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Managing Information and Decision Making: Week 6 (Conditions of decision…
Managing Information and Decision Making: Week 6
Managing and decision making
Decision-making influenced by sources, quality, and reliability of information
Ability to engage in critical thinking, analysis, and reflection determines how well one makes decisions based on available information
The execution of the managerial functions of POLC results in decision-making, often daily
Big Data and its associated analytics changing contemporary debates and arguments around decision-making
As organizational decisions increasingly become more data driven, managers need to consider inclusiveness of data (i.e. who uses it) in addition to the use of data for productive purposes
Methods of managerial decision making
Rationality
Managerial decision making is assumed to be rational
Rational decisions describe choices that are consistent and value-maximising
Rational decisions made by managers “maximise” economic benefit for the organization
Assumes:– The problem is clear and unambiguous– 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 exist– Final choice will maximise payoff
Bounded Rationality
Decisions made within the parameters of a simplified model that captures the essential features of a problem
Bounded by the limitations and constraints, managers attempt to behave rationally
“Good enough” decisions – “satisficing”
Intuition
Previous Experience
Gut-level-feeling
Accumulated judgement
Managerial problems and decisions
Structured problems
– Structured problems are easily defined
– Programmed decisions are those handled by a routine approach
Un-structured problems
– Un-structured problems are new or unusual
– Non-programmed decisions need a custom approach
Group decision-making
Advantages
• More complete information & knowledge
• More diverse alternatives
• Increases acceptance of a solution
• Increase legitimacy
Disadvantages
Time consuming
• Minority domination
• Pressure to conform
• Ambiguous responsibility
Value of group decision-making
Steve Jobs on the value of collaborative decision-making – No, you see you can’t. If you want to hire great people and have them stay working for you, you have to let them make a lot of decisions and you have to, you have to be run by ideas, not hierarchy. The best ideas have to win, otherwise good people don’t stay.
Conditions of decision-making
Certainty
– A manager can make accurate decisions because the outcome of every alternative is known
Risk
– A manager can estimate the likelihood of certain outcomes
Uncertainty
– A manager has neither certainty nor reasonable probability estimates
Decision making styles
Linear
– Preference for using external data and facts
– Process information through rational, logical thinking
Non-linear
Preference for internal sources of information
– Process information through internal insights, feelings, and hunches
Conclusion
Managerial functions of planning, organising, leading, and controlling are executed through accessing information and using the same to decide between alternative courses of action
When making decision managers rely on rationality, bounded rationality, and intuition
There are structured as well as unstructured problems which require programmed and non-programmed decisions by managers
Groups can be both beneficial as well as detrimental to effective decision-making
Managerial decision-making is undertaken within diverse conditions using linear as well as non-linear thinking fraught with numerous errors/biases
http://monash.online.clickview.com.au.ezproxy.lib.monash.edu.au/libraries/videos/3715694