Chapter 4 Managers as Decision Makers Management 301 Haley Klein 1 Introduction them a Self confidence they must believe in their decisions and he information foundations for 2 4 1 How Do Managers Use Information to Solve Problems a Managers deal with problems posing threats and offering opportunities i Problem solving the process of identifying a discrepancy between an actual and desired state of affairs ii Knowledge workers persons whose value to organizations rests with their iii intellectual not physical capabilities Information competency ability to locate retrieve evaluate organize and analyze information off the internet credible and valuable iv See Figure 4 1 on page 87 v Performance threat situation that occurs as an actual or potential performance deficiency 1 Example Katrina if the right steps are taken now vi Performance opportunity situation that offers the possibility of a better future b Manages can be problem avoiders problem solvers or problem seekers i Problem avoiders managers that ignore information that would otherwise signal the presence of a performance threat or opportunity ii Problem solvers managers that make decisions and try to solve problems when required likely to miss performance opportunities iii Problem seekers managers that are always looking for problems to solve or opportunities to explore c Managers make programmed and non programmed decisions when solving problems i Decision a choice among possible alternative courses of action ii Programmed decisions apply preplanned solutions based on the lessons of past experience iii Nonprogrammed decisions applies specific solution that has been crafted to meet unique demands of a situation 1 Example Treasury Secretary Timothy Geithner solving problems with national bank d Managers can use systematic and intuitive thinking i Systematic thinking a person approaches problems in a rational step by step ii and analytical fashion Intuitive thinking approaches problems in a more flexible and spontaneous way than systematic thinkers 1 Quickly jumps from one issue to another and deals with many aspects of a problem at once e Managers use different cognitive styles to process information for decision making i US Airway Flight 1549 into the Hudson River under Pilot Sullenberger ii Cognitive Styles the way an individual deals with information while making decisions 1 Contrast between information gathering sensation v intuition and information evaluation feeling v thinking iii Four Master Cognitive Styles 2 1 Sensation thinkers STs tend to emphasize the impersonal rather than the personal and take a realistic approach to problem solving hard facts clear goals certainty and situation of high control Intuitive thinkers ITs are comfortable with abstraction and unstructured situations tend to be idealistic prone toward intellectual and theoretical positions logical and impersonal avoids details Intuitive feelers IFs prefer broad and global issues insightful and tend to avoid details being comfortable with intangibles value flexibility and human relationships 3 4 Sensation feelers SFs tend to emphasize both analysis and human relations realistic and prefer facts open communicators f Managers make decisions under conditions of certainty risk and uncertainty i Certain environment an ideal decision situation where factual information exists for the possible alternative courses of action and their consequences ii Absolute certainty is best scenario for decision makers iii Risk environment where information and facts are incomplete but offers probabilities of the likely outcomes for possible action alternatives iv Avoid risks by gathering as much information as possible v Uncertain environment lacks so much information that it is difficult to assign probabilities to the likely outcomes of alternatives 1 Depend on intuition judgment informed guessing and hunches vi Three Different Conditions or Problem Environment see figure 4 2 on page 91 1 Certain environment alternative course of action and their outcomes are known to decision makers low risk of failure and programmed decision 2 Risk environment decision maker views alternatives and their outcomes in terms of probabilities medium risk of failure and in between programmed and nonprogrammed alternatives 3 Uncertain environment decision maker does not know all alternatives and outcomes even as probabilities high risk of failure and nonprogrammed decisions 3 4 2 What Are Five Steps in the Decision Making Process a Decision making process begins with identification of a problem and ends with evaluation of implemented solutions all conduct ethical analysis b Step 1 Identify and define the problem Information gathering information processing and deliberation i ii Three Mistakes Common in this Step 1 Defining problem too broadly or too narrowly 2 Dealing with symptoms not real causes 3 Focusing on wrong problem to begin with c Step 2 Generate and evaluate alternative solutions i Extensive information gathering should identify alternative courses if action ii Cost benefit analysis evaluate alternatives comparing the costs and benefits of each potential course of action iii Alternative should be timely acceptable d Step 3 Decide on preferred course of action see figure 4 4 on page 95 i Classical decision model views the manager as acting rationally and in a fully informed manner problem clearly defined all possible action alternatives are known ii Optimizing decision chooses the alternative providing the absolute best solution to a problem iii Cognitive limitations people act only in terms of their perceptions imperfect iv Satisfying Decisions chooses the first satisfactory alternative that presents itself e Step 4 Implement the decision i Requires persons willingness to act and support of many other people ii Lack of participation error failure to include the right people in the decision making process Step 5 Evaluate results f i Form of control and gathering data g Ethical reasoning is important at all steps in decision making i Four Criteria by Gerald Cavanagh 1 Utility Does the decision satisfy all constituents or stakeholders 2 Rights Does the decision respect the rights and duties of everyone 3 Justice Is the decision consistent with the canons of justice 4 Caring Is the decision consistent with my responsibilities to care ii Spotlight questions highlight the risks of public disclosure of one s actions 1 2 How would I feel if my family found out about this decision How would
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