H. DECISION-MAKING AND PROBLEM-SOLVING
) Operational decisions- refer to the decisions that employees make each
The Nature of Decision-Making
1.) Goal oriented- aims at achieving certain specific goals of the
organization.
2.) Selection Process- in which best alternative course of action is chosen
from the given alternative courses of action.
3.) Continuous process- manager is required to take decisions continuously
for different activities.
4.) Art as well as science- both an art and science.
5.) Responsibilities of manager- responsibility of managers at different levels
of management.
6.) Positive as well as negative- positive (to perform certain activity)
negative (not to perform certain activity).
Decision making
-is the act of choosing one alternative from among a set of alternatives.
Types of Decisions
1.) Programmed Decisions- occurred often enough to enable decision rules
to be developed and applied in the future.
2.) Nonprogrammed Decisions- response to unique poorly defined and
largely unstructured, and have important consequences to the organization.
Decision-Making Conditions
Decision Making Under Certainty
Exist when information is sufficient to predict the results of each
alternative in advance of implementation.
Decision Making Under Risk
Exist when decision maker lack complete certainty regarding the
outcome of various courses of action, but can assign probabilities of
occurrence.
Decision Making Under Uncertainty
Exist when managers have so little information that they cannot
even assign probabilities to various alternatives and possible outcomes.
Decisions Can Be Classified into (3) Categories.
1.) Strategic decisions- set the course of an organization.
2.) Tactical decisions- about how things will get done.
3.
day to make the organization run.
Authority in Decision Making
Deciding who should participate:
Authority Decisions- made by the Manager or top Level Management
without involving other people and by using information that he / she
possess.
Consultative Decisions- made by one individual after seeking input from
group members.
Group Decisions- made by all members of the group.
Decision Making Models
Rational decision-making model- describes a series of steps that decision
makers should consider if their goal is to maximize the quality of their
outcomes.
Bounded rationality model of decision making- recognizes the limitations
of our decision-making processes.
Intuitive decision-making model- this model, individuals knowingly limit
their options to a manageable set and choose the first acceptable
alternative without conducting an exhaustive search for alternatives.
Creative decision making model- All the models include problem
identification, which is the step in which the need for problem solving
becomes apparent.
Classical Decision Model- An approach to decision making that tells
managers how they should make decisions.
Decision-Making Process
Step 1: Identify the decision
You realize that you need to make a decision.
Step 2: Gather relevant information
Collect some pertinent information before you make your decision.
Step 3: Identify the alternatives
As you collect information, you will probably identify several possible paths
of action, or alternatives.
Step 4: Weigh the evidence
Draw on your information and emotions to imagine what it would be like if
you carried out each of the alternatives to the end.
Step 5: Choose among alternatives
Once you have weighed all the evidence, you are ready to select the
alternative that seems to be best one for you.
Step 6: Take action
You’re now ready to take some positive action by beginning to implement
the alternative you chose in Step 5.
Step 7: Review your decision & its consequences
In this final step, consider the results of your decision and evaluate whether
or not it has resolved the need you identified in Step 1.

Related Behavioral Aspects of Decision-Making

1.) The Administrative Model of Decision Making- describe how decisions
are often made rather than to prescribe how they should be made.
2.) Bounded rationality suggests that decision makers are limited by their
values and unconscious reflexes, skills and habits.
3.) Satisficing is the tendency to search for alternatives only until one is
found that meets some minimum standard of sufficiency.
4.) The Classical Model attempts to explain how managers can at least
attempt to be more rational and logical in their approach to decisions.