DECISION MAKING AND PROBLEM SOLVING.pptx

MPP

1. DECISION MAKING AND PROBLEM SOLVING

2. INTRODUCTION Explaining the relationship between problems, problem-solving and decision-making Managers at all managerial levels are responsible for setting goals. Problems exist whenever these goals are not met, i.e difference between what has actually happened and what they planned to happen . Problem-solving is the process of taking corrective action that will solve the problem. Decision-making i s the process of choosing between various courses of action .

3. TYPES OF MANAGERIAL DECISIONS The decisions that managers make vary in terms of their content and uniqueness . In general, the decisions made by managers are either Programmed Decisions Non-Programmed Decisions

4. TYPES OF MANAGERIAL DECISIONS 1. Programmed Decisions These are repetitive and routine decisions. They have fixed methods, policies, standard operating procedures and rules for obtaining a solution. These decisions are made without spending unnecessary time or effort on them – since they eliminate the process of identifying and evaluating options and making a new choice each time a decision is required The disadvantage of these decision is that they limit the flexibility of the decision-maker Examples of programmed decisions include : the processing of payroll vouchers in an organisation, the processing of graduation candidates at a university

5. TYPES OF MANAGERIAL DECISIONS 2. Non-Programmed Decisions Are decisions which have never occurred before, they are complex and there is no established method for dealing with them. The examples of Non-Programmed Decisions include firing an employee changing the workflow procedures in a section

6. The Decision-Making Process Managers at all levels of an organisation are constantly faced with problems, opportunities and threats and they need to make decisions . The decision-making process involves the following steps: Define the problem. Identify limiting factors. Develop potential alternatives. Analyze the alternatives. Select the best alternative. Implement the decision. Establish a control and evaluation system .

7. Cont . The Decision-Making Process 1.Define the problem The first step in decision making process is recognizing there is a problem- if the problem is wrongly defined, every step in the decision making process will be based on an incorrect starting point. The most worrying situations found in an organization can usually be identified as symptoms of underlying problems. These symptoms all indicate that something is wrong with an organization, but they do not identify root causes . A successful manager must not attack symptoms but uncover the factors that cause these symptoms .

8. Cont . The Decision-Making Process S ome examples of symptoms includes: Symptoms Underlying/Real Problem 1. High employee turnover 1. Rate of pay too low or 2. Job design not suitable 2. High costs 1. Poor design process 2. P oorly trained employees 3. High rate of absenteeism Employees believe that they are not valued 4. Low profits and/or declining sales Poor market research

9. CASE 1 Mourners Leave Employee’s Coffin at Organisation X “ The family members have left an Employee’s Coffin at the reception of Organisation X, over the Organisation’s reluctance to cover funeral expenses. The deceased worked for the organisation X. The relatives bought the coffin with their own money and left it at the Organisation X’s reception in order to force management to cover the funeral costs. The incident has led to a commotion at the Organisation .” As a manager of Organisation X you are supposed to make a Decisions

10. CASE 2 Mr. Hastings is a Chief Accountant at organisation X. Last year he was involved in sexual relationship with Miss Mercy, the administration secretary of the same organisation. Currently the organisation has recruited Miss Brenda as the new Accountant Officer. Mr. Hastings and Ms. Brenda are now in sexual relations. The organisation organised a retreat party at Salima . In course of drinking, Ms Mercy quarrel with Miss Brenda over Mr. Hastings and a fight starts between the two. As a Manager of the organisation X, you are supposed to make a decision

11. Cont . The Decision-Making Process 2. Identify limiting factors To make the best decisions, Managers need to have the ideal resources — information, time, personnel, equipment, and supplies — and identify any limiting factors. Realistically , managers operate in an environment that has limited resources . For example, lack the proper budget or accurate information or extra time. Therefore managers have to identify any limiting factor and choose to satisfice — to make the best decision possible with the information, resources, and available time .

12. Cont . The Decision-Making Process 3. Develop potential alternatives Successful problem solving requires thorough examination of the challenge, and a quick answer may not result in a permanent solution . Thus, this stage involves thinking through and investigating several alternative solutions to a single problem before making a quick decision.

13. Cont . The Decision-Making Process The following are some of methods/ techniques for developing alternatives: Brainstorming Method: A group works together to generate ideas and alternative solutions. The assumption is that the group can produce many ideas/ solutions. Nominal group technique : Involves the use of a highly structured meeting, complete with an agenda, and restricts discussion or interpersonal communication during the decision-making process. This technique is useful because it ensures that every group member has equal input in the decision-making process Delphi technique : With this technique, participants never meet, but a group leader uses written questionnaires to conduct the decision making .

14. Cont . The Decision-Making Process 4 . Analyze the alternatives This stage involves identifying the advantages and disadvantages of each alternative solution before making a final decision. The following techniques are used when evaluating the alternatives: Quantitative Pros and Cons : a technique for weighing the pros and cons of a decision. Cost /Benefit Analysis: involves adding up all the costs involved with decision comparing with the expected benefit Regardless of the method used, each alternative must be evaluate in terms of its Feasibility (Can it be done?) Effectiveness (How well does it resolve the problem situation?) Consequences (What will be its costs both financial and nonfinancial) to the organization ?

15. Cont . The Decision-Making Process 4. Select the best alternative The best alternative is the one that produces the most advantages and the fewest serious disadvantages. Sometimes , the best alternative may not be obvious. Hence, manager must select alternative which is the most feasible, effective , and carries the lowest costs to the organization. Managers must simply select the alternative with the highest probability of success.

16. Cont . The Decision-Making Process 5. Implement the decision This stage involves making sure that employees understand their roles. 6. Establish a control and evaluation system This stage involves monitoring ongoing actions. An evaluation system should provide feedback on how well the decision is being implemented, what the results are, and what adjustments are necessary to get the results that were intended when the solution was chosen .

17. Conditions that Influence Decision Making Managers make problem-solving decisions under the following conditions : 1. Certainty A decision is made under conditions of certainty when the available options and the benefits and costs associated with each option are known . The decision maker has perfect knowledge of all the information needed to make a decision . The regular problems are addressed through standard or prepared responses called programmed decisions . These solutions are already available from past experiences and are appropriate for the problem at hand. Example include the decision to reorder inventory automatically when stock falls below a determined level, vacation requests , payment of tax and committee assignments .

18. Conditions That Influence Decision Making 2. Risk The decision maker lacks complete information. A manager may understand the problem and the alternatives, but has no guarantee how each solution will work . when managers make decisions under conditions of risk, the outcomes of alternatives are not known in advance, but a probability can be assigned to each Unfamiliar problems addressed through non-programmed decisions.

19. Conditions That Influence Decision Making 3. Uncertainty A decision is made under conditions of uncertainty when there is a lack of information, the outcomes of alternatives are unpredictable and probabilities cannot be determined . Manager has no knowledge on which to base an estimate of the likelihood of various outcomes Examples: economic recessions, physical industrial accidents, natural disaster, work violent e.t.c

20. Summary of decision-making conditions and levels of certainty certainty Risk Uncertainty Decision-maker has complete certainty Decision-maker has some certainty Decision-maker has complete uncertainty available options and the benefit or costs of each are known Outcome of each alternative is not known in advance Outcome of each alternative is unpredictable No element of change intervenes between the option and its outcome Probability can be assigned to each alternative outcome Probability cannot be assigned to each alternative outcome Decision is a sure thing Decision is a ‘gamble’ Decision requires ‘guts’/bravery

21. Contextualize decision-making in terms of the management process Managers at all levels of an organisation are constantly faced with problems, hence they need to make decisions . Managers while performing managerial functions, are constantly faced with problems that need to be addressed and make decisions. When planning , a manager must make decisions about goals and when, where and how they will be realized. When organising , managers must make decisions that involve the creation of an organisational structure and the deployment of resources that will enable the organisation to attain its goals.

22. When leading , a manager must decide how to influence and direct the behaviour of subordinates so that they will work willingly to pursue the goals of the organisation. When controlling , the manager may notice that these goals have not been realised. Thus a problem exists that needs to be solved and the manager needs to decide on the most appropriate corrective action to take . Therefore, Decision-making is a central aspect of all four fundamental management functions. When managers perform these functions with skilled decision-making, they will have fewer problems to solve .

23. Barriers to Effective Decision- Making Time Constraints / limitation . Uncertainty Personal Biases Lack of information or too much information Lack of Feedback

24. REVIEW QUESTIONS 1 . Contextualize decision-making in terms of the management process .? 2. Define the terms ‘problems’, ‘problem solving’ and ‘decision-making’ and explain the relationship to each other. 3 . Compare the different types of managerial decisions and the various decision-making conditions. 4 . Discuss the decision-making models/ process/ stages. 5 . Explain the meaning of group decision-making and refer to the advantages and disadvantages associated with it. 6. List and describe at least three barriers to effective decision-making