Saiful Zizi Bin Jalil

§ Define decision making;

§ Identify the principles of decision making
§ Explain the types and conditions of decision making;

§ Explain and differentiate group in decision making;

§ Elaborate on the challenges in decision making process.
Decisions
§ choices from two or more alternatives
§ all organizational members make decisions

Decision making is a process of identifying and selecting a course of

action / alternative to solve a specific problem.

In the effort of making decision, a public manager evaluates the

alternative and makes a summary from the list of alternatives.
• This approach assumes: Decision makers must act rationally
• Rational Decision-Making - describes choices that are logical and consistent
while maximizing value.
• Use analytics, facts, and a step by step process to come to a decision.
• Bounded Rationality - decision making that’s rational, but limited (bounded)
by an individual’s ability to process information.
• Satisfice - accepting solutions that are “good enough.”
• Escalation of commitment – Increase comitment to a previous decision
• Making decisions on the basis of experience, feelings, and accumulated
judgment.
• Also known as ‘sixth sense’.
1. Programmed decision 2. Non-programmed decision

Made in accordance with

some habits rules or Deal with unusual or
procedures. exceptional problem.

Recurring situations (routine) Non-recurring situation.

Routine matters Non-routine matters.

§ - used to address structured problems

§ (Well-Structured Problems - straightforward, familiar, and easily defined)

§ minimize the need for managers to use discretion

§ facilitate organizational efficiency

§ procedure - series of interrelated sequential steps used to respond to a structured problem

§ rule - explicit statement of what to do or not to do

§ policy - guidelines or parameters for decision making

In reducing the poverty rate among the low and middle income families in Malaysia,
our government come out with the “programmed decisions” whereas, these target
groups have the right for;
• BRIM (Bantuan Rakyat 1 Malaysia)
• PPRT (Program Perumahan Rakyat Termiskin)
Used to address poorly- structured problems
(Poorly-Structured Problems - new, unusual problems for which information is ambiguous
or incomplete)

§ produce a custom-made response

§ more frequent among higher-level managers
§ few decisions in the real world are either fully
programmed or non-programmed
§ In case of unforeseen circumstances such as natural disaster; earthquake and
floods or even the world economic recession the “non programmed decisions” will
be made by the government on how to give a fast action and solution towards the
problem.
 Programmed Non-Programmed
Decision Decision

Fast Food Determine supplies Identify location for a

Restaurant to be reordered new franchise

University Decide if students Choose new

meet graduation academic programs
requirements
Automaker Determine union Select new car
employee pay rates design
(Certainty
§ Managers know what will happen in the future
§ Information is accurate, measurable & reliable to base decisions.

Risk
§ Managers know what the probability of each possible outcome is.
§ Risk exists when predictability is lower.
§ Complete information is unavailable but managers have a good idea of the
probability of particular outcomes.

(Uncertainty
§ Managers do not know the probabilities.
§ Maybe not even the possible outcome.
§ Very little is known.
i. Certainty
§ All alternatives known
§ Every alternative lead to a certain outcome
§ Result is clear
ii. Risk
§ All alternatives known
§ Probability of alternatives is known
§ Outcome of every alternative is known
§ Result is a ‘gamble’
iii. Uncertainty
§ All alternatives are NOT known
§ Probability of alternatives is NOT known
§ Outcome of every alternative is NOT known
§ Result needs ‘a tick of heartbeat’
Ways to improve the effectiveness of decision making. (Principles of an effective
decision making) :

1. Set Priorities
§ Managers should set the work priorities.
§ Managers should allocate time according to those priorities.
2. Acquire relevant information
There are 3 specific categories of info required in making decision :

Basic information
§ Provides essential structure of decision situation

§ Refers to process of identifying problems & establishing alternatives (including

alternatives that can be identified & the implications that may be existed)
Elaborating information
§ Focuses the basic information
§ Helps evaluate alternatives

Performance information
§ Outcome, or payoff for the organization of various courses of action
3. Proceed methodically & carefully
§ Managers must realize / aware of possible / common mistakes & take action
before they happen.
§ Provide complete, simple, and clear explanations of methods.
§ Pre-assessments should be made to examine how the decisions are being used
SUMMARY OF DECISION-MAKING PROCESS

Investigate the situation Develop

- Define problem alternatives
- Identify decision -Seek
objectives creative
- Diagnose causes alternatives
-Do NOT
evaluate yet

Implement & follow Evaluate

up alternatives &
- Plan select the best
implementation one
- Implement plan - Evaluate
- Monitor alternatives
implementation & - Select best
make necessary alternative
adjustment
Common methods of group decision-making in the public sector:

1. Authoritarian style
Decision ultimately rests in the hand of one person.
Applicable in the presence of a powerful person who has the final authority on the
outcome.
Disadvantage – people who opinions are disregarded might have negative feelings
about the final decision.
Advantage - Save time to reach final decision.
2. Brainstorming
Most suitable when a decision-making process has to be started from scratch.
Can create many options and evaluate the advantages and disadvantages for each
option.
Need a facilitator to facilitate the entire discussion.
Disadvantage : time consuming
Advantages : Encourage freedom and creativity to the decision-making group
members.
Final decision is based on consensus.
3. Voting based method
Suitable when a group has certain sets of options and needs to choose the optimum
solution.
Allow every group members to cast a vote for the option they think is the best.
The option that gathers the majority votes is the selected.
Disadvantage : does not value the individual opinion and every group member.
Advantage : Easy to reach final decision and a variation of this method is the majority
method.
When public managers make decisions, they may use ‘rules of thumbs’ or heuristics
to simplify their decision making. Heuristics can be useful because they help make
sense of complex and uncertain information.
However heuristics may lead to biases in processing and evaluating the information.
[Link] heuristics

Ø Decision makers tend to remember events that are the most recent and vivid in
their memory.
Ø Leads to bias and distort their ability to recall events in an objective manner and
distort their judgments.
2. Representative heuristic
Ø Decision makers assess the likelihood of an event based on how closely it
resembles other events.
Ø Discourage any creativity in making final decision because public managers draw
analogies and see identical situations where they don’t exist.
3. Escalation of commitment
Ø People tend to accept decision made by decision makers when a decision stream
represents a series of decisions.
Ø Although decision makers might select and highlight certain aspects of situations
while excluding others. People tend to support because they try to appear
consistency in what they say and do (based on previous actions) to shows their
consistency.
 Single, well-
defined goal
All is to be achieved
alternatives Problem is
and clear and
consequences unambiguous
are known Rational
Decision Final choice
Preferences Making will maximize
are clear
payoff

Preferences
No time or cost
are constant
constraints exist
and stable

© Prentice Hall, 2002

 Decision-Making Approach
• Rationality
• Bounded Rationality
• Intuition

Decision
Types of Problems and
• Choose best alternative
Decisions
• Well-structured Decision-Making - maximizing
- programmed Process - satisfying
• Poorly structured • Implementing
- nonprogrammed • Evaluating

Decision-Making Conditions
• Certainty
• Risk
• Uncertainty
© Prentice Hall, 2002