Decision making. Everyone is a Decision Maker. Types of Managerial Decisions. Identifying the Problem, страница 7

3.   The relation of personality to the decision-making process may vary for different groups on the basis of such factors as sex and social status.

Propensity for Risk

Decision makers vary greatly in their propensity for taking risks: the optimistic decision maker takes risks by assuming that the outcome will always be favourable. This aspect or personality strongly influences the decision-making process. A decision maker who has a low aversion to risk establishes different objectives, evaluates alternatives differently, and selects different alternatives than another decision maker in theTextl

Conditions of Risk

Conditions of risk occur when the planner/decision maker has enough information to allow the use of probability in evaluating the alternatives. We are all aware of probability as a basis for making decisions: every time we play bridge, poker, or backgammon we are making decisions under conditions of risk. Which is to say, we could know the probability associated with the decision we make.

We can estimate probability in one of two ways: Objective probability reflects historical evidence. For example, the probability of obtaining either heads or tails on the toss of a coin is 50 percent; the coin is equally likely to come up either heads or tails and we can verify this distribution of outcomes by tossing the coin a thousand times and see that each side does come up about the same number of times.

In many instances, planners do not have historical evidence but may have sufficient information to enable them to arrive at a subjective probability. Some managers seem to do better than others when estimating probabilities, perhaps due to experience intelligence, or intuition. When the planner has access to probability information, the criterion for decision making is to maximise the expected value of the decision.

What of the decision maker has absolutely no basis for making probability estimates? When the decision involves absolutely no information, it is a non-programmed decision in the purest sense of the term.

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Choosing an Alternative

Unfortunately for most managers, situations rarely exist in which one alternative achieves the desired objective without having some positive or negative impact on another objective. Situations often exist where two objectives cannot be optimised simultaneously. If one objective is optimised, the other is suboptimised. In a business organisation, for example, if production is optimised, employee morale may be suboptimised, or vice versa. Or hospital superintendent optimises a short-run objective such as maintenance costs at the expense of a long-run objective such as high-quality patient care. Thus, the multiplicity of organisational objectives complicates the real world of the decision maker.

A situation could also exist where an organisational objective would be attained at the expense of a societal objective. The reality of such situations is clearly seen in the rise of ecology groups, environmentalists, and the consumerist movement. These groups question the priorities (organisational as against societal) of certain organisational decision makers. In any case, whether an organisational objective conflicts with another organisational objective or with a societal objective, the values of the de-cision maker strongly influence the alternative chosen. The influence of individual values on the decision-making process should be clear.

Thus, in managerial decision making, optimal solutions are often impossible. This is because the decision maker cannot possibly know all of the available alternatives, the consequences of each alternative, and the probability of occurrence of these consequences. Thus, rather than being an optimiser, the decision maker is a satisfier selecting the alternative that meets an acceptable (satisfactory) standard.

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The Delphi Technique

This technique involves the solicitation and the comparison of anonymous judgement on the topic of interest through a set of sequential questionnaires that are interspersed with summarised information and feedback of opinions from earlier responses.