Managers have to make decisions whether they are simple or complex. Every decision is an outcome of a dynamic process, which is influenced by multiple forces. In order to make good decisions managers should follow a sequential set of steps. Various authors of management have described different steps in the process of decision making. According to Griffins the rational process of decision making follow the following six steps procedure.
(1) Recognize and Define the Decision Situation
The first step in the decision making process is to recognize that a decision is needed. The decision making process is initiated by the awareness of a problem. A manager must recognize the problem sufficient time and should define the problem precisely. The manager must develop a complete understanding of the problem, its causes and its relationships to other factors.
(2) Identifying Appropriate Alternatives
Once the decision situation has been effectively defined the second step is the identification of alternative courses of action. A problem can be solved in many ways. All possible ways should be identified. The decision maker should not jump on the first feasible alternative to solve the problem quickly. The manner must seek creative solutions and also recognize that various constraints often limit the alternatives.
(3) Evaluate Each Alternative
After the various alternatives are identified the next step is to analyze and evaluate each alternative. It is important to establish some common framework to evaluate each alternative to assure consistency and reliability. The manager must evaluate all the alternatives chosen one-by-one. The alternatives must be evaluate from each every sector.
(4) Select the Best Alternative
After evaluating all the alternatives, the manager must select a best alternative among all. Choosing the best alternative is the real crux of decision making. The best alternative is that which contributes maximum to the organizational goals. However, the manager selects the alternative that demonstrates the highest combined levels of feasibility, unsatisfactoriness,and affordable consequences.
(5) Implement the Selected Alternative
After selecting the best alternative the management takes necessary steps to implement it. Managers must also consider people's resistance to change when implementing change. They should anticipate potential resistance at various stages of the implementation process. Thus, all concerned parties should be well communicated and their full cooperation for the implementation should be obtained.
(6) Evaluate the Results and Follow-Up
The implementation of the decision should be constantly monitored and evaluated. Managers must determine the critical events to be measured, where and how they are to be measured, and how the measurements are to be evaluated. If the management feels that the decision taken is not yielding the desired results, necessary changes should be made in the decision or its implementation.
Wednesday, April 7, 2010
METHODS OR TECHNIQUES FOR CRISIS HANDLING
Organizations operate in a dynamic environment. Environmental forces greatly affect organizations. Environmental change and complexity increases organization uncertainty. Environmental uncertainty and turbulence occur occasionally with no warning at all. Crisis is the result of environmental turbulence.
A crisis can be defined as an unexpected problem that will lead to chaos and disaster if not resolved quickly. It is an unplanned, non-recurring and dramatic situation. The effect of crisis can be devastating to an organization especially if managers are unprepared to deal with. Good planning can reduce the number of such unexpected crisis, but no amount of planning can completely eliminate the occurrence of critical situations.
The ability to handle crisis problems is essential if a manner is to progress up the organizational hierarchy. The first step in successful crisis handling is the rapid isolation and identification of the problems permeating the crisis situation. The second step is the need for quick action to respond to the crisis as follows:
(1) Prepare for crisis by collecting as much knowledge as possible about the crisis situation.
(2) Establish a network of reliable information sources and be prepared to use them whenever necessary.
(3) Obtain and analyze information quickly to confirm the crisis situation.
(4) Implement immediate action on those absolutely urgent aspects of the problem situation.
(5) Do not try to avoid responsibility. Face the problem directly even in the face of risk and incomplete knowledge.
(6) Always learn from experience-what can be done to prevent a recurrence in the future.
Managers must respond quickly to crisis situations. They require adequate delegation of authority to deal with. Organizations can constitute a crisis team deal with such crisis. Experts also can be called to handle organization crisis. Flexibility in organizational design is needed to handle crisis situation successfully.
A crisis can be defined as an unexpected problem that will lead to chaos and disaster if not resolved quickly. It is an unplanned, non-recurring and dramatic situation. The effect of crisis can be devastating to an organization especially if managers are unprepared to deal with. Good planning can reduce the number of such unexpected crisis, but no amount of planning can completely eliminate the occurrence of critical situations.
The ability to handle crisis problems is essential if a manner is to progress up the organizational hierarchy. The first step in successful crisis handling is the rapid isolation and identification of the problems permeating the crisis situation. The second step is the need for quick action to respond to the crisis as follows:
(1) Prepare for crisis by collecting as much knowledge as possible about the crisis situation.
(2) Establish a network of reliable information sources and be prepared to use them whenever necessary.
(3) Obtain and analyze information quickly to confirm the crisis situation.
(4) Implement immediate action on those absolutely urgent aspects of the problem situation.
(5) Do not try to avoid responsibility. Face the problem directly even in the face of risk and incomplete knowledge.
(6) Always learn from experience-what can be done to prevent a recurrence in the future.
Managers must respond quickly to crisis situations. They require adequate delegation of authority to deal with. Organizations can constitute a crisis team deal with such crisis. Experts also can be called to handle organization crisis. Flexibility in organizational design is needed to handle crisis situation successfully.
CONCEPT, TYPES AND PROBLEM SOLVING STRATEGIES
A problem is a discrepancy between ideal and actual condition. It is the process of identifying the gap between the desired situation and the actual situation, and initiating corrective action. The basic purpose of making a decision is to solve a problem. Decision making begins with the awareness that a problem exists. Identifying problems requires considerable skill. Managers may become aware of a problem by noticing one of the following indicators.
(1) Deviation form Past Performance: If performance figures are down, a problem almost surely exists. Common problem indicators are declining sales, increased employee turnover, and higher scrap rates.
(2) Deviation from the plan: When the result hoped to attain with a plan are not forthcoming, there is a problem. This type of problem occurs when future performance deviates from the plan.
(3) Criticism from outsiders: Managers sometimes become aware of problems by hearing complaints from individuals and group. These sources of criticism include customers, government regulations, and shareholders.
(4) Competitive threats: The presence of competition can create problems for an organization.
Types and Problems Solving Strategies
Managers will face different types of problems and make decisions to solve the problems as they do their jobs. Robbins and Coulter have classified problems into two types-well structured problems and poorly-structured problems.
(1) Well-Structured Problems: Well-Structured problems are straight forward. The goal of the decision maker is clear, the problem familiar, and information about the problem is easily defined. Such problems are routine and repetitive. They align closely with the assumptions of perfect rationality. The manager uses a programmed decision. Hence, procedure, rule or policy is used to solve well-structured problems.
(2) Poorly-Structured Problems: Many organizational situations involve poorly-structured problems. They are new, unusual, and the information is incomplete. When problems are poorly structured, managers must rely on non-programmed decision making which are unique and non-recurring. Poorly structured problems require a customers made response through non-programmed decision making.
(1) Deviation form Past Performance: If performance figures are down, a problem almost surely exists. Common problem indicators are declining sales, increased employee turnover, and higher scrap rates.
(2) Deviation from the plan: When the result hoped to attain with a plan are not forthcoming, there is a problem. This type of problem occurs when future performance deviates from the plan.
(3) Criticism from outsiders: Managers sometimes become aware of problems by hearing complaints from individuals and group. These sources of criticism include customers, government regulations, and shareholders.
(4) Competitive threats: The presence of competition can create problems for an organization.
Types and Problems Solving Strategies
Managers will face different types of problems and make decisions to solve the problems as they do their jobs. Robbins and Coulter have classified problems into two types-well structured problems and poorly-structured problems.
(1) Well-Structured Problems: Well-Structured problems are straight forward. The goal of the decision maker is clear, the problem familiar, and information about the problem is easily defined. Such problems are routine and repetitive. They align closely with the assumptions of perfect rationality. The manager uses a programmed decision. Hence, procedure, rule or policy is used to solve well-structured problems.
(2) Poorly-Structured Problems: Many organizational situations involve poorly-structured problems. They are new, unusual, and the information is incomplete. When problems are poorly structured, managers must rely on non-programmed decision making which are unique and non-recurring. Poorly structured problems require a customers made response through non-programmed decision making.
DECISION MAKING CONDITIONS
Everyday a manager has to make hundreds of decisions in the organization. Managers do not function in a theoretical world but they function within the reality that many thongs are not known. There are three conditions that managers may face as they make decisions. They are (1) Certainty, (2) Risk, and (3) Uncertainty.
(1) Certainty
A state of certainty exists only when the managers knows the available alternatives as well as the conditions and consequences of those actions. There is little ambiguity and relatively low possibility of making a bad decision. It assumes that manager has all the necessary information about the situation. Hence, decisions under certainty means a perfectly accurate decision will be made time after time. Of course, decision making under certainty is rare.
(2) Risk
A state of risk exists when the manager is aware of all the alternatives, but is unaware of their consequences. The decision under risk usually involves clear and precise goals and good information, but future outcomes of the alternatives are just not known to a degree of certainty. A risk situation requires the use of probability estimates. The ability to estimate may be due to experience, incomplete but reliable information, or intelligence. Statistical analysis can be applied to the calculation or probabilities for success or failure.
(3) Uncertainty
In today's complex environment most significant decisions are made under a state of uncertainty where there is no awareness of all the alternatives and also the outcomes,even for the known alternatives. To make effective decisions, managers must require as much relevant information as possible. Such decisions require creativity and the willingness to take a chance in the face of such uncertainties. In such situations, managers do not even have enough information to calculate probabilities and degrees of risk. So, statistical analysis is of no use. Hence, managers need to make certain assumptions about the situation in order to provide a reasonable framework for decision making. Intuition, judgment, and experience always play major roles in the decision making process under conditions of uncertainty.
Hence, In conclusion, we can say that greater the amount of reliable information, the more likely the manager will make a good decision. Hence, manager should make sure that the right information is available at the right time.
(1) Certainty
A state of certainty exists only when the managers knows the available alternatives as well as the conditions and consequences of those actions. There is little ambiguity and relatively low possibility of making a bad decision. It assumes that manager has all the necessary information about the situation. Hence, decisions under certainty means a perfectly accurate decision will be made time after time. Of course, decision making under certainty is rare.
(2) Risk
A state of risk exists when the manager is aware of all the alternatives, but is unaware of their consequences. The decision under risk usually involves clear and precise goals and good information, but future outcomes of the alternatives are just not known to a degree of certainty. A risk situation requires the use of probability estimates. The ability to estimate may be due to experience, incomplete but reliable information, or intelligence. Statistical analysis can be applied to the calculation or probabilities for success or failure.
(3) Uncertainty
In today's complex environment most significant decisions are made under a state of uncertainty where there is no awareness of all the alternatives and also the outcomes,even for the known alternatives. To make effective decisions, managers must require as much relevant information as possible. Such decisions require creativity and the willingness to take a chance in the face of such uncertainties. In such situations, managers do not even have enough information to calculate probabilities and degrees of risk. So, statistical analysis is of no use. Hence, managers need to make certain assumptions about the situation in order to provide a reasonable framework for decision making. Intuition, judgment, and experience always play major roles in the decision making process under conditions of uncertainty.
Hence, In conclusion, we can say that greater the amount of reliable information, the more likely the manager will make a good decision. Hence, manager should make sure that the right information is available at the right time.
Saturday, April 3, 2010
DECISION MAKING STYLES
Decision making style proposes people differ along two dimensions in the way they approach decision making. The first is an individuals way of thinking. Some people tend to be rational and logical and others tend to be creative and intuitive. The other dimension describes an individuals tolerance for ambiguity. Some people have a low tolerance for ambiguity and others have high level of ambiguity. Based on way of thinking and tolerance for ambiguity decision making styles can be of four types.
(1) Directive Style: Managers using directive style have low tolerance for ambiguity and are rational in their way of thinking. They are efficient and logical. They make fast decisions with minimal information and assessing few alternatives.
(2) Analytic Style: Managers with an analytic style have high tolerance for ambiguity than do directive type and are rational in their way of thinking. They need more information and consider more alternatives. They are characterized as careful decision makers with the ability to cope with unique situations.
(3) Conceptual Style: Managers with conceptual style have high tolerance for ambiguity and an intuitive way of thinking. They tend to be very broad to their outlook and consider many alternatives. They are at finding creative solutions to problems.
(4) Behavioral Style: Managers with behavioral style have low tolerance for ambiguity and an intuitive way of thinking. They work well with others. They are receptive to suggestions from others. They often use meetings to communicate although they try to avoid conflict. They want to be accepted by others.
Some managers will rely almost exclusively on their dominant style, while others are flexible and can shift their style depending on the situation. Some may take their time carefully weighing alternatives and considering riskier options whereas others may be more concerned about getting suggestions from others before making decisions. This doesn't make one approach better than the other. It is just their decision-making styles, which are different.
(1) Directive Style: Managers using directive style have low tolerance for ambiguity and are rational in their way of thinking. They are efficient and logical. They make fast decisions with minimal information and assessing few alternatives.
(2) Analytic Style: Managers with an analytic style have high tolerance for ambiguity than do directive type and are rational in their way of thinking. They need more information and consider more alternatives. They are characterized as careful decision makers with the ability to cope with unique situations.
(3) Conceptual Style: Managers with conceptual style have high tolerance for ambiguity and an intuitive way of thinking. They tend to be very broad to their outlook and consider many alternatives. They are at finding creative solutions to problems.
(4) Behavioral Style: Managers with behavioral style have low tolerance for ambiguity and an intuitive way of thinking. They work well with others. They are receptive to suggestions from others. They often use meetings to communicate although they try to avoid conflict. They want to be accepted by others.
Some managers will rely almost exclusively on their dominant style, while others are flexible and can shift their style depending on the situation. Some may take their time carefully weighing alternatives and considering riskier options whereas others may be more concerned about getting suggestions from others before making decisions. This doesn't make one approach better than the other. It is just their decision-making styles, which are different.
TYPES OF DECISION
Different problems require different type of decision making. Decisions are taken at various levels of management. Such decisions are of several types. They can be classified into the following categories:
(1) Programmed and Non-programmed Decisions
Programmed decisions are the decision managers make in response to repetitive and routine problems. If a particular situation occurs often, managers will develop a routine procedure or policy for handling it. Decisions are said to be programmed if they are repetitive and routine, and a definite procedure has been developed for determining when the decision should be made and what actions should be taken.
Non-programmed decisions are just reverse to programmed decisions. They are relatively unstructured and occur much less often. Decisions are termed non-programmed when they are made for novel, nonrecurring and unstructured problems. They often deal with complex issues that demand data gathering, forecasting, and strategic planning. Such a decision would involve issues of strategy, resource commitment, and long term investments.
(2) Organizational and Personal Decisions
If an executive takes any decision in his official capacity, that decision is called organizational decision. Such decisions affect the functioning of the organization directly. The authority for taking such decision is clearly defined in the organizational structure. Such authority can be delegated.
Personal decisions are decisions, which are taken by an individual in his personal capacity. Such decisions are concerned with him. They do not affect the organization directly but affect from the organization in his personal decision. The power to make personal decisions cannot be delegated.
(3) Individual and Group Decisions
Decisions can also be classified on the basis of persons involved in the decision making process. When an individual takes a decision, it is known as individual decision. Individual decisions are generally taken in small organization. Individual decisions are also taken in big organization if they are of routine nature.
When a number of persons collectively take the decision it is known as group decision such a decision taken by the Board of Directors, Committees, etc. Such decisions are generally taken in big organizations, which follow the participative style of management. Such group decisions are well balanced but they involve delay and make it difficult to fix responsibility of such decisions.
(1) Programmed and Non-programmed Decisions
Programmed decisions are the decision managers make in response to repetitive and routine problems. If a particular situation occurs often, managers will develop a routine procedure or policy for handling it. Decisions are said to be programmed if they are repetitive and routine, and a definite procedure has been developed for determining when the decision should be made and what actions should be taken.
Non-programmed decisions are just reverse to programmed decisions. They are relatively unstructured and occur much less often. Decisions are termed non-programmed when they are made for novel, nonrecurring and unstructured problems. They often deal with complex issues that demand data gathering, forecasting, and strategic planning. Such a decision would involve issues of strategy, resource commitment, and long term investments.
(2) Organizational and Personal Decisions
If an executive takes any decision in his official capacity, that decision is called organizational decision. Such decisions affect the functioning of the organization directly. The authority for taking such decision is clearly defined in the organizational structure. Such authority can be delegated.
Personal decisions are decisions, which are taken by an individual in his personal capacity. Such decisions are concerned with him. They do not affect the organization directly but affect from the organization in his personal decision. The power to make personal decisions cannot be delegated.
(3) Individual and Group Decisions
Decisions can also be classified on the basis of persons involved in the decision making process. When an individual takes a decision, it is known as individual decision. Individual decisions are generally taken in small organization. Individual decisions are also taken in big organization if they are of routine nature.
When a number of persons collectively take the decision it is known as group decision such a decision taken by the Board of Directors, Committees, etc. Such decisions are generally taken in big organizations, which follow the participative style of management. Such group decisions are well balanced but they involve delay and make it difficult to fix responsibility of such decisions.
Friday, April 2, 2010
APPROACHES TO DECISION-MAKING
The decision making process can be explained by three approaches. They are (1) rationality, (2) Bounded rationality, and (3) intuition.
(1) Rationality
Rationality is a prescriptive approach that tells managers how they should make decisions. Managerial decision making is assumed to be rational. Effective decision making requires a rational choice of a course of action. Rationality can be defined as the ability to follow a systematical, logical, thorough approach in decision making. A decision maker who is rational would be fully objective and logical. He would define a problem carefully and would have a clear and specific goal. The steps in the decision making process would consistently lead towards selecting the alternative that maximizes that goal.
(2) Bounded Rationality
Herbert A Simon was one of the first people to recognize that decisions are not always made with rationality and logic. His view of decision making now called administrative model. It is a normative approach, which describes how decisions are actually made. Managers are often faced with uncertainty and non-programmed decision making situation.
(3) Intuition
Our intuition can assist decision making, particularly when ther is not enough time for a more organized analysis. Intuition is the personal characterstics that influences decision making. Intuition is the ability to know when a problem or opportunity exists and to select the best course of action
(1) Rationality
Rationality is a prescriptive approach that tells managers how they should make decisions. Managerial decision making is assumed to be rational. Effective decision making requires a rational choice of a course of action. Rationality can be defined as the ability to follow a systematical, logical, thorough approach in decision making. A decision maker who is rational would be fully objective and logical. He would define a problem carefully and would have a clear and specific goal. The steps in the decision making process would consistently lead towards selecting the alternative that maximizes that goal.
(2) Bounded Rationality
Herbert A Simon was one of the first people to recognize that decisions are not always made with rationality and logic. His view of decision making now called administrative model. It is a normative approach, which describes how decisions are actually made. Managers are often faced with uncertainty and non-programmed decision making situation.
(3) Intuition
Our intuition can assist decision making, particularly when ther is not enough time for a more organized analysis. Intuition is the personal characterstics that influences decision making. Intuition is the ability to know when a problem or opportunity exists and to select the best course of action
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