MQBS_Lecture 3b Managerial decision making (1)

Introduction to Lecture 3

  • Topic: Planning, Strategic Management, and Decision-Making

  • Course: MGMT1002 Managing for Impact

  • Unit Convenor: Dr. Frances Chang

  • Purpose of Material: Provided for individual research and study. Sharing without permission is prohibited.

Learning Outcomes

  • Explain how managers use information to solve problems.

  • Identify steps in the decision-making process.

  • Discuss current issues in managerial decision-making.

Problem Solving

  • Definition: Identifying the discrepancy between an actual and a desired situation and taking action to resolve it.

  • Managers as Knowledge Workers:

    • Require technological, analytical, and information competencies.

    • Play decisional, informational, and interpersonal roles.

Types of Decisions

Decision Categories

  • Programmed Decisions: Solutions from past experiences applied to routine problems.

  • Non-Programmed Decisions: Specific solutions crafted for unique problems.

Thinking Approaches in Decisions

Systematic Thinking

  • Approaches problems rationally and analytically.

Intuitive Thinking

  • Approaches problems flexibly and spontaneously.

The Decision-Making Process

  1. Identify and Define the Problem.

  2. Generate and Evaluate Alternative Solutions.

  3. Decide on a Preferred Course of Action.

  4. Implement the Decision.

  5. Evaluate Results.

  6. Ongoing evaluation, feedback, and iteration.

Models of Managerial Decision-Making

  • Classical Model:

    • Assumes a certain environment with complete information.

    • Focuses on optimizing decisions—choosing the absolute best alternative.

  • Behavioral Model:

    • Operates in uncertain environments with incomplete information.

    • Focuses on satisficing decisions—choosing the first satisfactory alternative.

  • Realistic Model:

    • Functions in uncertain environments with discoverable information.

    • Uses evidence-based decision-making—choosing the best-supported alternative by credible evidence.

Ethical Reasoning in Decision-Making

Criteria for Ethical Decisions (by Gerald Cavanagh)

  • Utility: Does the decision satisfy all stakeholders?

  • Rights: Does the decision respect rights and duties?

  • Justice: Is the decision consistent with justice principles?

  • Caring: Does the decision reflect responsibilities to care?

Cognitive Styles and Decision-Making

  • Sensation Thinkers: Prefer facts and goals.

  • Sensation Feelers: Prefer facts and feelings.

  • Intuitive Thinkers: Abstract, theoretical approach.

  • Intuitive Feelers: Thoughtful and flexible.

Levels of Certainty in Decision-Making

  • Certainty: All facts and alternatives are known.

  • Risk: Alternatives are known, but consequences are described in probabilities.

  • Uncertainty: Not all alternatives and consequences are known.

Errors in Decision-Making

  • Heuristics: May lead to errors.

    • Availability Heuristic: Judging likelihood based on recent examples.

    • Representativeness Heuristic: Incorrect assumptions based on stereotypes.

  • Framing Error: Influencing decisions based on how information is presented.

  • Confirmation Error: Focusing on information that supports existing beliefs.

  • Escalation of Commitment: Continuing a failing course of action due to prior investments.

Current Issues in Decision-Making

Crisis Decision-Making

  1. Figure out what is happening.

  2. Speed is crucial.

  3. Recognize that slow decisions are also significant.

  4. Respect the unfamiliar and unknowns.

  5. Value skeptics in discussions.

  6. Be prepared to adapt quickly.

Creativity in Decision-Making

  • Big-C Creativity: Extraordinary achievements by exceptional individuals.

  • Little-C Creativity: Unique solutions for everyday challenges.

Group Decision-Making

Advantages:

  • Increased information from members’ expertise.

  • More alternatives considered.

  • Greater understanding and commitment.

Disadvantages:

  • Social pressures may lead to conformity.

  • Possible domination by a small group.

  • Time delays in reaching consensus.

Summary of Managerial Decision-Making

  • Use information, technology, and competencies for problem-solving (both programmed and non-programmed).

  • Identify steps in the decision-making process.

  • Apply different styles and models (classical, behavioral, realistic).

  • Address current issues, including crisis management, creativity, and group decision-making.