streamline Decision Making o Limit meetings o Encourage Collaboration IMPORTANCE; o Efficient Resource Management o Timely Project Completion o Improved Quality of Decisions o Enhanced Coordination and Communication First Things First “Effective Managers do “First things First” and they do one thing at a time. Concentration is crucial for effectiveness, as effective managers prioritize task s, manage time wisely, and understand the importance of timely action to avoid frustration and failure” Employee Discipline Discipline is a means that management uses to bring employees behavior under control. It is a form of control to protect the interests of the company as well as those of the employees. Control within this context has three major dimensions; 1. As a means of establishing awareness on the part of the employees regarding the proper behavior, attitude, and conduct in their jobs. 2. As a means of establishing an atmosphere conducive to working together efficiently. 3. As a means of correcting or reforming employees who commits any refraction or violation of the company rules and regulations. Principle of Management HENRI FAYOL; o Henry Fayol is known as the father of modern management theory. o He was an engineer at the Compagnie de Commentry-Fourchambault-Decazeville mining company. o Fayol worked his way up to become a manager during the peak of the Industrial Revolution in France. o Fayol focused on administrative over technical skills. o His principles became one of the earliest examples of treating management as a true profession. o In 1916, Fayol wrote "Administration Industrielle et Générale.« The book shared his experiences of managing a workforce PRINCIPLE OF MANAGEMET Henry Fayol’s 14 principles of management look at an organization from a top-down approach to help managers get the best from employees and run the business with ease. Let’s take a look at them and understand them in detail. 1. DIVISION OF WORK- The Fayol principle states that employees will become more efficient and skilled if they are assigned a specific focus task, rather than being overburdened with multiple tasks at once. To implement this effectively, employers should assess each employee's current skills and assign them a task they can specialize in, which can improve long-term productivity and proficiency. 2. AUTHORITY- Managers require sufficient authority to ensure their instructions are carried out, but this authority must be balanced with an equal level of responsibility. Fayol emphasized that an imbalance, with either too much authority or too much responsibility, will lead to frustration for either the employees or the manager respectively. 3. DISCIPLINE- Fayol believed that discipline is essential for an organization to function effectively. This requires establishing a culture of mutual respect through clear organizational rules, philosophies, and structures that must be upheld by all employees. Maintaining discipline also necessitates good supervision and impartial enforcement to ensure no one is allowed to bend or slack on the established guidelines. 4. UNITY OF COMMAND- Fayol emphasized the importance of a clear chain of command in an organization, where each employee reports to a single manager. Dividing an employee's loyalty and authority between multiple managers threatens discipline, stability, and the overall management structure. Maintaining a direct line of command is crucial to avoid employee burnout and ensure effective execution of instructions. 5. UNITY OF DIRECTION- It emphasizes that all work should be organized so that employees collaborate towards a common objective under one plan and one manager. For instance, all marketing activities like advertising, budgeting, and sales promotion should be overseen by a single manager, ensuring all efforts are directed towards a shared goal. 6. COLLECTIVE INTEREST OVER INDIVIDUAL INTEREST- This principle states that the overall interest of the team should take precedence over personal ones. The interest of the organization should not be sabotaged by the interest of an individual. If anyone goes rogue, the organization will collapse. 7. REMUNERATION- "Henri Fayol's principle of management asserts that employees should receive fair wages, including both financial and non-financial incentives. Organizations must compensate fairly to retain  and motivate quality workers, with a structure in place to reward good performance." 8. CENTRALIZATION- Centralization involves concentrating power at the top, while decentralization distributes authority across all management levels. Modern organizations cannot be entirely centralized or decentralized. Effective management today requires a balance, with the degree of centralization and decentralization varying by organization. 9. SCALAR CHAIN- A scalar chain refers to a clear chain of communication between employees and their superiors. Employees should know where they stand in the hierarchy of the organization and who to go to in a chain of command. To implement this in the workplace, Fayol suggests that there should be an organizational chart drawn out for employees to see this structure clearly. 10. ORDER- This principle states that there should be an orderly placement of resources (manpower, money, materials, etc.) in the right place at the right time. This ensures the proper use of resources in a structured fashion. Misplacement of any of these resources will lead to misuse and disorder in the organization. 11. EQUITY- Equity is a combination of kindness and justice. This principle states that managers should use kindliness and justice towards everyone they manage. This creates loyalty and devotion among the employees towards the organization they work for. 12. STABILITY OF TENURE PERSONNEL- "This principle emphasizes minimizing staff turnover and maximizing efficiency. New employees need time to adapt to the organization's culture. Ensuring job security for all employees is crucial to avoid inefficiency. Additionally, there should be a clear method for handling vacancies, as training new staff is time-consuming and costly." 13. INITIATIVE- This principle states that all employees should be encouraged to show initiative. When employees have a say as to how best they can do their job, they feel motivated and respected. Organizations should listen to the concerns of their employees and encourage them to develop and carry out plans for improvement. 14. ESPIRIT DE CORPS- "Esprit de Corps, meaning 'Team Spirit,' is a principle by Henri Fayol that stresses the importance of unity, morale, and cooperation among employees. Team spirit strengthens the organization, leading to happy, motivated, and more productive employees."