Decision Making

Lea Marie Salazar

You have chartered a yacht with three friends, for the holiday trip of a lifetime across the Atlantic Ocean. Because none of you have any previous sailing experience, you have hired an experienced captain and two-person crew. Unfortunately in mid Atlantic, a fierce fire breaks out in the ship galley and the captain and crew have been lost while trying to fight the blaze. Much of the yacht is destroyed and is slowly sinking.

Your location is unclear because vital navigational and radio equipment have been damaged in the fire. Your best estimate is that you are many hundreds of miles from the nearest landfall. You and your friends have managed to save 15 items, undamaged and intact after the fire. In addition, you have salvaged a four man rubber life craft and a box of matches.

Your task is to rank the 15 items in terms of their importance for you, as you wait to be rescued. Place the number 1 by the most important item, the number 2 by the second most important, and so on through to number 15 for the least important.

Decision Making
Process of choosing a particular action that deals with a problem or opportunity

The quality of the decisions the managers make is the yardstick of their effectiveness.

Types of Decisions
PROGRAMMED DECISIONS
Frequent, repetitive, routine problems Much certainty regarding cause and effect relationships Procedure Dependence on policies, rules and definite procedures Middle managers
Type of Problem

NONPROGRAMMED DECISIONS
New, unstructured problems

Uncertainty regarding cause and effect relationships

Need for creativity, intuition, tolerance for ambiguity Top management

Rational Decision Making Process

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1. Establishing specific goals and measuring results 2. Problem identification and definition 3. Establishing priorities 4. Consideration of causes 5. Development of alternative solutions 6. Evaluation of alternative solutions 7. Solution selection 8. Implementation

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9. Follow-up

1. Establishing specific goals and measuring results

G and O will dictate what results must be achieved and the measures that indicate whether or nor they have been achieved SONY
Closely tracks its progress toward established objectives Constantly detects changes in consumer preference

2. Problem identification and definition

Factors that often lead to difficulties in identifying exactly what the problem is: 1. Perceptual problems 2. Defining problems in terms of solutions 3. Identifying symptoms as problems

If problems did not exist, there would be no need for decisions.

3. Establishing priorities Consider these 3 issues:

1. Urgency: How critical is the time pressure? 2. Impact: Seriousness of the problems effects? 3. Growth tendency: Future considerations?

4. Consideration of causes
It is difficult to determine a solution to a problem when the cause is unknown Scenario:
If an organization wishes to address the problem of declining sales, how can it decide on an appropriate solution if it does not know the reason for the decline?

5. Development of alternative solutions

Feasible alternatives should be developed search process

6. Evaluation of alternative solutions

Once alternatives have been developed, they must be evaluated and compared 3 Possible Conditions: 1. Certainty decision maker has complete knowledge of the probability of the outcome of each alternative 2. Uncertainty - decision maker has absolutely no knowledge of the probability of the outcome of each alternative 3. Risk - decision maker has some probable estimate of the outcomes of each alternative

7. Solution selection
If one solution is optimized, the other is suboptimized.

8. Implementation
A good decision may be hurt by a poor implementation.

9. Follow-up
Periodic management of results Actual results are compared planned results If deviations exist, changes must be made

eaders hip

 Process of influencing others to facilitate the attainment of organizationally relevant goals

Characteristics of An Effective Leader

1. Provides meaning and direction to the people they are leading 2. Generates trust 3. Favors action and risk taking 4. Purveyors of hope
- Reinforce that success will be attained

Saddam Hussein (Iraq)

Total Deaths Responsible for: Approaching 2 million Up to 340,000 Iraqi and 730,000 Iranian combatants during the Iran-Iraq War. U p to 200,000 during the Gulf War Over 100,000 Kurds killed or disappeared. Up to 150,000 Shia Muslims and Iraqi dissidents killed during his reign

TraIt Approaches of Leadership

Trait Theory
An attempt to identify specific characteristics (physical, mental, personality) associated with leadership success. Relies on research that relates to various traits to certain success criteria

Intelligence Personality Physical Characteristics Supervisory Ability

Pol Pot (Cambodia)

Total Deaths Responsible for: One to three million (between a 1/4 and 1/3 of the population).

Behavioral Approaches of Leadership

Job Centered Leader

Focuses on encouraging employees to complete the task Uses close supervision so that employees perform using acceptable and timely procedures

Employee Centered Leader

Focuses on having people complete the work Believes in delegating decision making and aiding employees in satisfying their needs by creating a supportive environment

Adolph Hitler (Germany)

Total Deaths Responsible for: Over 46 million as a result of the Second World War. Including between 11 and 16 million systematic killings during the Holocaust.

Situational Approaches of Leadership

Fiedlers Contingency Model

Performance of groups is dependent on the interaction between leadership styles and situational favorableness

Factors that determine how favorable a leaders environment is:

Leader-Member Relations
Degree of confidence, trust and respect a leader obtains from his followers

Task Structure
Refers to how structured a job is with regard to requirements, problem solving alternatives and feedback on how correctly the job has been accomplished

Position Power
Refers to the power inherent in the leadership position

 Specifies which leadership decision making procedures will be most effective in different situations

Vroom-Jago Leadership Model

Decision Styles
Autocratic leader makes decisions without input from subordinates Consultative subordinates have some input but leader makes the decision Group group makes the decision and the leader is just another group member Delegated leader gives exclusive responsibility to his subordinates

Path Goal Leadership Model for the leader to Suggests that it is necessary
influence the followers perception of work goals, self-development goals and paths to goal attainment

Joseph Stalin (USSR)

Deaths caused Under his watch: Approximately 20 million Up to 14.5 million starved to death At least one million executed for political offences Approximately five million sent to the Gulag Archipelago never to return alive

Other Approaches of Leadership

Charismatic Leadership
One who creates an atmosphere of motivation based on an emotional commitment to his vision, philosophy, and style on the part of the followers

 Types
Visionary
Ability to see the big picture and its opportunities

Crisis based
When existing knowledge and resources are not adequate

 Helps the follower identify what must be done to accomplish the desired results (better quality output, more sales) and ensures that employees have the resources needed to complete the job

Transactional Leadership

 Motivates followers to work for goals instead of short term self-interest and for achievement of self-actualization instead of security Inspire others to strive to accomplish the vision

Transformational Leadership

Thank you.