due in 2 hours........please read
Alexis562
PrinciplesofManagement_05_DecisionMaking.pptxPrinciples of Management
Decision Making
The Decision Making Process: Information Related Barriers
When information is either incorrect or incomplete
Uncertainty is introduced and any decision made can be misguided
When too much information is available
Difficult to grasp big picture and recognize important information
Inability to process everything to decision maker’s satisfaction
Title: This or That Decision Making. Authored by: Tony Richards. Located at: http://columbiabusinesstimes.com/2016/04/25/this-or-that-decision-making/. License: CC-BY
2
The Decision Making Process: Circumstance and Time Related Barriers
Stress from personal life
Less objective or disciplined in following decision-making process
Provide opportunity to intentionally protect against those tendencies
Time
When decision makers feel rushed, their judgement often suffers
Important to commit to taking enough time for decisions
Title: Tip Tuesday: 3 Ways to Manage Stress. Authored by: Jacqueline Soto. Located at: https://slentertainment.com/tip-tuesday-3-ways-to-manage-stress/. License: CC-BY
3
The Decision Making Process: Cognitive Biases
Confirmation Bias: information that we believe will confirm our own judgement
Framing Bias: influenced by the way that a situation or problem is presented
Hindsight Bias: believe falsely we would have accurately predicted the outcome of an event after it is actually known
Anchoring: focus on initial information and then failing to adjust to later information
Halo Effect: initial attitude that we have toward certain individuals/organizations
Overconfidence Bias: individual decision maker trusts own judgement and allows it to override judgement of others
Status-Quo Bias: prefer to avoid change and maintain status-quo
Pro-Innovation Bias: giving preference to any new and innovative ideas simply because it presents something new
4
Rational Decision Making vs. Other Types of Decision Making
Step 1: Identify Problem
Step 2: Establish Decision Criteria
Step 3: Weigh Decision Criteria
Step 4: Generate Alternatives
Step 5: Evaluate Alternatives
Step 6: Select the Best Alternative
Data, Logic, and Facts
Rational Decision Making Continued
Prospect Theory
Bounded Rationality
Heuristics
Robust Decisions
Evidence Based Decision Making
Using objective facts alone leaves room for error: must have evidence
Proof of Success: relying on actual experimentation to demonstrate likelihood of success
Data Collection, Sharing, and Analytics: plenty of material to work with
Title: What counts as evidence? Authored by: Unknown. Located at: https://www.cebma.org/faq/what-counts-as-evidence/. License: CC-BY
7
Descriptive and Predictive Analysis
Descriptive
Goal is to understand and describe what has taken place as revealed by data sets
Attempts to explain what data reveals about events that have occurred
Daunting task to accomplish
Predictive
Projecting future trends
Subjected to discipline of evidence-based principles
Using a Decision Tree
Useful tools for situations where financial data and probability of outcomes are relatively reliable
Tree starts with decision node, which decision should be made
Then, a branch is created for each choice and along branch there are decision pathways
Uncertainty node is sometimes added, but eventually each pathway reaches final outcome
Each division involves costs, probability of each outcome, and calculations about return value
Image: decision-tree. Authored by: jean-louis Zimmermann. Located at: https://www.flickr.com/photos/jeanlouis_zimmermann/3203572717. License: CC-BY
9
Managing Group Decision Making
Advantages:
Sum of knowledge, skills, and creativity in group setting will always be greater than that of individuals
Increased understanding of the issue and decision amongst team members
Disadvantages:
Slower process and more expensive
Tendency for group members to support a proposed group position
Decisions may move toward extremes
Title: Both Sides to Look Before Borrowing Monthly Loans! Authored by: Abigail Johnson. Located at: https://medium.com/@abigailjohn101/both-sides-to-look-before-borrowing-monthly-loans-3bf881a9c52f. License: CC-BY
10
Ways to Facilitate Group Decision Making
Brainstorming: builds group’s cohesiveness due to encouragement to contribute
Group techniques:
Write ideas on how to solve problem
Each member presents ideas
Group engages in discussion
Members rank-order ideas
Alleviates fear of criticism
Devil’s advocacy or Delphi technique
Title: Are decisions made in groups better than decisions made alone? Authored by: Charles W. Bryant. Located at: http://people.howstuffworks.com/decisions-groups-decisions-alone.htm. License: CC-BY
11
Group Decision Making Wrap Up
Decisions decided through consensus
Strengths and weaknesses
Must keep discussion on topic
Effective group leader will find system that works best for each particular group and setting
Must be prepared to diffuse any issues and bring group back on track
Title: How to make group decisions without the tears. Authored by: Unknown. Located at: http://blog.marksweep.com/post/28142330635/how-to-make-group-decisions-without-the-tears. License: CC-BY
12
Quick Review
Can you describe the barriers to decision making?
Are you now able to summarize the steps in the rational decision-making process?
How do you differentiate between prospect theory, bounded rationality, heuristics, and robust decisions?
Can you explain evidence-based decision making?
Please explain the uses of descriptive and predictive analysis
Are you now able to describe the components and use of a decision tree?
Can you correctly identify the advantages/disadvantages of group decision making?
Are you able to describe the techniques used to guide and reach consensus?
