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Managerial Decision Making

The process by which managers identify problems and try to

resolve them

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Characteristics of managerial decisions

Risk

Uncertainty

Conflict

Lack of structure

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Lack Of Structure

Programmed decisions Non Programmed decisions

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Programmed Decisions

Keputusan yang telah pernah diambil sebelumnya dan telah terbukti benar, dapat diselesaikan dengan menggunakan aturan-aturan yang sederhana, policy perusahaan dan perhitungan yang simple

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Non Programmed decisions Keputusan-keputusan yang tidak/

belum tahu bagaimana cara untuk menyelesaikannya. Keputusan yang tidak berdasarkan perhitungan baku yang ada, standard perusahaan atau belum pernah teruji.

Pengambil keputusan harus membuat metode baru untuk mengambil keputusan (memakaipendekatan yang kreatif)

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Types of decisions

Programmed decisions NonProgrammed decisions Type of problem

Frequent, repetitive, routine, much certainty regarding cause and effect relation ships

Novel, unstructured, much uncertainty regarding cause and effect relationship

Procedure Dependence on policies, rules and definite procedures

Necessity for creativity,intuition, tolerance for ambiguity, creative problem solving

Examples Business firm: Periodic reorders of inventory

Business firm: diversification into new products and markets.

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Uncertainty

Situasi dimana pengambil keputusan berada dalam ketidak pastian atau tidak mampu memastikan kemungkinan yag akan terjadi

The leaders has insufficient information to make decisions, they may have strong opinions but they are still operating under pressure

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Risk

Probability of success is less than 100 %

When we can estimate the likelihood of various consequences and we still do know the certainty

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Conflict

Is opposing pressure from different sources occurs at two levels

psychological conflict - individual decision makers: perceive several attractive options perceive no attractive options

conflict between individuals or groups

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Identifying anddiagnosingthe problem

Generatingalternativesolutions

Evaluatingalternatives

Evaluatingthe decision

Implementingthe decision

Making thechoice

The Stages Of Decision Making

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1 2

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Identifying and diagnosing the problems (first stage)

Recognize the problem exists (the current state and desire state)

Comparing past performance Current performance Future expected (plan and forecasts)

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Generating alternative solution (second stages)

Manager generate some alternative solution

Ready-made solutions (idea they have tried before or follow the advice of others who have faced similar problems)

Custom-made solutions (combining ideas into new and creative solutions)

Based on past experience ???

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Evaluating alternatives (third stages)

The fundamental is to predict the several types consequence that will occur

Key questions Is the information complete and current ? Does the alternative meet our primary objective ? What problems will happen ?

Result cannot be forecast in the perfect accuracy Decision makers can build in safeguard against an

uncertainty future by considering the potential consequence of several scenario.

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Evaluating alternatives (third stages)-continue

Contingency plans The alternative of action that can be

implemented based on how the future unfolds

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Making the choice (fourth stages)

The concepts are : Maximizing Satisficing Optimizing

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Maximize

Realizes the greatest positive consequences and the fewest negative consequences

Or Maximizing results in greatest benefit

at the lowest cost

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Satisfice To choose an option that is acceptableacceptable,

although not necessarily the best or perfect

Barriers: People do not spend time to gather complete

information Compare with the choice against the goal not

against other option Time limited Information not available Other constrains make it impossible

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Optimizing

Achieving the best positive balance among several goals

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Implementing the decision (fifth stages)

those who implement the decision must: understand the choice and why it was made be committed to its successful implementation

can’t assume that things will go smoothly during implementation identify potential problems identify potential opportunities

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Implementing the decision (fifth stages)-cont

If not go smooth identify potential problem What problems could this action cause ? What can we do to prevent the problems ? What unintended benefits or opportunities could

arise ? How can we make sure they happen ? How can we be ready to act when the

opportunities come ?

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ImplementationPlan

Steps In The Implementation Plan

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Decision evaluation is useful whether the feedback is positive or negative

Positive will applied Negative feed back

Implementation will require more time, resources, effort or thought

Decision was bad one decision appears inappropriate, back to

first stage

Evaluating the decision (sixth step)6.

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The best decision

The decision maker were appropriately vigilant (waspada) in making the decision. Kewaspadaan (Vigilance) akan terjadi

apabila para pengambil keputusan secara hati-hati dan sadar menerapkan ke 6 langkah pegambilan keputusan, termasuk membuat rencana implementasi dan evaluasi.

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The decision are influenced by subjective Psychological biases, time pressure, and social realities.

Barriers to Barriers to effective decision makingeffective decision making

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Halangan Dalam Membuat Keputusan Yg Efektif

Psikologis

Illusion of control (rasa percaya yang berlebihan bahwa orang itu dapat

mempengaruhi hasil akhir, padahal ia tidak mempunyai kontrol atas kejadian itu)

Framing effects (bagaimana problem atau pilihan keputusan itu di

presentasikan atau di persepsikan)Discount the future (bagaimana seseorang memilih biaya dan keuntungan

jangka pendek daripada biaya dan keuntungan jangka panjang)

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Manager must understanding how groups and teams operate and how to use them to improve decision making.

“ two heads are better than one”

Decision making on groups

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Decision making on groups (cont)

Potential advantages Larger pool of

information More prospective and

approach Intellectual simulation People understand the

decision People are committed

to the decision

Potential disadvantages One person

dominates Groupthink Goal displacement

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Managing group decision maker

Effective group decision maker

Leadership1.Avoid domination2.Encourage input3.Avoid groupthink and satisficing4.Remember goals

Constructive conflict1.Air legitimate differences2.Stay task-related3.Be impersonal4.Play devil’s advocate

Creativity1.Brainstorm2.Avoid criticizing3.Exhaust ideas4.Combine ideas

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Managing Group Decision Making

Leadership style leader should attempt to minimize process-

related problems leader should:

avoid dominating the discussion encourage less vocal members to express

themselves stay alert to groupthink and psychological bias prevent group from losing sight of the primary

objective

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Managing Group Decision Making (cont.) Constructive conflict

a certain amount of constructive conflict should exist cognitive conflict - issue-based differences in

perspectives or judgments (perspektif dan praduga) most constructive type of conflict can air legitimate differences of opinion and develop

better ideas affective conflict - emotional disagreement

directed toward other people that is likely to be destructive

devil’s advocate - has the job of criticizing others

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Decision making in crisis Manager must make decision under a great

deal of pressure Commonly a crisis makes effective decision

making less likely Psychological stress and lack time cause

decision makers to think simplistic terms, to fail to consider an adequate number of alternatives and to ignore the long term implications of their actions.

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Decision making in crisis (cont)

Some crisis can prevent by Clarifying the corporation values and

social responsibilities Monitoring of people’s behavior and

ethical

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Decision making in crisis (cont)

An effective plan for crisis management should include the following elements

Strategic action such as integrating CM into strategic planning and officials policies

Technical and structural actions such as creating a CM team and dedicating budget to CM