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Decision Making

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Decision Making

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  1. Principles of Management CHAPTER-6 Decision Making BY: SHIBA PRASAD DAHAL

  2. Decision Making • Decision Making: • Definition: Decision making is the process of solving organizational problems by choosing a best alternative among several alternatives. • G.R.Terry: “Decision making is the selection based on some criteria from two or more possible alternatives.” • Koontz & Weihrich : “Decision making is define as the selection of course of action from among alternatives.” • Ricky W. Griffin: “Decision making is the act of choosing one alternative from among a set of alternatives.” • Conclusion: Decision making is a process of choosing best alternative from two or more alternatives. Decision making is an action to select proper alternative among all. BY: SHIBA PRASAD DAHAL

  3. Decision Making BY: SHIBA PRASAD DAHAL

  4. Decision Making Decision making is useful for successful operation of activities. All the managerial function such as planning, organising, directing and controlling are determined by the decision. BY: SHIBA PRASAD DAHAL

  5. Decision Making In classical approach decision are made scientific, systematic & Step by step process to achieve single and stable goal. In behavioral approach decision are made in real life situations. Mangers have limited information about problems so satisfying result or good to enough rather than ideal decision. Retrospective approach: This approach is applicable in non-programmed decision. This approaches is used to select various factor of favorite items in which a customer give arguments. BY: SHIBA PRASAD DAHAL

  6. Decision Making BY: SHIBA PRASAD DAHAL

  7. Decision Making BY: SHIBA PRASAD DAHAL

  8. Decision Making Problems, Decision Types, and Organizational Levels BY: SHIBA PRASAD DAHAL

  9. Decision Making • Problem Solving • Problem solving is an intellectual process to get actual situation closer to desired situation. • Managerial problem solving consists of following four steps. • Identifying the problem • Generating alternative solutions • Selecting a best solution • Implementing & evaluation of problem. • Managers may face problems in the stage of planning, Organizing, leading & controlling. BY: SHIBA PRASAD DAHAL

  10. Programmed Decisions Nonprogrammed Decisions Types of problems Repetitive, routine, frequent; decisions made according to specific procedures Novel, complex, difficult, infrequent; decisions require original thinking Proce-dures Depend on policies and rules Require creativity, intuition, tolerance for ambiguity Examples Business firm: Periodic reorders of inventory Health care: Procedure for admitting patients University: Necessary GPA for good academic standing Business firm: Diversification into new products and markets Health care: Purchase of experimental equipment University: Construction of new classrooms Programmed and Nonprogrammed Decisions: A Comparison 6.2 BY: SHIBA PRASAD DAHAL

  11. “What really, really is our problem?” “Let’s dream up some great ideas.” “Some of these ideas are good; others are wacko.” Identify and diagnose the problem Develop creative alternatives Evaluate the alternative solutions “How really good was that idea?” “Now let’s take action.” “This alternative is a winner!” Evaluate and control Implement the decision Choose one alternative solution Steps in Problem Solvingand Decision Making 6.3 BY: SHIBA PRASAD DAHAL

  12. 1. Have a specific agenda and adhere to it 2. Rely on qualified group members 5. Build consensus so the decision is more likely to be implemented 4. Provide summaries for each major point 3. Have the leader share decision-making authority Suggestions for Improving Group Problem-Solving BY: SHIBA PRASAD DAHAL

  13. 1. Keep an idea notebook 2. Stay current in your field 3. Listen to other people 4. Learn to think in the five senses 5. Improve your sense of humor 6. Adopt a risk-taking attitude 7. Develop a creative mental set 8. Identify your most creative times 9. Be curious about your environment 10. Step back when faced with a creativity block Suggestions to Build Creativity BY: SHIBA PRASAD DAHAL

  14. Types of Problem • Frequency /Structures of the problems • Well structured Problems: Straight Forward, Clear goals related decision used to solving repetitive and routine problem. Refer guideline, procedures, rules, policies etc. while solving problems. • Poorly Structured Problems: Such problems are new or unusual, unclear & incomplete information, Such problem can not refer guideline, procedures, rules, policies etc. while making decisions. • Urgency Of Problem: • Urgent Problems • Non Urgent Problems • Impact of Problem: • Over all impact problems • Partial Impact Problems • Sources of Problems • Technical Problems • Human Problems BY: SHIBA PRASAD DAHAL

  15. Problem Solving Strategy BY: SHIBA PRASAD DAHAL

  16. Techniques of group decision making • BRAINSTORMING: It is a techniques of group decision making in which individuals generate ideas in the form of free discussion and understanding. Under this techniques, a group is gathered presented with the problem &encourage to produce many ideas and solutions as they can. • Delphi Technique: This techniques involves the solicitation & comparison of anonymous judgement on the topics of interest through a set of sequential set of questionnaires. In this techniques a group of professional who are experts in their own sector of knowledge are gathered and they are asked to give their opinions about the problems. • Nominal Group Techniques: This techniques is very similar to Brainstorming techniques. It is a structured technique used to generate creative and innovative ideas. This techniques is similar to traditional committee meetings, except members work independently & they generate idea solving the problem in writing silently. BY: SHIBA PRASAD DAHAL

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  19. 1. Small group is assembled 6. Alternatives are rated and best-rated one is chosen 2. Leader presents a problem 5. Group clarifies and evaluates all suggestions 3. Members write down ideas individually 4. Each participant presents one idea to group NOMINAL GROUP DECISION Technique BY: SHIBA PRASAD DAHAL

  20. Advantages and Disadvantages of group decision making BY: SHIBA PRASAD DAHAL

  21. Definition Management By Objectives (MBO) • Definition Management By Objectives (MBO) can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. • Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. • The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management. BY: SHIBA PRASAD DAHAL

  22. Main Concept • The principle behind Management by Objectives (MBO) is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims. • • The complete MBO system is to get managers and empowered employees acting to implement and achieve their plans, which automatically achieve those of the organization. • Preparing of organizational vision, goals and objectives • Specific objectives for each member • Participative decision making • Explicit time period • Performance evaluation and feedback BY: SHIBA PRASAD DAHAL

  23. MBO Strategy: • Three Basic Parts • • All individuals within an organization are assigned a special set of objectives that they try to reach during a normal operating period. These objectives are mutually set and agreed upon by individuals and their managers. • Performance reviews are conducted periodically to determine how close individuals are to attaining their objectives. • Rewards are given to individuals on the basis of how close they come to reaching their goals BY: SHIBA PRASAD DAHAL

  24. The MBO Process BY: SHIBA PRASAD DAHAL

  25. Balance Between Management and Employee Empowerment • The balance between management and employee empowerment has to be struck, not by thinkers, but by practicing managers. Turning their aims into successful actions, forces managers to master five basic operations: • setting objectives • organizing the group • motivating and communicating • measuring performance and • developing people BY: SHIBA PRASAD DAHAL

  26. MBO: Key Advantages and Disadvantages • Advantages • • MBO programs continually emphasize what should be done in an organization to achieve organizational goals. • MBO process secures employee commitment to attaining organizational goals. • Disadvantages • The development of objectives can be time consuming, leaving both managers and employees less time in which to do their actual work. BY: SHIBA PRASAD DAHAL

  27. Factors for successful MBO • Thedynamic nature of the environment: •  In which the business operates. The environment is never static but dynamic and, therefore, any change in it requires changes in the policies and programmes of the business, i.e., the management should be adaptable to changes or else it will be out of existence very soon. M.B.O. is suitable for activities that are not reflective but where changes are desired to accomplish the goals. • The change in the objective of business: • Profit maximization to growth and survival’ has necessitated that the objective can be better accomplished if M.B.O. is practiced, which aims at better utilization of material, human and physical resources of the organization. • The realization of the fact that the aspirations of the individuals should be fulfilled or satisfied if the best is to be drawn out from them. The M.B.O. ensures accommodation of organization objectives with those of the individual objectives. BY: SHIBA PRASAD DAHAL

  28. Cont…Factors for successful MBO • Current Thinking • The current thinking that the appraisal of the personnel against the set objectives and in which the person concerned has participated is a more reliable and positive assessment, for it leads to the improvement in the performance of the person concerned. • The development of the concept of corporate planning, • which is concerned with the top management largely because it requires ability, experience, and need for maintaining secrecy and information, though M.B.O. is concerned with all levels of management by involving everyone in fixing the goals of the organization. • M.B.O. has been the result of various supportive concepts, such as Maslow’s hierarchy of needs; McGregor’s Theory of Motivation (Theory X and Theory Y); and Herzberg’s Hygiene Theory. These theories have played an important role in the development of the M.B.O. concept, since they recognize that desire of most managers is to satisfy their higher level needs on the job and to assume responsibility. Managements are achievement-oriented and desire a degree of control over their jobs. BY: SHIBA PRASAD DAHAL

  29. Factors for successful MBO SUMMARY BY: SHIBA PRASAD DAHAL

  30. THANK YOU BY: SHIBA PRASAD DAHAL

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