Decision-making is one of the important tasks of a manager

Decision-Making

Decision-making is one of the important tasks of a manager. There are four common approaches to systematic decision making:

Rational Model: The rational model of decision making suggests that decision makers develop complete information about all possible alternatives then select the best choice to achieve the underlying goal or objective.

Emotional Model: The emotional model of decision making suggests that decision makers screen information when too much is available or when a decision must be made quickly. Decision makers eliminate some options and elevate others based on subjective processes.

Political Model: The political model of decision making recognizes that it is improbable that decision makers are able to have all available information and alternative and may not be able to be completely objective in selecting choices. Instead, decision makers focus on most important interests and make decisions that are considered “good enough” to satisfy those interests.

Garbage Can Model: The garbage can model of decision making recognizes the chaotic environment of most organizations. Decision makers mate together current problems and current available solutions as if everything is thrown into a garbage can.

Each of the decision-making models may be at use within the same organization and even the same manager. The models provide both a description (what is happening) and prescription (what should happen) for making choices. Different decisions may require a different decision making process by the manager.

We can also consider the environment in which decisions are made. Programmed decisions are made in a certain environment in which outcomes can be reasonably predicted. Non-programmed decisions occur in environments characterized by uncertainty, risk, non-precedence, and conflict.

Importance of Ethics

Imagine that you've worked in an organization for perhaps 30 years. You've put in a lot of hard work and saved your money for retirement in the company's pension fund.

Now you are ready to retire. Just before you do so, your world collapses around you. The news comes out that your company has been engaged in questionable accounting practices, the price of the stock tumbles, and your firm declares bankruptcy. It turns out that your company had invested most of the pension fund in its own stocks. You are left holding worthless stock, and your dreams about retirement have disappeared.

This is not some nightmare plot from a novel, but it actually happened at Enron, and the energy giant declared bankruptcy in 2003 shortly after all this happened. Other such scandals involving highly-respected firms such as Arthur Andersen and WorldCom have made ethics and unethical business practices a topic of media attention.

These, of course, are the more blatant examples of unethical business practices. In everyday business affairs, and even in our daily lives, each one of us is called on every day to make decisions that have to do with ethical dilemmas.

Very simply stated, ethics is about right and wrong and the system of rules and guidelines that we use to tell us right from wrong. Business ethics is the system of rules and guidelines developed by an organization to guide its actions. As the Enron fiasco and other stories suggest:

"Good ethics is just good business, and good business is just good ethics."

Ethics becomes an important issue when we encounter an ethical dilemma. An ethical dilemma is a decision-making situation where we have several options to choose from, some of which are fuzzy in terms of whether they are right or wrong.

Problem Solving

The usual way of dealing with problems is:

Diagnosing→Action Selection→ Implementation

Diagnosing means making sense of events within a proper context to give them meaning. Action selection means choosing appropriate actions to solve the diagnosed problem. Implementation means putting the plan into action and monitoring progress toward resolving the issue.

The most important step in the process is actually the diagnosis phase. Correctly identifying a problem is a large part of solving it. If we do not correctly diagnose the problem, any interventions likely will be ineffective because the problem will not be addressed. When possible, taking the time to gather accurate data and interpreting that data to detect root causes is one of the most important tools of an effective manager.

Identifying a problem means framing it. The frame of a situation is the decision maker’s cognitive image of the situation. Framing means embedding the observed events in a context that gives them meaning.