DECISION MAKING
Presented By: Virata, Roselle Joy T.
Chapter Outline
› The Nature of Decision Making
› The Rational Approach to Decision
Making
› The Behavioral Approach to Decision
Making
› Creativity, Problem Solving and Decision
Making
The Nature of Decision Making
Decision Making is the
process of choosing from
among several alternatives.
Types of Decisions
Programmed Decision Rule Non – Programmed
Decisions Is a statement that Decisions
Is a decision that tells a decision Is a decision that
recurs often enough maker which recurs infrequently and
for a decision rule to alternative to for which there is no
be developed. choose based on previously established
the characteristics decision rule.
of the decision
situation.
Types of Decisions
Decision-Making Conditions
Condition of Condition of Risk Condition of
Certainty The decision maker Uncertainty
The manager knows cannot know with The decision maker
what the outcomes certainty what the lacks enough
of each alternative outcome of a given information to estimate
of a given action will action will be but the probability possible
be but has enough has enough outcomes.
information to information to
estimate the estimate the
probabilities of probabilities if
various outcomes. various outcomes.
The Rational Approach to
Decision-Making
The rational decision-making
approach is a systematic, step-by-
step process for making decisions.
The Rational Approach to Decision-Making
The Rational Approach to Decision-Making
Evidence – Based Decision Making
Is the commitment to identify and utilize the
best theory and data available to make
decisions.
Framework for Evidence Based
Decision - Making
Best
Contextual Available
Evidence Research
Evidence
Experiential
Evidence
Evidence – Based Decision Making
Five Basic Principle
1. Face the hard facts and build a culture in which
people are encouraged to tell the truth, even if it’s
unpleasant.
2. Be committed to “fact-based” decision making –
which means being committed to getting the best
evidence and using it to guide actions.
3. Treat your organization as an unfinished
prototype – encourage experimentation and
learning by doing.
Evidence – Based Decision
Making Five Basic Principle
4. Look for the risks and drawbacks in what
people recommend (even the best medicine
has side effects).
5. Avoid basing decisions on untested but
strongly held beliefs, what you have done in the
past, or uncritical “benchmarking” of what
winners do.
The Behavioral Approach to
Decision Making
Acknowledges the role and importance
of human behavior in the decision –
making process. Herbert A. Simon was
one of the first experts to recognize
that decisions are not always made
with rationality and logic. Rather than
prescribing how decisions should be
made, his view of decision making,
now called administrative model,
describes how decisions often actually
are made.
The Behavioral Approach to
Decision Making
The Administrative Model
Use incomplete
When faced ..and end up
and imperfect
with a decision with a decision
information. Are
that may or may
situation constrained by
not serve the
managers bounded
interests of the
actually.. rationality. Tend
organization.
to satisfice..
The Behavioral Approach to
Decision Making
The Administrative Model
What is Bounded Rationality?
The idea that decision makers cannot deal with
information about all the aspects and alternative
pertaining to a problem and therefore choose to
tackle some meaningful subset to it.
An Integrated Approach to
Decision Making
An Integrated Approach combines the steps of
the rational approach with the conditions in the
behavioral approach to create a more realistic
approach for making decisions in organizations.
Creativity and Decision Making
Creativity is a person’s ability to
generate new ideas or to conceive of
new perspectives on existing ideas.
Dimensions of Creativity
FLUENCY
FLEXIBILITY
ORIGINALITY
The Creative Process
PREPARATION
A period if
education,
formal training INCUBATION
and on-the-job A period of INSIGHT
experiences less intense A spontaneous
conscious breakthrough to VERIFICATION
concentration achieve a new A test of the
understanding validity or
truthfulness of
the insight
End of Presentation
