CHAPTER 2

DECISION MAKING

OBJECTIVE:

The main objective of this chapter is to discuss about decision making. It discusses on
how to make an effective decision and how to be an effective manager. Decision Process
including its elements is also presented in this chapter. It also discusses on how to budget the
time and discipline among the employees to educate them in the fundamental standards of
behavior and performance.

Decision making is the fundamental process of management. Most of the efforts of

managers are related to this process. Unfortunately, decisions do not always turn out as planned.

Decision-making is only one of the manager’s tasks. It is but a small fraction of his time.
But to make decisions is his specific work.

EFFECTIVE DECISIONS

Decision is a judgement. It is a choice between alternatives. It is rarely a choice between

right or wrong. It is at best a choice between almost right and probably wrong.

Managers who make effective decisions know that one does not start with facts, one starts
with opinions. But opinions are nothing, but untested hypotheses and such as, is worthless unless
tested against reality.

Effective manager knows that unless a decision has degenerated into work, it is not a
decision; it is at best a good intension. While the decision itself is based on the highest level of
conceptual understanding, the action to carry it out should be as close as possible to the working
level and as simple as possible.

Right decision grows out of the clash and conflict of divergent opinions and competing
alternatives. Effective managers, encourages opinions. But he insists that people who voice out
an opinion must also take responsibility for defining what factual findings can be expected and
should be looked for.
 The main task of a manager is not administration. It is the making if policy, the making
of right decision.

The first rule in decision making is that, one does not decide unless there is disagreement.

Right decision demands adequate disagreement first.

There is only one final question the effective decision maker asks. Is the decision really
necessary? One alternative is always the alternative of doing nothing.

EFFECTIVE MANAGERS

-are expected to make effective decisions. Decisions with significant impact on the entire
organization, its performance and results, defines the manager.

-does not make a great many decisions.

-knows that a decision must be based on principle and should be made on the merits of the case.

-insist on alternatives, so that he can choose the one appropriate one. Unless one has considered
alternatives, one has a closed mind.

Effective decision maker constantly monitors the result of the decision to ascertain that
the desired objectives have been achieve. If they have not, the decision maker may have to restart
the entire process, of perhaps a review of the situation may reveal the ff:

1. An error in the actual implementation

2. An error in calculation

Decision Process

1. Identify the problem

2. Specify objectives and the decision criteria

3. Develop alternatives

4. Analyze and compare alternatives

5. Select the best alternatives

6. Implement the chosen alternatives

7. Monitor results to ensure the desired results are achieved.

Identifying the Problem is the focal point of the process. Solutions must address the basic
problem not the symptoms.

The decision make must identify the criteria by which process solutions will be judged.
Common criteria often relate to
1. Capital 5. Return of Investment
2. Profits 6. Increase of cost
3. Time 7. Risks
4. Maintenance

The ability to satisfactorily handle problems often depends on the degree of success one
has in developing suitable alternatives. Much depends on the experience and creativity of the
decision makes as well as on the nature of the situation.

As a general rule, efforts expended in carefully identifying alternatives can result to

substantial dividends in terms of the overall decision. One alternative that is frequently
overlooked possibly because it seems to simple is to do nothing. The beauty of doing nothing
lies not only in the fact that no time of effort is needed but also in that it may cost nothing and
requires no implementation.

Analyzing and comparing alternatives, often benefits from the use of mathematical or
statistical techniques.

Selection of the best alternatives will depend on the objectives of the decision maker
and the criteria that are being used to evaluate alternatives.

Implementing the chosen solution simple mean, carrying out the actions by the chosen
alternatives.

Implementing the chosen solution simply mean, carrying out the actions indicated
by the chosen alternative. If the alternative selected to do nothing, no action will be required
to implement.

REASONS WHY MANAGER INSIST ON DISAGREEMENT BEFORE DECISION

MAKING
 1. It is only a safeguard against the decision maker’s becoming the hostage of the
organization. Everybody always wants something from the decision maker.

2. Disagreement alone can provide alternatives decision. A deciding without an alternative

is like a desperate gambler’s throw, no matter how carefully thought through it might be,
there is always a possibility that the decision will prove wrong either because it was
wrong at the start or because of a change of circumstances that makes it wrong.

3. Disagreement is needed to stimulate the imagination. But the imagination of the high
level is not abundant. Neither is it scarce as commonly believed.

4. Effective manager organizes disagreement because this will protect him against being
taken in by seemingly honest but false or incomplete information. It gives him the
alternative to choose and make decision.

5. Effective managers know that there are fools around and that are mischief makers. But
they do not assume that the man who disagree with what they themselves sees as clear
and obvious, is therefore a fool or knave.

6. Every decision is like surgery. It is an intervention into a system and therefore carries
with it the risk of shock. One does not make unnecessary decisions any more than a good
surgeon does unnecessary surgery.

7. Individual decision makers like individual surgeons differ in their styles. Some are more
radical or more conservative than others. But generally, they agree on rules.

8. One has to make decision when condition is likely to degenerate if nothing is done. This
also applies with respect to opportunity.

9. Effective decision makers, compares the risk of inaction.

2-5 REASONS OF POOR DECISION

1. Errors made in the decision process

2. Bounded rationality

3. Sub-Optimism
 In many cases, the manager fails to appreciate the importance of the above step in the
decision process. Sometimes this is due to a manager’s style of making quick decisions or failure
to recognize the consequences of a poor decision.

BOUNDED RATIONALITY. A term refers to the limit at control on making decision

because of costs, human abilities, time, technology and the availability of information.

SUB-OPTMISM. Is the result from each different department’s attempt to reaching a

solution that is optimum for their department? Unfortunately, what is optimum to a particular
department may not be optimum for the entire organization as a whole.

2-6 ELEMENTS OF DECISION PROCESS

1. See if the problem was generic and could only be solved through a decision established
by a rule, or principle.

2. Define the specifications which the answers to the problem had to satisfy, that is, of the
boundary conditions.

3. The thinking through what is right, that is, the solution which will satisfy the specifications
before attention is given to the compromises, adaptations, and concessions needed to make
the decisions acceptable.

4.The building into the decision of the action to carry it out.

5. The feedback, which tests the validity and effectiveness of the decision against the actual
course of events.

The second elements in the decision process is clear specifications as to:

1. What the decision has to accomplish?

2. What are the objectives, the decision has to reach?

3. What are the minimum goals it has to attain?

4. What are the conditions it has to satisfy?

In science, these are known as the “boundary conditions.” A decision to be effective,

need to satisfy the boundary conditions. It needs to be adequate to its purpose. Any serious
shortfall in defining these boundary conditions is almost certain to decide ineffectual, no matter
how brilliant it may seem.
 The next major element in the decision process is the converting the decision into action.
A decision will not become effective unless the action commitments have been built into the
decision from the start. In fact, no decision has been made unless carrying it out in specific
steps. Until then, these are only good intentions.

Finally, a feedback has to build into the decision to provide a continuous testing against
actual events of the expectations that underlie the decisions.

Decisions are made by end. Men are fallible. At their best, their works do not last long.
Even the best decision has a high probability of being wrong. Even the most effective one
eventually becomes obsolete.

2-7 Budgeting the Time

Time is a unique resource. Its supply is totally inelastic. No matter how high the
demand, the supply will not go up. There is no price for it. Moreover, time is totally perishable
and cannot be stored. Yesterday’s time is gone forever and will never come back. Time is
therefore exceedingly short of supply.

Time is absolutely irreplaceable. There is no substitute for time. Everything we do

requires time All works takes place in time and uses up time.

The main task in the work of the manager is the time spent working with people. By
nature, people are the time consumers and most people are time wasters. To spend a few minutes
with the people is simply not productive.

Mixing personnel relations and work relations is time consuming. The more people
are together; the more time will be consumed for interactions. Thus, less time will be available to
them for work accomplishment and results.

Time wastes Is often result from over staffing. The symptom of over staffing could be
in the chiefs and course the manager in particular spend more time, on problems of the human
relations, on feuds and frictions, on disputes and disputes and questions of cooperative etc.

MEETINGS:

Another common time waster is mal-organization. Meetings are defined as concession to

deficient organization for one either meets ore one works. Certainly one cannot do both things
at the same time.
 Meetings have to be the exception rather than the rule. When people in organization find
the organization find themselves in meetings a quarter of their time or more, there is time wasting
mal-organization. As a rule, meetings should never have allowed to become the main demand
on an executive time.

Timing is the most important element in the success of any effort. To a year later what it
would have been smart to do a year earlier is almost a sure recipe for frustration and failure.

2-8 FIRST THINGS FIRST

The one secret of effectiveness is CONCENTRATION. Effective managers do first thing

first and they do one thing at a time. There are always more important contributions to be made
than there is time available to make them. No matter how the manager manages his time, the
greater part of it will still not be his own. Therefore, there is always a time deficit.

What one postpones, one actually abandons. TIMING is the most important element in
the success of any effort. To a year later what it would have been smart to do a year earlier is
almost a sure recipe for frustration and failure.

EMPLOYEE DISCIPLINE

DISCIPLINE is a means that management uses to bring employees behavior under

control. Its purpose is not retribution or vengeance but to impress upon the employee the need
to do things in a prescribed manner. Discipline is an employer’s action against an employee for
infraction of company policies or rules.

EMPLOYEE DISCIPLINE (Purpose)

The purpose of discipline is PREVENTIVE; that is to prevent the commission of an act,

which violates the policies, rules and regulations of the company. It is a form of control to protect
the interests of the company as well as those employees.

Control within this context has three major dimensions:

As a means of establishing awareness on the part of the employees regarding the proper
behavior, attitude, and conduct in their jobs.

As a means of establishing an atmosphere conducive to working together efficiently.

 As a means of correcting or reforming employees who commit any infraction or violation
of company rules and regulations.

EMPLOYEE DISCIPLINE (Objective)

The objective of discipline is to educate the employees in the fundamental standards of

behavior and performance. The employees should therefore be made to realize that the rules and
regulations are enforced for their own benefit and not merely to punish them. It aims to correct
or reform the employee, not to penalize him.

1. Disciplinary action should not be taken unless there is an obvious necessity for it.

2. The reasons for disciplinary action should be made clear.

3. Give the man a chance to present his side of the story, and do not argue.

4. There should be no favoritism or discrimination in any disciplinary action.

5. Reprimand should be given as soon as possible after the occurrence of the act. Right
timing is important, but first have all the facts.

6. Forgive and forget. When disciplinary action has been given, the supervisor should
resume a normal.

7. Never discipline anyone in the presence of others.

8. The discipline that is inflicted must be just, but sufficiently severe to meet the
requirements of the situation.

9. Disciplinary measure should be applied by the immediate superior of the employee

affected, rather than by some other higher executive.

10. In general, negative disciplinary action cannot be successfully applied to large groups of
employees representing a substantial portion of one’s organization. If there is poor
discipline among a large group, it is possible that there is something vitally wrong in the
situation. The remedy is correction of the situation, not disciplinary action.

11. In determining the nature and degree of disciplinary action that is made necessary by
some improper act of an employee, the intent should be considered.
12. Discipline should be constructive. It should show the offender how to correct his errors
and leave him willing and anxious to improve rather than feel bitter and resentful.

13. Except in cases of extremely serious offenses, no disciplinary action should be permitted
to take place until the supervisor has actually talked over with the employee.

14. Discipline should not be administered on an entirely routine basis. Each case should be
treated individually. You cannot discipline a group to teach a few offenders.

15. Maintain a constant and sincere interest in your people’s welfare on and off the job. This
reduces the need for disciplining to a minimum.

16. Motivation is the secret of good discipline. When a man is sufficiently motivated,
discipline will take care of itself.