Decision Making in Management

Introduction

• Decision making is central to management.
• Every organization choice stems from decision making.
• Decisions affect probability, well-being, innovation, and crisis avoidance.

Objectives of the Session

• Understanding the meaning and importance of decision making.
• Types of decisions in organizations.
• Decision-making situations.

What is Decision Making?

• Definition: Choosing from available alternatives to achieve a specific goal.
• Process involves identifying problems/opportunities and resolving them.
• Decision making is goal-oriented and involves intuition and logic.
• It's a skill that can be refined with practice.

Importance of Decision Making for Managers

• Direction and Goals: Sets a clear path by evaluating options and consequences.
• Problem Solving: Analyzes situations to overcome challenges.
• Empowerment and Growth: Decisions are learning experiences that build resilience.
• Increases Efficiency and Innovation: Facilitates new alternatives and enhances organization efficiency.

Types of Decisions in Organizations

1. Personal and Organizational Decisions

• Personal Decisions: Individual choices (e.g., buying a phone) with indirect organizational impact; cannot be delegated.
• Organizational Decisions: Made in a formal capacity with stakeholder interests in mind; can be delegated.

2. Individual and Group Decisions

• Individual Decisions: Routine decisions made by one person.
• Group Decisions: Made by a committee; involve more discussion and debate.
  • Advantages: More information and creativity.
  • Disadvantages: Pressure to conform and dominance by influential members.

3. Programmed and Non-Programmed Decisions

• Programmed Decisions: Routine, repetitive, and follow established rules (e.g., hospital admission procedures).
• Non-Programmed Decisions: Unique problems requiring executive discretion and judgment (e.g., restructuring a company).

4. Strategic, Administrative, and Routine Decisions

• Strategic Decisions: Made by top management for long-term impact.
• Administrative Decisions: Operational issues handled by middle management.
• Routine Decisions: Repetitive, short-term issues managed by lower-level managers.

Decision Making Situations

1. Certainty

• Full information is available, enabling straightforward decision making.

2. Risk

• Goals are clear, but outcomes involve some chance of failure.

3. Uncertainty

• Goals are known, but information on alternatives is incomplete.

4. Ambiguity

• Goals and outcomes are unclear; decision making is most challenging.

Conclusion

• Effective decision making is critical to management success.