CHAPTER 12 REVIEW: ENHANCING DECISION MAKING

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Decisions are  made at all levels  of the  firm and   that   some   of  these  decisions are   common, routine,  and   numerous. Although the  value  of improving any  single  decision may  be small,  improving hundreds of thousands of “small” decisions adds  up to a large  annual value  for the business.

Types of Decisions

There are generally three classifications of decisions:
·      Unstructured: Requires judgment, evaluation, and insight into non-routine situations. Usually made at senior levels of management.
·    Structured: Repetitive, routine, with definite procedures for making the decision. Usually made at the lowest organizational levels.
·       Semistructured: A combination of the two. Usually made by middle managers.

Information Requirements of Key Decision-Making Groups in a Firm
·       Senior management: Makes decisions based on internal business information but also external industry and society changes; decisions affect long-term, strategic goals and the firm’s objectives.
·       Middle management and project teams: Decisions affect resource allocation, short-range plans and performance of specific departments, task forces, teams, and special project groups.
·       Operational management and project teams: Decisions affect subunits and individual employees regarding the resources, schedules and personnel decisions for specific projects.
·       Individual employees: Decisions affect specific vendors, other employees and most importantly, the customer.

The Decision-Making Process

Making decisions requires four steps:
  • Intelligence: Discovering, identifying, and understanding problems.
  • Design: Identifying and exploring solutions to problems.
  • Choice: Choosing among solution alternatives.
  • Implementation: Making the chosen alternative work and monitoring how well the solution is working.

Managers and Decision Making in the Real World

Although information systems have gone a long way toward improving the decision-making process, they are not the Holy Grail. They should be viewed as a way to assist managers in making decisions, but not as the final answer.

Managerial Roles

Let’s compare the classical model of management with the behavioral model. The former describes the five classical functions of managers as:
  • Planning
  • Organizing
  • Coordinating
  • Deciding
  • Controlling
Behavioral models of managers dissect the many activities involved in the five functions of management. That is, managers:
  • Perform a great deal of work at an unrelenting pace.
  • Activities are fragmented.
  • Prefer current, specific, and ad hoc information.
  • Prefer oral communications rather than written documentation.
  • Maintain a diverse and complex web of contacts.
We take all of these activities and categorize them into three managerial roles:

  • Interpersonal: Act as figureheads, leaders, and liaisons.
  • Informational: Act as nerve centers, disseminators, and spokespersons.
  • Decisional: Act as entrepreneurs, handle disturbances, allocate resources, negotiate and mediate conflicts.

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