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INTRODUCTION.
All managers make numerous decisions. The overall quality of these decisions strongly affect the organization's success or failure.
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THE DECISION-MAKING PROCESS.

Decision making is a process that involves more than the simple act of choosing among alternatives. The decision-making process is defined as a set of eight steps that include identifying a problem, selecting an alternative, and evaluating the decision's effectiveness.
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A problem is defined as a discrepancy between an existing and a desired state of affairs.

The decision criteria include any criteria that define what is relevant in a decision.

The criteria identified in step 2 of the decision-making process must be weighted in order to give them correct priority in the decision.
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The decision maker now needs to identify viable alternatives for resolving the problem.

Each of the alternatives must now be critically analyzed. Each alternative is evaluated by appraising it against the criteria.
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The act of selecting the best alternative from among those identified and assessed is critical.

The chosen alternative must be implemented. Implementation is defined as conveying a decision to those affected and getting their commitment to it.
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The last step in the decision-making process assesses the result of the decision to see whether or not the problem has been corrected.
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THE RATIONAL DECISION MAKER.

Rational decision making describes choices that are consistent and value-maximizing within specific constraints.
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There are seven assumptions about rationality. 1. The problem is clear and unambiguous. 2. A single, well-defined goal is to be achieved. 3. All alternatives and consequences are known. 4. Preferences are clear. 5. Preferences are constant and stable. 6. No time or cost constraints exist. 7. Final choice will maximize economic payoff.
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Unfortunately, most decisions that managers face don't meet all the tests of rationality.

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Defined as behavior that is rational within the parameters of a simplified model that captures the essential features of a problem. The result of bounded rationality is satisficing, which is defined as acceptance of solutions that are "good enough."
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There are two types of decisions that managers might face.

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are repetitive decisions that can be handled by a routine approach. In dealing with this type of decision, managers may utilize procedures, rules, or policies.
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are unique decisions that require a custom-made solution.

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DECISION-MAKING STYLES.
Managers have different styles when it comes to making a decision and solving problems.
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A. One view proposes that there are three different ways managers approach problems in the workplace.
1. A problem avoider ignores information that points to a problem. These individuals don't want to confront problems. 2. Problem solvers try to solve problems when they come up. They can be characterized as being reactive only dealing with problems when they occur.
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3. A problem seeker actively seeks out problems to solve or new opportunities to pursue. They take a proactive approach to anticipating problems before they occur. 4. Managers can and do use each approach.
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B. The other approach suggests that individuals differ along two dimensions in the way they approach decision making. One dimension is an individual's way of thinking (rational or intuitive) and the other is an individual's tolerance for ambiguity (low or high). These two dimensions can be combined into four different decisionmaking styles.
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1. The directive style is characterized by a low tolerance for ambiguity and a rational way of thinking. 2. The analytic style is characterized by a high tolerance for ambiguity and a rational way of thinking.
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3. The conceptual style is characterized by a high tolerance for ambiguity and an intuitive way of thinking. 4. The behavioral style is characterized by a low tolerance for ambiguity and an intuitive way of thinking. 5. Although these four styles are distinct, most managers have characteristics of more than one style. It's probably more realistic to think of a manager s dominant style and his or her alternate styles.
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Short Quiz
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1. The set of eight steps that begins with identifying a problem and decision criteria and allocating weights to those criteria is called the _____. A. programmed decision B. decision-making process C. structured problem D. directive style
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2. In the decision-making process, once alternatives have been identified, a decision maker must analyze each one by evaluating it against _____. A. heuristics B. risks C. nonprogrammed decisions D. decision criteria
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3. The last step of the decisionmaking process involves _____. A. selecting an alternative B. identifying decision criteria C. evaluating decision effectiveness D. identifying a problem
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4. Because of limitations on coming up with the "best" alternative, managers frequently pursue alternatives that they consider to be "good enough." This is known as _____. A. satisficing B. bounded rationality C. rationality D. certainty
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5. A waitress spills a drink on a customer and the manager immediately offers to pay to dry-clean the customer's jacket. This problem and solution are fairly routine and straightforward. This is an example of a _____. A. nonprogrammed decision B. unstructured problem C. programmed decision D. bounded rationality
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6. In the case of _____, the goal of the decision maker is clear, the problem is familiar, and information about the problem is easily defined and complete. A. structured problems B. intuitive decision making C. unstructured problems D. bounded rationality
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7. Which of the following is an example of a policy? A. Employees must clock out before taking lunch breaks. B. Employees may not smoke inside the building. C. Employee wages will be competitive within community standards. D. Employees requesting vacation time must submit the appropriate form at least three weeks prior to the beginning of the requested vacation period.
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8. Under conditions of _____, the choice of alternative is influenced by the limited amount of information available to the decision maker and by the psychological orientation of the decision maker. A. certainty B. uncertainty C. risk D. intuition
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9. Individuals with a(n) _____ management style tend to be very broad in their outlook and look at many alternatives. They focus on the long run and are very good at finding creative solutions to problems. A. directive B. analytic C. conceptual D. behavioral
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10. Which of the following is NOT one of the habits of highly reliable organizations, as described by Karl Weick? A. They defer to experts on the front line. B. They let unexpected circumstances provide the solution. C. They reject uncertainty. D. They are not tricked by their successes.
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11. The overall quality of managerial decisions has no appreciable influence on whether an organization succeeds or fails. True False
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12. All organizational members make decisions that affect their jobs and the organization they work for. True False
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13. Problem identification is objective. True False

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14. Rational managerial decision making assumes that decisions are made in the best interests of the organization. True False
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15. Most decisions that managers make fit the assumptions of perfect rationality. True False
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16. Procedures, rules, and policies are examples of nonprogrammed decisions. True False
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17. Problems confronting managers usually become more unstructured as they move up the organizational hierarchy. True False
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18. The ideal situation for making decisions is one of uncertainty. True False
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19. Most managers have characteristics of more than one decision-making style. True False
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20. Heuristics can be useful to decision makers because they increase the complexity of a problem. True False
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