Decision Making in Organizations, Lecture notes of Organization Behaviour

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Lecture 11Lecture 11

Decision Decision

Making Making

Topic ObjectivesTopic Objectives

After studying this topic, students should be able to define ,

illustrate and discuss the following concepts:-

Introduction to Decision Making

Definition of Decision Making

Types of Decision Making

Categories and Models of Decision Making

Factors that Evaluate the Level of Creativity in Decision

Making

Individual and Group Decision Making

Decision Making Process and Styles

Importance of decision making in Organisations

DefinitionsDefinitions

 What is a Decision  the act of making up your mind about something  the act or process of deciding to do something

Decision MakingDecision Making

Definition …… A decision is …..  (^) A choice made between two or more alternative courses of action in a situation of uncertainty.  (^) A choice that you make about something after thinking about it : the result of Deciding  (^) The action or process of deciding something or of resolving a question.  (^) Decision making can be regarded as the mental processes resulting in the selection of a course of action among several alternatives.  (^) Every decision making process produces a final choice.  (^) The output can be an action or an opinion of choice.

Characteristics of decisionsCharacteristics of decisions

Making Making

 (^) Decisions in an organisational context requires good judgement and diagnostic skills.  (^) Most managers advance within an organisation as a result of their ability to make good decisions.  (^) The characteristics of decisions faced by most managers are varied in nature, depending on the type of decision in question. Given that managers make a variety of decisions during their daily lives we would expect that decisions would have different characteristics.  (^) There is no doubt that a relatively simple decision in relation to re-ordering stationery supplies will not have the same characteristics as a decision concerning establishing a new subsidiary in a foreign market

Programmed and Non-Programmed and Non-

programmed decisions (1) programmed decisions (1)

 (^) Programmed decisions tend to be well structured , routine and repetitive , occurring on a regular basis.  (^) They are usually made at lower levels in the organisation, have short-term consequences and are based on readily available information

Examples of programmed decisions include ordering raw materials or office supplies and calculating holiday pay, sick pay or redundancy payments, which takes place frequently in organisations.

Decision MakingDecision Making

Conditions Conditions

 In general there are three different types of condition under which managers take decisions. (1) Certainty (2) Risk (3) Uncertainty

Steps in Decision MakingSteps in Decision Making

A good-decision-maker has to follow certain

steps in decision making. They are :

1. Identify the problem and define it.

2. Develop objectives.

3. Seek the facts and identify the problem.

4. Develop a model.

5. Evaluate the alternatives.

6. Select the best alternative

7. Implement the decision or plan a course of

action.

Decision Making ProcessDecision Making Process

DECISION-MAKING INDECISION-MAKING IN

HUMAN RESOURCES HUMAN RESOURCES

 (^) Imagine you are the CEO of an e-commerce start-up. Your work is expanding and you need to hire the right resources to help you realize the vision of creating a leading online retail platform.  (^) You would need to hire people who are experienced and adept in their fields such as software development, marketing, operations, procurement, and logistics.  (^) Since the business is an online start-up, you won’t need to hire employees who work on the premises exclusively. You can also get talented location- independent workers capable of delivering the required technical support and services online.  (^) This will also give you the flexibility of hiring talent that might be scattered over different geographic locations and can come together digitally to create path-breaking solutions.

DECISION-MAKING INDECISION-MAKING IN

PRODUCTION PRODUCTION

 (^) As your business expands and demand grows, you will be forced to increase your production capacity.  (^) The next step would be to decide how much capacity installation is required to meet demand effectively.  (^) You will also need to identify the right equipment for the purpose and the workforce to run the production processes.

Your decision has to be guided by the fact that the ultimate aim is to increase production sustainably so that you have the flexibility of scaling up or down without incurring a high cost.

Consumer decision making processConsumer decision making process  Problem recognition: Recognizes the need for a service or product  Information search: Gathers information  Alternatives evaluation: Weighs choices against comparable alternatives  Purchase decision: Makes actual purchase  Post-purchase evaluation: Reflects on the purchase they made

Other ExamplesOther Examples

Choosing a University

How to collect

Research Data

Making Purchases

Online (Eg ZAPPOS)