Principles of Management 1
Managers as Decision Makers
Lecturer: Dr. Mazen Rohmi
Department: Business Administration
Learning Objectives
Describe the eight steps in the decision - making process.
Explain the four ways managers make decisions.
Classify decisions and decision-making conditions.
Identify effective decision-making techniques.
Decision - making a choice from two or more
alternatives.
Problem - an obstacle that makes it difficult
to achieve a desired goal or purpose.
The Decision-Making Process
Managers at all levels and in all areas of organizations make
decisions.
Making decisions isn’t something that just managers do.
Decision making is a process, not just a simple act of choosing
among alternatives.
Exhibit 7-1 shows the eight steps in the
decision-making process.
This process is as relevant to personal
decisions as it is to corporate decisions.
Exhibit 7-1: Decision-Making Process
Step 1: Identifying a Problem
Characteristics of Problems
A problem becomes a problem when a manager
becomes aware of it.
There is pressure to solve the problem.
The manager must have the authority, information, or
resources needed to solve the problem.
How do managers identify problems?
In the real world, most problems don’t come with neon signs
flashing “problem.”
Managers have to be cautious not to confuse problems with
symptoms of the problem.
Keep in mind that problem identification is subjective. What
one manager considers a problem might not be considered a
problem by another manager.
A manager who resolves the wrong problem perfectly
is likely to perform just as poorly as the manager who
doesn’t even recognize a problem and does nothing.
Effectively identifying problems is important, but not
easy.
Step 2: Identifying Decision Criteria
Once a manager has identified a problem, he must identify
the decision criteria that are important or relevant to resolving
the problem.
Every decision maker has criteria guiding his decisions even if
they’re not explicitly stated.
Step 3: Allocating Weights to the
Criteria
If the relevant criteria aren’t equally important, the
decision maker must weight the items in order to give
them the correct priority in the decision. How?
A simple way is to give the most important criterion a
weight of 10 and then assign weights to the rest using
that standard.
You could use any number as the highest weight.
Exhibit 7-2: Important Decision Criteria
Step 4: Developing Alternatives
The decision maker to list viable alternatives
that could resolve the problem.
In this step, a decision maker needs to be
creative.
The alternatives are only listed, not evaluated
just yet.
Exhibit 7-3: Possible Alternatives
Step 5: Analyzing Alternatives
Estimate each alternative’s strengths and weaknesses.
An alternative’s estimation is based on its ability to resolve the
issues related to the criteria and criteria weight.
Sometimes a decision maker might be able to skip this step.
If one alternative scores highest on every criterion, you
wouldn’t need to consider the weights because that alternative
would already be the top choice.
Step 6: Selecting an Alternative
The sixth step in the decision-making process is
choosing the best alternative or the one that generated
the highest total in Step 5.
Step 7: Implementing the Alternative
Managers put the decision into action by conveying it to those
affected and getting their commitment to it.
If the people who must implement a decision participate in the
process, they’re more likely to support it than if you just tell
them what to do.
Step 7: Implementing the Alternative
Managers need to do during implementation is reassess the
environment for any changes, especially if it’s a long-term
decision.
Are the criteria, alternatives, and choice still the best ones, or has
the environment changed in such a way that we need to
reevaluate?
Step 8: Evaluating Decision
Effectiveness
The soundness of the decision is judged by its
outcomes.
The last step in the decision-making process
involves evaluating the outcome or result of the
decision to see whether the problem was
resolved.
If the evaluation shows that the problem still
exists, then the manager needs to assess what
went wrong.
.
Step 8: Evaluating Decision Effectiveness
Was the problem incorrectly defined? Were errors
made when evaluating alternatives? Was the right
alternative selected but poorly implemented?
The answers might lead you to redo an earlier step
or might even require starting the whole process
over.
