Decision making As a Manager’s Job
Eight steps of decision making: any choice or decision, while being taken, consists of the following stages
- Identification of problem
- Identifying criteria of decision to be made
- Ranking of criteria according to weight
- Developing alternatives
- Analyzing the formed alternatives
- Selection of the optimum alternative
- Feedback and evaluation of effectiveness
Four ways of thinking styles
- Rationality: simple problems, predefined goals, and the development of alternatives is not required.
- Bounded rationality: choosing the best outcome from the available limited information.
- Intuition: use of gut feelings, hunches and inner feelings to reach a decision
- Evidence-based management: using the best available information to make a decision.
Types of decisions and decision-making conditions
- Programmed decisions: routine simple decisions with a fixed course of actions like protocols, rules etc that need no analysis and formulation of alternatives.
- Non-programmed decisions: unique, unstructured decisions tailor-made to suit each unique problem.
- Certainty: when all the outcomes are known.
- Risk: when some outcomes are known and manager has to make probabilistic analysis to weigh the risks in each alternative.
- Uncertainty: when none of the outcomes are known and guesswork has to be employed.
Different styles of decision-making and role of Bias
- Linear thinking: analytical and minute interpretation of available information for decision-making purposes.
- Non-linear thinking: intuitive and unorthodox approach towards the problem for decision-making purposes.
- Bias: any prejudice among the manager which hinders their ability to objectively make a decision. Examples include overconfidence, anchoring, selective perception etc.
Techniques to make effective decisions
- Prioritize the important aspects.
- Be consistent and apply logic.
- Don’t use excess information than that required.
- Encourage feedback and informed opinions for better evaluation.
- Should be flexible and easy to implement.
- Combine the best of both intuition and analysis.
- Develop your own unique style of thinking.