mgt 1

• Decision-making


  The process of choosing between two or more options
• All members of a company make choices that impact the position they hold and the company they work for; managers are not the only ones who do this
• Choosing between options is how decision-making is usually defined, but this perspective is overly straightforward
• Making decisions involves more than just selecting an option, it is a process
• Decision


  An option made between two or multiple choices
• Problem


  A hurdle that makes achieving a desired aim or objective challenging
• Identifying a problem


  1. Recognise the difference between the desired and actual state

  2. Exercise caution to avoid conflating issues with their symptoms

  3. Identifying problems is a subjective process
• Identifying decision criteria


  1. Determine the crucial or pertinent criteria to solve the problem

  2. Every decision-maker has criteria that helps them make decisions
• Allocating weights


  Balance the criteria and assign appropriate priority if they are not equally significant
• Developing alternatives


  1. Enumerate workable options that could address the issue

  2. Use creativity to generate options
• Analyzing alternatives


  1. Assess each option and calculate the weighted alternatives

  2. Sum the weighted criteria to get the overall score for each alternative
• Selecting an alternative


  Choose the option with the highest total score
• Implementing the alternative


  1. Communicate the decision to impacted individuals and obtain their support

  2. Reevaluate the setting for any changes during implementation
• Evaluating decision effectiveness


  1. Determine if the issue was resolved

  2. Identify what went wrong if the issue persists
• Decision-making is the fundamental component of management
• Rationality


  A rational decision-maker would be completely objective and logical, selecting the course of action that maximizes the possibility of reaching the target, with the best interests of the company in mind
• Bounded rationality


  Managers satisfice rather than maximize because they are unable to process every available detail on all alternatives, thereby constraining their ability to make rational decisions
• The majority of decisions made by managers are satisfice because they do not conform to the ideals of perfect rationality
• Managers are also probably impacted by the culture of the company, internal politics, power dynamics, and escalation of commitment
• Intuitive decision-making


  The process of selecting choices based on feelings, experience, and collected knowledge
• Nearly 50% of the CEOs polled stated that they "ran their companies more often using intuition than formal analysis"
• Evidence-based management (EBMgt)


  The systematic application of the most effective available evidence to enhance management practice
• Crowdsourcing


  Using the Internet, social media, and smartphone apps to access a large number of individuals with diverse abilities and perspectives
• Structured problems


  Simple, well-known, and readily defined issues that can be solved using a routine technique
• Programmed decision


  A constant decision that can be managed by a routine technique
• Procedure


  A set of sequential actions that a manager takes to address a structured issue
• Rule


  A straightforward order that informs a manager of what is acceptable and unacceptable
• Policy


  A set of guidelines used to make decisions, providing a broad framework for the decision-maker
• Unstructured problems


  Uncommon issues with insufficient or unclear information, requiring original solutions
• Nonprogrammed decision


  A customized solution for an unstructured problem, distinct and nonrepeating
• Linear thinking style


  Using information from outside sources, such as data and statistics, and processing this knowledge using logic and deductive reasoning to support decisions
• Nonlinear thinking style


  Inclination for inside sources (feelings and intuition) and the interpretation of this data to inform choices and actions using internal knowledge, feelings, and hunches
• Heuristics


  Rules of thumb that managers use to make the decision-making process easier
• Overconfidence bias


  When decision-makers have a tendency to believe they know more than they actually do or to have exaggeratedly high expectations for their own abilities and performance
• Gratification bias


  Decision-makers with a tendency to seek out immediate benefits rather than long-term rewards
• Anchoring effect


  Decision-makers fail to adjust for new information after they have already been put in motion due to their fixation on the initial information
• Selective-perception bias


  People in positions of authority arrange and interpret events in a biased way because of their preconceived notions
• Confirmation bias


  Individuals who make decisions by looking for data to support their prior decisions and ignoring data that challenges such decisions
• Framing bias


  When decision-makers pick out and emphasize some parts of a scenario while leaving out others, altering what they observe and establishing false reference points
• Availability bias


  Decision-makers have a tendency to recall the most recent events from their memories, leading to skewed perceptions