191468013 decision-making-study-material

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The one who stays in ACTION while in INACTION andin INACTION while in ACTION is the supreme man------The Gita

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WORKSHOPon

DECISION MAKING & PROBLEM SOLVING SKILLS

Dr. Sneh BhardwajYAJNAA

2143, Sector 38-C, ChandigarhMobile : 8699051240 , 0172-2625405

[email protected]

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www.yajnaa.com

(The one who stays in ACTION while in INACTION and in INACTION while in ACTION is the supreme person)

WHAT IS A DECISION?

What it is - According to the dictionary, the verb ‘decide’ means ‘to determine, to end, to resolve, to settle and to make up

one’s mind’, while the noun ‘decision’ is ‘the act of settling, making up one’s mind’, etc.

What it is not - A decision is not allowing events to take their course willy-nilly. If you did, an outcome would still occur -

but one not influenced or decided upon with due regard to the surrounding circumstances. Such an outcome represents

an inability or lack of desire to analyse and reach a conclusion.

Decision-making is about deliberately opting for one choice from two or more, proactively to optimise a situation or

outcome and not let it happen by default. It is also about trying to minimise the element of chance or risk in life.

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DECISION MAKING

Decision-making is the selection of an option over others (which could include no action) under conditions

that are uncertain which exposes you to a risk in order to reach a specified goal, objective or outcome.

There must be a choice and it must be taken proactively, otherwise it is merely an occurrence.

The process involves getting from an identified need to a decision that addresses the need and the real

issues. At the same time it is necessary to minimise the risks of the issues and the consequences of the

decision.

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WHY SOME DECISIONS ARE HARDER THAN OTHERS?

While some decisions are easy (what to eat for dinner) many more are extremely hard. Usually, a hard decision involves

greater consequences/implications or, in some cases, a higher level of resource commitment. In reality, not all so-called

hard decisions are hard. Some feel harder than others owing to scale.

If a friend asks to borrow Rs 50 you’re likely to oblige without thinking about it. If that friend asks to borrow Rs 50,000

you’re likely to be circumspect and ask questions. The decision is the same one in essence - concerning creditworthiness.

But, where the amount is greater, we perceive the decision to be much harder because the consequences are greater.

Who cares about Rs 50? But, Rs 50,000 is a sum most people would not wish to lose. It represents a risk, but at what stage

does the decision become hard. The risk is that the friend might not or cannot repay the money and, therefore, you might

regret your decision.

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The key issue is how to handle hard decisions to ensure they are taken as painlessly as possible. This requires the use of a

robust, consistent approach and an appropriate level of detail - essential to ensure that risk is minimised or, at least,

understood.

CORRECT DECISION MAKING

A robust, consistent approach to decision-making, together with the required supporting analysis, will deal with

the complexities

1) by providing a structure within which the issues can be organised (human beings have real problems

dealing with five or more variables)

2) Identify uncertainty and

3) then present this in a structured and helpful manner,

4) deal with a multiplicity of objectives and trade-offs ,

5) analyse different perspectives and

6) facilitate logical presentation, in order to obtain consensus/decisions, especially where several opinions are

present ,

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7) encourage flexibility to change as circumstances alter and which may invalidate or fundamentally alter the

appropriateness of the decision

8) provide for evaluation.

DECISION MAKING PROCESS

A) Define the problemThe decision-making process begins when real problem is identified. One way that a manager can help determine the true problem in a situation

is by identifying the problem separately from its symptoms.

TABLE 1 Symptoms and Their Real Causes

Symptoms Underlying Problem

Low profits and/or declining sales Poor market research

Low morale Lack of communication between management and subordinates

High employee turnover Rate of pay too low; job design not suitable

High rate of absenteeism Employees believe that they are not valued

B) Identify Resources Available

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Everybody wants to make the best decisions. To do so, managers need to have the ideal resources — information, time,

personnel, equipment, and supplies — and identify any limiting factors to make the best decision possible with the

information, resources, and time available.

C) Develop potential alternatives

Time pressures frequently cause us to move forward after considering only the first or most obvious answers. However,

successful problem solving requires thorough examination of the challenge, and a quick answer may not result in a

permanent solution.

D) Analyze the alternatives

Determine the pros and cons of each alternative.

Perform a cost-benefit analysis for each alternative.

Weight each factor’s importance in the decision, ranking each alternative relative to its ability to meet each

factor. Regardless of the method used, one needs to evaluate each alternative in terms of

Feasibility — Can it be done?

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Effectiveness — How well does it resolve the problem situation?

Consequences — What will be its costs (financial and nonfinancial) to the organization?

E) Select the best alternative

After one has analyzed all the alternatives, one must decide on the best one. The best alternative is the one that produces

the most advantages and the fewest serious disadvantages. Sometimes, the selection process can be fairly

straightforward, such as the alternative with the most pros and fewest cons. Other times, the optimal solution is a

combination of several alternatives.

F) Implement the decision

Positive results must follow decisions. Everyone involved with the decision must know his or her role in ensuring a

successful outcome.

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SEVEN KEY STEPS

There are seven key steps to decision-making:

1 Define correctly the real decision to be made

2 Understand the context in which the decision needs to be made

3 Identify the options

4 Evaluate the consequences of each option

5 Prioritise the options and choose one

6 Review the decision taken (possible re-work)

7 Take action to effect the decision

Unless step 7 is taken then no real decision has been made and it has been an exercise in futility.

You must, of course, live with the consequences of the decision. If, however, you have followed a logical process,

as outlined above, then you would expect these to be within your tolerances.

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A FRAMEWORK FOR DECISION-MAKING

SEVEN KEY STEPS

EVALUATION SYSTEMCONSEQUENCES

3 4

5

6 71

2

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Ongoing actions need to be monitored. 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.

Was the wrong alternative selected? If so, one of the other alternatives generated in the decision-making process

may be a wiser choice.

Was the correct alternative selected, but implemented improperly? If so, a manager should focus attention solely

on the implementation step to ensure that the chosen alternative is implemented successfully.

Was the original problem identified incorrectly? If so, the decision-making process needs to begin again, starting

with a revised identification step.

Has the implemented alternative been given enough time to be successful? If not, a manager should give the process

more time and re-evaluate at a later date.

DECISION MAKING STYLES

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Democratic decision making is when the leader gives up ownership and control of a decision and allows the group to vote.

Majority vote will decide the action.

Autocratic decision making is when the leader maintains total control and ownership of the decision. The leader is also

completely responsible for the good or bad outcome as a result of the decision. The leader does not ask for any suggestions

or ideas from outside sources and decides from his or her own internal information and perception of the situation.

Collective - Participative decision making is when the leader involves the members of the organization. Other perspectives

of the situation are discovered because the leader deliberately asks and encourages others to participate by giving their

ideas, perceptions, knowledge, and information concerning the decision. The leader maintains total control of the decision

because, although outside information is considered, the leader alone decides.

Consensus decision making is when the leader gives up total control of the decision. The complete group is totally involved

in the decision. The leader is not individually responsible for the outcome. The complete organization or group is now

responsible for the outcome.

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DECISION MAKING TECHNIQUESGROUP DECISION MAKING

BRAIN STROMING

One of the best known methods for developing alternatives is through brainstorming, where a group works together to

generate ideas and alternative solutions.

Concentrate on the problem at hand. This rule keeps the discussion very specific and avoids the group's tendency to

address the events leading up to the current problem.

Entertain all ideas. In fact, the more ideas that come up, the better. In other words, there are no bad ideas.

Encouragement of the group to freely offer all thoughts on the subject is important. Participants should be encouraged to

present ideas no matter how ridiculous they seem, because such ideas may spark a creative thought on the part of

someone else.

Refrain from allowing members to evaluate others' ideas on the spot. All judgments should be deferred until all

thoughts are presented, and the group concurs on the best ideas.

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NOMINAL GROUP TECHNIQUE

Nominal group technique. This method involves

1) the use of a highly structured meeting,

2) complete with an agenda, and

3) restricts discussion or interpersonal communication during the decision-making process.

4) it ensures that every group member has equal input in the decision-making process.

5) It also avoids some of the pitfalls,

a) such as pressure to conform

b) group dominance, hostility, and conflict, that can plague a more interactive, spontaneous, unstructured forum such

as brainstorming.

DELPHI TECHNIQUE

With this technique, participants never meet, but a group leader uses written questionnaires to conduct the decision

making.

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SIX THINKING HATS

If you look at a problem with the 'Six Thinking Hats' technique, then you will solve it using all approaches. Your decisions and plans

will mix ambition, skill in execution, public sensitivity, creativity and good contingency planning.

WHITE HAT

With this thinking hat you focus on the data available. Look at the information you have, and see what you can learn from it. Look for

gaps in your knowledge, and either try to fill them or take account of them.

This is where you analyze past trends, and try to extrapolate from historical data.

RED HAT

'Wearing' the red hat, you look at problems using intuition, gut reaction, and emotion. Also try to think how other people will react

emotionally. Try to understand the responses of people who do not fully know your reasoning.

BLACK HAT

Using black hat thinking, look at all the bad points of the decision. Look at it cautiously and defensively. Try to see why it might not

work. This is important because it highlights the weak points in a plan. It allows you to eliminate them, alter them, or prepare

contingency plans to counter them.

Black Hat thinking helps to make your plans 'tougher' and more resilient. It can also help you to spot fatal flaws and risks before you

embark on a course of action. Black Hat thinking is one of the real benefits of this technique, as many successful people get so used

to thinking positively that often they cannot see problems in advance. This leaves them under-prepared for difficulties.

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YELLOW HAT

The yellow hat helps you to think positively. It is the optimistic viewpoint that helps you to see all the benefits of the decision and the

value in it. Yellow Hat thinking helps you to keep going when everything looks gloomy and difficult.

GREEN HAT

The Green Hat stands for creativity. This is where you can develop creative solutions to a problem. It is a freewheeling way of

thinking, in which there is little criticism of ideas.

BLUE HAT

The Blue Hat stands for process control. This is the hat worn by people chairing meetings. When running into difficulties because

ideas are running dry, they may direct activity into Green Hat thinking. When contingency plans are needed, they will ask for Black

Hat thinking, etc.

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GROUP DYNAMICS

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GROUP DYNAMICS

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There are several factors that affect the efficiency of groups. The balance between these factors will determine the group’s effectiveness.

In large groups interaction between members decreases, leadership becomes more dominant and solutions tend to be based on politics rather than analysis.

O

Composition Norms & values

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Core The group devolves into sub-groups around a core. Members on the fringe contribute little and outliers effectively withdraw.

GROUP DYNAMICS

To obtain a decision from a group you must understand each of its members and the rational, emotional and

political arguments that will convince them.

Each one will ask ‘what’s in it for me and how can this advance my personal ambition or my status within the

group/organisation?’ Lack of a satisfactory answer will result in the decision being rejected, either overtly or, more

likely, covertly. An overt rejection can at least be dealt with. A covert one is probably more damaging because the

decision is opposed tacitly.

You must carry a majority of the group or at least the key decision-makers who will out-vote the rest.

INDIVIDUAL DECISION MAKING

PARETO ANALYSIS

USING THE 80:20 RULE TO PRIORITIZE

Pareto Analysis is a simple technique for prioritizing possible changes by identifying the problems that will be resolved by

making these changes. By using this approach, you can prioritize the individual changes that will most improve the

situation. Pareto Analysis uses the Pareto Principle – also known as the "80/20 Rule" – which is the idea that 20% of

causes generate 80% of results. With this tool, we're trying to find the 20% of work that will generate 80% of the results

that doing all of the work would deliver.

STEP 1: IDENTIFY AND LIST PROBLEMS

Firstly, write a list of all of the problems that you need to resolve. Where possible, talk to clients and team members to get

their input, and draw on surveys, helpdesk logs and suchlike, where these are available.

STEP 2: IDENTIFY THE ROOT CAUSE OF EACH PROBLEM

For each problem, identify its fundamental cause.

STEP 3: SCORE PROBLEMS

Now you need to score each problem. The scoring method you use depends on the sort of problem you're trying to solve.

STEP 4: GROUP PROBLEMS TOGETHER BY ROOT CAUSE

Next, group problems together by cause. For example, if three of your problems are caused by lack of staff, put these in

the same group.

STEP 5: ADD UP THE SCORES FOR EACH GROUP

You can now add up the scores for each cause group. The group with the top score is your highest priority, and the group

with the lowest score is your lowest priority.

STEP 6: TAKE ACTION

Now you need to deal with the causes of your problems, dealing with your top-priority problem, or group of problems,

first.

PARETO ANALYSIS EXAMPLE

Varun has taken over a failing service center, with a host of problems that need resolving. His objective is to increase

overall customer satisfaction.

He decides to score each problem by the number of complaints that the center has received for each one. (In the table below, the second column

shows the problems he has listed in step 1 above, the third column shows the underlying causes identified in step 2, and the fourth column shows

the number of complaints about each column identified in step 3.)

1 Phones aren't answered quickly enough. Too few service center staff. 15

2Staff seem distracted and under pressure.

Too few service center staff. 6

3Engineers don't appear to be well organized. They need second visits to bring extra parts.

Poor organization and preparation. 4

4 Engineers don't know what time they'll arrive. This means that customers may have to be in all day for an engineer to

Poor organization and preparation. 2

visit.

5Service center staff don't always seem to know what they're doing.

Lack of training. 30

6When engineers visit, the customer finds that the problem could have been solved over the phone.

Lack of training. 21

Varun then groups problems together (steps 4 and 5). He scores each group by the number of complaints, and orders the

list as follows:

1. Lack of training (items 5 and 6) – 51 complaints.

2. Too few service center staff (items 1 and 42) – 21 complaints.

3. Poor organization and preparation (items 3 and 4) – 6 complaints.

SIMPLE DECISION TREES

A decision tree maps the chain of decisions. Consider, for example, the question of whether to wear a coat or not.

The ‘map’ with outcomes would look like this:

This can be modelled using probabilities,but there are rules: each option must be linear, the branches must be mutually exclusive (either it rains or it doesn’t)

and all options must be represented.

INDIVIDUAL VS GROUP DECISION-MAKING

The major differences in the way that individuals and groups make decisions are contrasted below:

INDIVIDUAL GROUP DECISION MAKING

Consensus Not a problem Needs to be gained

Divergent Views Not possible Usually present but must be

allowed expression

Wide-ranging experiences Limited to individual’s own Multi-faceted

Discussion Does not happen Needs to be facilitated

Goals Unity of purpose Many requiring compromises

SOME DECISION-MAKING ERRORSResearch has identified a few very common errors or points to watch out for when making decisions, in particular:

● Haste - not to be confused with speed. A decision is made before the facts are available or without taking the

facts into account. Decide in haste - regret at leisure.

● Narrow perspective - often results in addressing the wrong issue because the real issue has been pre-judged or

confined within a framework of analysis that is inappropriate.

● Over-confidence - either in the decision itself or, more commonly, in the understanding of the issue and facts.

● Rules-of-thumb - relying on rough frameworks or shortcuts for important decisions instead of carrying out

adequate analysis.

● Filtering - screening out unpleasant findings or those that do not support pre- conceived notions or the

decision you want to make.

● Juggling - lack of analytical framework and, therefore, trying to manage many variables or pieces of

information in your head.

SELF-TEST

What are the characteristics of a good decision-maker?

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2

3

4

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Compare your answers with the information on the following pages.

PROBLEM SOLVING

Problem solving is a key skill, and it's one that can make a huge difference to your career. At work, problems are at the

center of what many people do every day. You're either solving a problem for a client (internal or external), supporting

those who are solving problems, or discovering new problems to solve.

The problems you face can be large or small, simple or complex, and easy or difficult to solve. Regardless of the nature of

the problems, a fundamental part of every manager's role is finding ways to solve them. So, being a confident problem

solver is really important to your success.

Much of that confidence comes from having a good process to use when approaching a problem. With one, you can solve

problems quickly and effectively. Without one, your solutions may be ineffective, or you'll get stuck and do nothing, with

sometimes painful consequences.

PROBLEM SOLVING TECHNIQUES

CAUSE AND EFFECT ANALYSIS was devised by Professor Kaoru Ishikawa, a pioneer of quality management, in the 1960s.

The technique was then published in his 1990 book, "Introduction to Quality Control."

Cause and Effect Analysis was originally developed as a quality control tool, but you can use the technique just as well in other

ways. For instance, you can use it to

Discover the root cause of a problem. Uncover bottlenecks in your processes. Identify where and why a process isn't working.

http://www.mindtools.com/pages/article/newTMC_76.htm

THE 5 WHYS is a simple problem-solving technique that helps you to get to the root of a problem quickly. Made popular in the

1970s by the Toyota Production System, the 5 Whys strategy involves looking at any problem and asking: "Why?" and "What caused

this problem?"

Very often, the answer to the first "why" will prompt another "why" and the answer to the second "why" will prompt another and

so on; hence the name the 5 Whys strategy.

Benefits of the 5 Whys include:

It helps you to quickly determine the root cause of a problem.

It's simple, and easy to learn and apply.

PDCA CYCLEA popular tool for doing just this is the Plan-Do-Check-Act Cycle. This is often referred to as the Deming Cycle or the Deming Wheel

after its proponent, W Edwards Deming.

The four phases in the Plan-Do-Check-Act Cycle involve:

Plan: Identifying and analyzing the problem.

Do: Developing and testing a potential solution.

Check: Measuring how effective the test solution was, and analyzing whether it could be improved in any way.

Act: Implementing the improved solution fully.

These are shown in Figure 1 below.

The PDCA Cycle encourages you to be methodical in your approach to problem solving and implementing solutions. Follow the

steps below every time to ensure you get the highest quality solution possible.

STEP 1: PLAN

First, identify exactly what your problem is. Next, draw together any other information you need that will help you start sketching

out solutions.

STEP 2: DO

This phase involves several activities:

Generate possible solutions.

Select the best of these solutions.

Implement a pilot project on a small scale basis, with a small group, or in a limited geographical area, or using some

other trial design appropriate to the nature of your problem, product or initiative.

STEP 3: CHECK

In this phase, you measure how effective the pilot solution has been, and gather together any learnings from it that could make it

even better.Depending on the success of the pilot, the number of areas for improvement you have identified, and the scope of the

whole initiative, you may decide to repeat the "Do" and "Check" phases, incorporating your additional improvements.

STEP 4: ACT Now you implement your solution fully. However, your use of the PDCA Cycle doesn't necessarily stop there. If you are

using the PDCA or Deming Wheel as part of a continuous improvement initiative, you need to loop back to the Plan Phase (Step 1),

and seek out further areas for improvement.

HOW GOOD ARE YOU AT SOLVING PROBLEMS?

Instructions: For each statement, click the button in the column that best describes you. Please answer questions as you actually are (rather than how you think you should

be), and don't worry if some questions seem to score in the 'wrong direction'. When you are finished, please click the 'Calculate My Total' button at the bottom of the test.

StatementNot

at allRarely

Sometimes

OftenVeryOften

1 Once I choose a solution, I develop an implementation plan with the sequence of events necessary for completion.

2 After a solution has been implemented, I immediately look for ways to improve the idea and avoid future problems.

3 To avoid asking the wrong question, I take care to define each problem carefully before trying to solve it.

4 I strive to look at problems from different perspectives and generate multiple solutions. 5 I try to address the political issues and other consequences of the change I’m proposing so that

others will understand and support my solution.

6 I evaluate potential solutions carefully and thoroughly against a predefined standard. 7 I systematically search for issues that may become problems in the future. 8 When I decide on a solution, I make it happen – no matter what opposition I may face. 9 I find that small problems often become much bigger in scope, and thus very difficult to solve.

10 I ask myself lots of different questions about the nature of the problem. 11 After my solution is implemented, I relax and focus again on my regular duties. 12 I focus on keeping current operations running smoothly and hope that problems don’t appear. 13 I evaluate potential solutions as I think of them. 14 When I need to find a solution to a problem, I usually have all of the information I need to solve

it. 15 When evaluating solutions, I take time to think about how I should choose between options. 16 Making a decision is the end of my problem-solving process.

TOTAL = 0

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191468013 decision-making-study-material