Managers as decision makers:
Although we know about the decision-making
process, we still don’t know much about the manager as a
decision maker. In this session, we’ll look at how decisions are made,
the types of problems and decisions
managers face, the conditions under which managers make decisions, and
The nature of managerial decision making:
making is the process through which managers identify
organizational problems and
attempt to resolve them. Decision makers face three types of problems.
1. A crisis problem is a serious difficulty requiring immediate
2. A non-crisis
problem is an issue that requires resolution,
but does not simultaneously have
the importance and immediacy characteristics of crises.
3. An opportunity problem
is a situation that offers a strong potential
organizational gain if appropriate actions are taken.
a. Opportunities involve ideas that could be sued, rather than
difficulties that must
b. Non-innovative managers tend to focus on problems rather than upon
Models of Decision Making:
According to the
of decision making, managers engage in
completely rational decision
processes, ultimately make optimal decisions, and possess and understand
all information relevant to their
decisions at the time they make them (including all possible
alternatives and all potential outcomes and
Rational Model Step by Step:
Defining Problem by gathering relevant information:
Step 1 is identifying a problem.
is defined as a discrepancy between an
existing and a desired state
of affairs. Some cautions about problem identification include the
1. Make sure it’s a problem and not just a symptom of a problem.
2. Problem identification is subjective.
3. Before a problem can be determined, a manager must be aware of any
4. Discrepancies can be found by comparing current results with some
5. Pressure must be exerted on the manager to correct the discrepancy.
6. Managers aren’t likely to characterize some discrepancy as a problem
if they perceive that they
don’t have the authority, money, information, or other resources needed
to act on it.
Step 2 is identifying the decision criteria.
are criteria that define what is relevant and
important in making a decision.
Step 3 is allocating weights to the criteria. The criteria identified in
Step 2 of the decision-making process
aren’t all equally important, so the decision maker must weight the
items in order to give them correct
priority in the decision.
Step 4 involves developing alternatives. The decision maker now needs to
identify viable alternatives for
resolving the problem.
Step 5 is analyzing alternatives. Each of the alternatives must now be
critically analyzed. Each alternative is
evaluated by appraising it against the criteria.
Step 6 involves selecting an alternative. The act of selecting the best
alternative from among those identified
and assessed is critical. If criteria weights have been used, the
decision maker simply selects the alternative
with the highest score from Step 5.
Step 7 is choosing a course of action and implementing the alternative.
The chosen alternative must be
implemented. Implementation is conveying a decision to those affected by
it and getting their commitment
Step 8 involves evaluating the decision effectiveness. This last step in
the decision-making process assesses
the result of the decision to see whether or not the problem has been