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Session IV Decision Making

Administrative Decision Making


Administrators have to make many decisions in their day to day working. Some of these decisions are easy to make but in many cases they do not do not find it easy. They are handicapped on account of Volatile and ever changing factors. Lack of complete information. Lack of clarity. Conflicting interests. Divergent view point.

Decision Making

Decision Making is the process of identifying problems and opportunities and resolving them for a win-win situation.

Kinds of Decisions
Administrators often come across
Programmed Decisions Frequently pre-experienced situations against which decision rules have already been developed. Rules programmed for application to future business problems.
Non-Programmed Decisions Unprecedented unique situations.

Decision Making
Each decision making is a calculated business risk which involves Certainty When all the information the decision maker needs is fully available. Risk Risk is reduced when decision has clear-cut goals. Risk is further reduced when required information is available. Risks are greater when objectives associated with each alternative are subject to chance. Uncertainty When the objectives are clear but information available about alternatives and future events is incomplete. Ambiguity Neither objectives are clear nor is there any complete information available. Alternatives available are difficult to define.

Decision Making
Administrators Dilemma

Low Certainty

Possibility of Failure Risk Uncertainty

High Ambiguity

Programmed Decisions Administrative Decision

Non-Programmed Decisions

Decision Making
Administrators Cerebral Process

Swayam Vishleshan An effort to analyze decision-making and styles through intensive exercise

Coffee Break

The Rational Decision-Making

Setting Administrative objectives

Searching for alternatives

Comparing & evaluating alternatives

Revise or update objectives


Follow-up and control

Renew search

Implementing decisions

Choosing alternatives

Take corrective action as necessary

The Rational Decision-Making

Setting administrative Objectives


Objectives are the foundation of rational decision making.

These are also the ultimate ends of managerial decision making.

The Rational Decision-Making

Searching for Alternatives


Limitations of time and money.

Declining value of additional information.


Rising cost of additional information. Abort the search in the zone of cost effectiveness.

Alternative Information Cost Curve

Value and cost of additional information

Average value Point of optimality

Cost

Zone of cost effectiveness 0 Perfection of information

Marginal value

100%

The Rational Decision-Making Evaluating Alternatives


Research will alternatives. provide usually 3-5

Only one of these alternatives will be valid. Use yardsticks derived from the objective to evaluate alternatives.

The Rational Decision-Making

Choosing Alternatives The choice should be the alternative most likely to result in the attainment of the objective.

The Rational Decision-Making

Implementing Decisions Success of your decision will depend on the quality of decision and its implementation.

Evaluating Business Decision Success


Admin. Decision Success Admin. = f Decision Quality Admn. Decision Implementation

+ f

1. Compatibility with operating constraints. 2. Time-factor. 3. Optimum amount of information. 4. Influence of the decision maker.

1. Conflict of interest. 2. Risk-reward factor. 3. Understanding the decision. 4. Objectivity.

Personal Decision Making Styles


Situation Programmed Non-Programmed Personal Decision Making Style Directive Analytical Conceptual Behavioral

Best admn. Decision Solution

Directive Style
Simple and clear-cut quick admin. decisions.
May evaluate only one or two alternatives. Efficient and cost effective. Stickler of rules and procedures. May not be the best business decision.

Analytical Style
Create complexity by calling for loads and loads of data. Consider all alternatives. Utilize administrative Information Systems and administration Control Systems as support functions. Search for best possible objective and rational decision based on information available.

Conceptual Style
Call for a broad spectrum of information.
Socially oriented style than analytical style. Talks to everyone about the problem and possible solutions. Consider and evaluate many broad alternatives. Relies on administrative Information Systems in addition to informants. Finds creative administrative solutions.

Behavioral Style
Shows human concern for others as individuals.
Obtains information on one-on-one basis from people. Involved with the personal development with others through decision making. An ideal combination of man and machine.

Decision Making Style Grid


Conceptual Directive

Behavioral
Optimal administrative decision making grid

Analytical

Swayam Vishleshan Analyzing Decision-Making and Styles

Scoring Effective Decision-Making Statements Nos. 4 and 9


4 points for Yes and 1 point for No.

Statement Nos. 1,2,3,5,6,7,8, and 10


4 points for No and 1 point for Yes.

Assessment Effective Decision-Making

32-40

Good DecisionMaking Manageable Decision-Making Scope for improvement exists

24-31

23 and below

Assessment Decision-Making Styles


10 to 16 : A Reflexive/Directive Style A reflexive decision-maker likes to make quick decisions without taking the time to get all the information that may be needed and without considering all alternatives. You may want to slow down and spend more time gathering information and analyzing alternatives. 17 to 23 : A Consistent/Analytical Style Still better styles of decision-making as you tend to take decisions without rushing or without wasting time. 24 to 30 : A Reflective/Conceptual Style The reflective decision-maker likes to take plenty of time to make decisions, gathering considerable information and analyzing. They are viewed not so decisive. You need to speed up your decision making.

However a healthy combination of time management, optimal information gathering, and human cerebral reflections will result into sound and dependable decision-making.

Q & A Session