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Managing Information & Decision-Making (POLC, information and …
Managing Information &
Decision-Making
POLC, information 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
How do managers arrive at decisions ?
Bounded rationality
Decisions made within the paremeters 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
Previious Experience
"Gut-Level Feeiing"
Accumulated Judgment
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 organizaton
Assume:
The problem is clear and unambiguos
A single, well-defined goal is to be achieved
All alternatives and consequences are known
Preferences are clear
Preferences are constant& stable
No time or cost constraints exist
Final choice will maximise payoff
Group Decision-making
The value of collaborative 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.
Pros and cons of group decision-making
Disadvantages
• Minority domination
• Pressure to conform
• Time consuming
• Ambiguous responsibility
Advantages
More complete information & knowledge
More diverse alternatives
Increases acceptance of a solution
Increase legitimacy
Managerial types of problems and
decisions
Well structured problems and programmed
decisions
– Programmed decisions are those handled by a
routine approach
– Structured problems are easily defined
e.g. deferred exams, technical faults
Un-structured problems and non-programmed
decisions
– Non-programmed decisions need a custom
approach
– Un-structured problems are new or unusual
e.g. fires, natural disasters, epidemics
Decision - making conditions, style and errors
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
– Process information through
rational, logical thinking
Preference for using external data
and facts
Non-linear
– Preference for internal sources of
information
– Process information through internal insights, feelings, and hunches
Decision-making errors
Self-serving
Hindsight
Sunk costs
Overconfident
immediate gratification
Anchoring affect
Randomness
Representation
Availability
confirmation