DECISION MAKING &
PROBLEM SOLVING
Developing Future Leader
Decision Making
“A decision is a judgment. It is a choice between
alternatives. It is rarely a choice between right
and wrong. It is at best a choice between
“almost right” and “probably wrong”
-Drucker
“A manager by profession is a decision maker;
Uncertainty is his opponent, overcoming it is
his mission.”
Decisions and Decision Making
• Decision = choice made from available
alternatives
• Decision Making = process of identifying
problems and opportunities and resolving
them
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Significance of Decision Making
• Strategic Decision Making
• Tactical Decision Making
• Operational Decision Making
Categories of Decisions/Types
• Programmed Decisions (routine, almost
automatic process)
– Situations occurred often enough to enable
decision rules to be developed and applied in the
future (There are rules or guidelines to follow)
– Made in response to recurring organizational
problems (managers have made decision may
times before)
– Example: deciding to reorder office supplies
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Categories of Decisions/Types
• Non-programmed Decisions – (Unusual
situations that have not been often addressed)
– In response to unique, poorly defined and largely
unstructured, and have important consequences to
the organization
– No rules to follow, since the decision is new
– These decisions are made based on information, and
a managers intuition and judgment
• Example: should the firm invest in a new
technology?
ADMINISTRATIVE MODEL
• Two concepts are instrumental in shaping the
How nonprogrammed decisions are made--uncertainty/ambiguity
administrative model
– Bounded rationality: people have limits or
boundaries on how rational they can be
– Satisfying: means that decision makers choose the
first solution alternative that satisfies minimal
decision criteria
POLITICAL MODEL
– Closely resembles the real environment in which
most managers and decision makers operate
– Useful in making non-programmed decisions
– Decisions are complex
– Disagreement and conflict over problems and
solutions are normal
• Coalition = informal alliance among manages
who support a specific goal
RATIONAL DECISION MAKING MODEL
RATIONAL DECISION MAKING MODEL
STEP EXAMPLE
Recognizing & defining the A plant manager sees that employee turnover
situation has increased by 5%
Identifying the alternatives The plant manager can increase wages,
increase benefits, or change hiring standards
Evaluating the alternatives Increasing the benefits may not be feasible.
Increasing wages and changing hiring standards
may satisfy all conditions
Selecting the best alternative Changing hiring standards will take an
extended period of time to cut turnover, so
increase wages
RATIONAL DECISION MAKING MODEL
Implementing the chosen The plant manager may need permission from
alternatives corporate headquarters. The HRD establishes a
new wage structure
Following up and evaluating The pant manager notes that six months later
the results turnover has dropped to its previous level
Vroom and Yetton Model
DECISION MAKING STYLES
High
Analytical Conceptual
Broad outlook
Careful decision makers examine
Adapt to new situation more alternative
long range
Tolerance find creative solution
for
Ambiguity
Directive
Efficient,logical Behavioral
use less Work well with others
information, few Receptive to
alternative suggestions Avoid
make decision fast conflicts
focus on short-
term
Rational Intuitive
Low Way of Thinking
Strategic Decision Making Process
Recognize the problem and
the need for a decision
Identify the objective of
the decision
Gather and evaluate data
and diagnose the situation
List and evaluate
alternatives
Strategic Decision Making Process
Select the best
course of action
Implement
the decision
Gather
feedback
Follow up
How to be More Creative
Create a culture of creativity.
Encourage brainstorming.
Suspend judgment.
Get more points of view.
Provide physical support for creativity.
Encourage anonymous input.
Influences on Creativity
• S OCIOLOGICAL
• T ECHNOLOGICAL
• E COLOGICAL
• E CONOMY
• P OLITICAL
Group Decision-Making
Advantages
1) more knowledge through
pooling of group resources 1) pressure in groups to conform
2) Increased acceptance & 2) domination by one forceful
commitment due to voice in member or dominant clique
decisions
3) amount of time required,
3) greater under-standing due to because group is slower
involvement in decision stages than individual to make a
decision
Disadvantages
Creative Problem Solving
• Dividing the process into steps allows you to break a large,
complex problem into simpler problems where your various
skills can be used
• 5 Questions for Creative Problem Solving
– 5W
– 1H
Thank You…!
