BE VERY KEEN ON INSTRUCTIONS BEFORE YOU START HANDLING THE PAPER and REVIEW VERY KEENLY

Topic 6 Decision Making

Learning Objectives

Explain the rational decision making process What aspects of the environment impact

decision making? Explore different types of problems Explore decision making styles Identify and explain common decision

making errors and biases Explore and identify ways to make effective

decisions

How many decisions

Food choices? Boolean choices ( where we use and or) Conscious or unconscious,

Information sources

What makes good information?- primary, secondary, tertiary?

Sources you might use – relevance is important too

Managers make decisions daily

They make choices between alternative courses of action

All decisions rely upon information Therefore quality information is critical Programmed decisions Non programmed decisions

Overview of managerial decision making

Figure 3.5. From Robbins et al. 2015 Managing organisation and people p. 93.

Rational?

What type of environment are we in?

Certain – Risk – Uncertain- Have to learn to function on probabilities

Let’s explore rational decision making first 1.  Find and define the problem 2.  Generate and evaluate alternative

solutions 3.  Select preferred solution ( conduct an

ethical check here) 4.  Implement the solution 5.  Evaluate results Now repeat!

But …

While rational decisions are good, complexity can be confusing

How do you generate possible solutions?

Are decision really rational?

What about intuition? What about patterned behaviour?

But how do you choose the alternative? Classical Behavioural Judgemental ( Heuristic approach)

Today is exploring how you make decisions ( and how organisations do this also)

There are many types of decision making

Errors and Biases

How did I miss this?

Perceptual errors

Serial position: Primacy, recency Halo effect Projection Stereotypes

A"ribu'on  theory   How  the  ac*ons  of  individuals  are  perceived  by  others  depends   on  what  meaning  (causa*on)  we  a;ribute  to  a  given  behaviour.   v   Internally  caused  behaviour:  under  the  individual’s  control   v Externally  caused  behaviour:  due  to  outside  factors   This  is  Fundamental  a;ribu*on  error  

we do this because of self-serving bias

–  Protect self-esteem      

Self fulfilling prophecy

Think, feel, behave

Satisficing

Optimal vs good enough

Heuristics

Decision making biases increase when…

Optimism and over confidence

Escalation of commitment

When our investment of time and emotion keeps us involved even when there is evidence to stop

Unintended consequences

All actions have outcomes that we may not first see

Tools to use for decision making

Problem identification: Solution generation: Solution evaluation: Implementation and planning: Use scenario planning

Design thinking

To finish up

Critical analysis? Be aware, about satisficing Unintended consequences