Decision MakingDecision Making

ByByDr.Raafat Youssef ShehataDr.Raafat Youssef Shehata

Making choices from among two or more alternatives

Decision Making

The situation:

In 2nd of April, 2004 at 09:00 am you were traveling via air with a group of your colleagues toward a city in Canada called Norway House. Just a few miles before the city, the pilot

suddenly faced a technical problem in the plane, and he was forced to land somewhere in the northern pole. A few seconds before landing, the pilot contacted his base and informed them that they were 50 aero miles away from Norway House. While

landing, the surroundings conditions were not at your side, unfortunately, the pilot died and most of the plan was damaged.

Exercise:“Stay alive in the Northern-Pole”

The situation:

Your plane landing was on top of a lake covered with a very thin layer of ice, which made the plane started to sink due to the

pressure of the shock. Lucky enough, you and your colleagues succeeded to collect 15 items, see attached list, out of which you will be able to risqué just few items. Before traveling, you were able to explore the net to get the weather forecast of the following week, see attached. Because other neighbor cities are very far from Norway House, you can not go to any other place. At the crashing place, you found that the surroundings

were between snow, water flows, green grass, but plenty of mountains. In the direction of Norway House, there was a great

mountain in the way.

“Stay alive in the Northern-Pole”

The problem:You do not know will you be able to carry all collected items that is why, you

need to prioritize them according to your need. Please do that in your own once, then in the group. Calculate the differences between yourself, the

team, and the expert.

Crash day Day2 Day3 Day4 Day5

Temp OC

Day

Night

10

-1

6

-3

4

-7

3

-8

1

-12

Sun conditions Sunny Partially sunny

Partially cloudy

Cloudy Very cloudy

Temperature forecast over the coming 5 days

“Stay alive in the Northern-Pole”

# Description Your rank Team rank (Team – you)

Expert rank (Expert – you) (Expert – team)

1 Compass

2 A can of honey

3 Sleeping bag

4 Water filter

5 Piece of leather 5m*5m

6 Match

7 Nylon rope 750 m

8 Torch

9 Three pairs of snow shoes

10 A bottle of alcohol

11 Shaving set with mirror

12 Clock

13 A strong metal pin

14 Three Inside tiers

15 A book about topography

Total

Exercise “Stay alive in the northern pole!”

# Description Your rank

Team rank (Team – you)

Expert rank (Expert – you)

(Expert – team)

1 Compass 14

2 A can of honey 3

3 Sleeping bag 7

4 Water filter 13

5 Piece of leather 5m*5m 2

6 Match 5

7 Nylon rope 750 m 12

8 Torch 4

9 Three pairs of snow shoes 11

10 A bottle of alcohol 10

11 Shaving set with mirror 1

12 Clock 9

13 A strong metal pin 8

14 Three Inside tiers 6

15 A book about topography 15

Total

A systematic approach to decision making process

1 -Identification of a problem/opportunity2 -Identification of decision criteria

3 -Allocating weights to criteria4 -Development of alternatives

5 -Analysis of alternatives6 -Selection of an alternative

7 -Implementation of the alternative8 -Evaluation of decision effectiveness

222004

Decision makingDecision making

Evaluation of decision effectiveness

Implementation of the alternative

Selection of an alternative

Analysis of alternatives

Development of alternatives

Allocating of weights to criteria

Identification of decision criteria

Identification of a problem

Volvo

Volvo

BMW –Mercedes- Volvo- Opel

BMW- Mercedes- Volvo- Opel

Safety 8 price 7durability 5 spare parts 4

Price, safety , durability and spare parts

I need a new car

The Decision-Making Process

Certainty, Risk, Uncertainty, Ambiguity

Certainty all the information is fully available

Risk decision has clear goals information is available future outcomes are subject to chance

Uncertainty managers know which goals they wish to achieve information is incomplete may need to develop creative alternatives

Ambiguity goals to be achieved or the problem to be solved is unclear alternatives are difficult to define information about outcomes is unavailable

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Conditions that Affect the Possibility of Decision Failure

OrganizationalProblem

ProblemSolution

Low HighPossibility of Failure

Certainty Risk Uncertainty Ambiguity

ProgrammedDecisions

NonprogrammedDecisions

Classification of decisions

Programmed decisions Programmed decisions are routine decisions, made by lower-level

personnel, that rely on predetermined courses of action

Non-programmed decisions Non-programmed decisions are decisions for which there are no

ready-made solutions. The decision maker confronts a unique

situation in which the solutions are novel

Strategic decisions Strategic decisions are non-programmed decisions that have

important long-term implications for the organization and are made by

coalitions of high-level executives

Programmed vs. Non-programmed

Programmed vs. Non-programmed

Programmed Non-programmed

Type of task Simple, routine Complex, creative

Reliance on organizational policies

Guidance from past decisions

No guidance form past decisions

Typical decision maker Lower level Upper level

Rational decision making

Rational decision making

Intuitive decision making

Rational versus Intuitive

Rational decision making-The problem is clear

-A single well defined goal is to be achieved

-All alternatives and consequences are known

-Preferences are clear

-Preferences are constant and stable

-No time or cost constraints

Intuitive decision making

A subconscious process of making decisions on the basis of experience and accumulated judgment

Intuition

1-Experience based decisions:

- Making decisions based on their past experiences

2-Affect-initiated decisions:

-Making decisions based on emotions

3-Cognitive-based decisions:

-Making decisions based on knowledge &training

4-Subconscious mental processing :

-Making decisions from subconscious mind

Intuition

Use a blend of information ,logic, emotions and intuition

Escalation of CommitmentEscalation of Commitment The tendency for individuals to continue to support previously

unsuccessful courses of action because they have sunk costs invested in them

Biases (Imperfection) in Decision Making

Escalation of commitment

An increased commitment to a previous decision despite evidence that it may have been wrong

This is because they do not want to admit that their initial decisions have been wrong

Reasons why people have difficulty in making decisions

-Fear of failing

-Fear of success/believing that others will expect always expect perfection following a success

-Unable to set priorities/don’t know what to do first

-Not knowing where to get the information needed to help with the decision

-Hoping someone else will decide

• -Having little experience in making decisions and feeling overwhelmed

• -Not being willing to sacrifice immediate comfort for the long-term gain

• -Fear that others will disapprove of the decision

• -Believing decisions won’t really matter, other circumstances will ultimately dictate the outcome

Reasons why people have difficulty in making decisions

Decision quality

1. Know your biases

2. Do you do enough analysis?

3. Are you hesitant to make a decision?

4. Sleep on it

5. Use others to help

6. Study decision makers

Decision-Making Styles

Types of Decision MakersDirective

• Use minimal information and consider few alternatives.Analytic

• Make careful decisions in unique situations.Conceptual

• Maintain a broad outlook and consider many alternatives in making long-term decisions.

Behavioral• Avoid conflict by working well with others and being receptive to

suggestions.

Decision-Making Styles

Source: S.P. Robbins and D.A. DeCenzo, Supervision Today. 2nd ed. (Upper Saddle River, NJ: Prentice Hall, 1998). p. 166.

Common Decision-Making Errors and Biases

Overconfidence Bias

-Holding unrealistically positive views of one’s self and one’s performance.

-Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability

Immediate Gratification Bias

Choosing alternatives that offer immediate rewards and that to avoid immediate costs.

Anchoring Effect

Fixating on initial information and ignoring subsequent information.

Selective Perception

Selecting organizing and interpreting events based on the decision maker’s biased

perceptions.

Confirmation Bias

-It is a type of selective perception.

-Seeking out information that reaffirms past choices and discounting contradictory information.

Framing Bias

Selecting and highlighting certain aspects of a situation while ignoring other aspects.

Availability Bias

Tendency for people to base judgments on information that is readily available

Self-Serving Bias

-Taking quick credit for successes and blaming outside factors for failures

-Korean managers found that, contrary to the self-serving bias, they tended to accept responsibility for group failure

Contrast Effects

We do not evaluate a person in isolation. Our reaction to one person is influenced by other persons we have recently encountered.

For example, an interview situation in which one sees a pool of job applicants can distort perception. Distortions in any given candidate’s evaluation can occur as a result of his or her place in the interview schedule

Stereotyping

Stereotyping—judging someone on the basis of our perception of the group to which he or she belongs.

In organizations, we frequently hear comments that represent stereotypes based on gender, age, race, ethnicity, and even weight.

Halo Effect

The halo effect occurs when we draw a general impression on the basis of a single characteristic

This phenomenon frequently occurs when students appraise their classroom instructor.