Understanding Management First Canadian Edition Slides prepared by Janice Edwards College of the...

Understanding ManagementFirst Canadian Edition

Slides prepared byJanice EdwardsCollege of the Rockies

Copyright © 2009 Nelson Education Ltd.

Managerial Decision Making and Information Technology

Chapter 6

6-2

Copyright © 2009 Nelson Education Ltd. 6-3

Learning Objectives

1. Explain the difference between programmed and non programmed decisions and the decision characteristics of risk, uncertainty, and ambiguity.

2. Describe the classical, administrative, and political models of decision making and their applications.

3. Explain why decision making is an important component of good management.

4. Identify the six steps used in managerial decision making.


Learning Objectives (contd.)

5. Explain four personal decision styles used by managers.

6. Discuss the advantages and disadvantages of participative decision making.

7. Identify techniques for improving decision making in today’s turbulent environment.

8. Describe the importance of information technology (IT) for organizations and the attributes of quality information.

9. Discuss IT trends that affect the workplace.


Decisions and Decision Making

• A decision is a choice made from available alternatives.

• Decision making is the process of identifying problems and opportunities and then resolving them.


Types of Decisions

Programmed decisions• situations that occur often enough to enable

decision rules to be developed.

Nonprogrammed decisions• are made in response to situations that are

unique, are poorly defined and largely unstructured.


Decision Making Conditions

Certainty• All of the information the decision maker needs

is fully available

Risk• A decision has clear goals and good information

is available, but the future outcomes associated with each alternative are subject to chance.


Decision Making Conditions (Cont’d)

Uncertainty• Managers know which goals they wish to achieve.• Information about alternatives and future events is

incomplete.• Managers may have to come up with creative

approaches to alternatives.


Decision Making Conditions (Cont’d)

Ambiguity• The goals to be achieved or the problem to be

solved is unclear• Alternatives are difficult to define• Information about outcomes is unavailable.


Ex. 6.1 Conditions That Affect the Possibility of Decision Failure

OrganizationalProblem

ProblemSolution

Low HighPossibility of Failure

Certainty Risk Uncertainty Ambiguity

ProgrammedDecisions

NonprogrammedDecisions


Three Decision Making Models

Political Model

Administrative Model

Classical Model


Selecting a Decision Making Model

Depends on: • The manager’s personal preference.• Whether the decision is programmed or non-

programmed.• The extent to which the decision is characterized by risk,

uncertainty, or ambiguity.


Classical Model

• Based on economic assumptions• Is considered to be normative


Assumptions of the Classical Model

• Accomplishes goals that are known and agreed upon.• Strives for certainty by gathering complete information.• Criteria for evaluating alternatives are known.• Decision maker is rational and uses logic.


Administrative Model

• How managers actually make decisions in situations characterized by non-programmed decisions, uncertainty, and ambiguity.

• Two concepts are instrumental in shaping the administrative model:• Bounded Rationality: people have limits or

boundaries on how rational they can be.• Satisficing: decision makers choose the first

solution alternative that satisfies minimal decision criteria.


Political Model

• Closely resembles the real environment in which most managers and decision makers operate.

• Decisions are complex.• Information is often ambiguous.• Disagreement and conflict over problems and

solutions are normal.• Coalition building is important.


Ex. 6.2 Characteristics of Classical, Administrative, and Political Decision-Making Models

Classical Model Administrative Model Political Model

Clear-cut problem and goals.

Condition of certainty.

Full information about alternatives and their outcomes.

Rational choice by individual for maximizing outcomes.

Vague problem and goals.

Condition of uncertainty.

Limited information about alternatives and their outcomes.

Satisficing choice for resolving problem using intuition.

Pluralistic; conflicting goals.

Condition of uncertainty/ambiguity.

Inconsistent viewpoints; ambiguous information.

Bargaining and discussion among coalition members.


Ex. 6.3 Six Steps in the Managerial Decision Making Process


Ex. 6.5 Personal Decision Framework

Situation:· Programmed/non-programmed· Classical, administrative,

political· Decision steps

Decision Choice:·Best Solution to Problem

Personal Decision Style:·Directive·Analytical·Conceptual·Behavioural


The Vroom-Jago Model

The Vroom-Jago Model helps gauge the appropriate amount of participation for subordinates, based on:

• leader participation styles • a set of diagnostic questions with which to analyze a

decision situation• a series of decision rules.


Vroom-Jago Model: Diagnostic Questions

1. Decision significance

2. Importance of commitment

3. Leader expertise

4. Likelihood of commitment

5. Group support for goals

6. Group expertise

7. Team competence


New Decision Approaches for Turbulent Times

1. Start with brainstorming.

2. Learn; do not punish.

3. Know when to bail.

4. Practise the 5 Whys.

5. Engage in rigorous debate.


Management Implications of Information Technology

• Improved employee effectiveness.

• Increased efficiency.

• Empowered employees.

• Information overload.

• Enhanced collaboration.

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