Managers as Decision Makers

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Managers as Decision Makers

• Why is skilled decision making so important for
  managers?

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Managers as Decision Makers

• Do we make good decisions?
• Theme of Webcast there is a rational model, but
  we often deviate from it.
• Blink?

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Improving our Decision Making

• Under what decision conditions do we make
  decisions?
• Is the goal certainty?
• Move from uncertainty to risk via information
  uncovered by a useful process plus an appropriate
  reference to personal experience.

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Failure to See Information

• Most decision problems come not from a lack of
  information, but from the failure to identify and
  use the information already available to us.

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Failure to See Information

• We make perceptual mistakes and attribution
  errors.
• Perception how accurate are our senses?
• Attribution how accurately do we interpret the
  events we perceive?

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Failure to See Information

• Can we improve our abilities to recognize and use
  the information we already have?
• Buy an outsiders perspective.

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Group Decision Making

• Based on advantages of group decision-making
• more information and knowledge
• generate more alternatives
• critical evaluation of ideas
• increased acceptance of decision
• increased legitimacy of decision

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Failure to Seek Information

• Do we attempt to find the most useful
  information?

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Confronting the Brutal Facts

• Stockdale Paradox
• Retain absolute faith that you can and will
  prevail.. and
• Confront the most brutal facts in your current
  reality.
• The belief to seek and hear all the news.

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Group Conformity Pressures

• Groupthink Process in a group where finding the
  truth is replaced by a consensus at all costs
  mentality.

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Avoiding Conformity Pressure

• Facilitative Leadership
• Decision-Making Tactics to bring in conflict in
  the face of conformity pressure
• Debate
• Devils Advocate
• Nominal Group Technique

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Develop Psychological Hardiness
Anxiety Worry Defensive
In the Flow Active Engagement Highest
Performance
Degree Of Challenge
Competent Basic Performance
Boredom Apathy Disengagement
Degree of Skill/Competence
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Decision Making Under Uncertainty

• When we lack sufficient information, we tend to
  follow our personal styles when making decisions.
• To illustrate, consider a payoff matrix

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Payoff Matrix
Fast Food
Italian
Mexican
Chinese
Bar
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Decision-Making Conditions

• Certainty pick the alternative with the known
  highest payoff.
• Risk Sum the payoffprobability.
• Uncertainty Personal style takes over.

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Styles in Uncertainty

• Maximax Optimist - Maximize the Maximums
• Choose highest payoff possible.
• (22, 17, 31, 24, 14)
• Maximin Pessimist - Maximize the Minimums
• Choose the best of the worst options.
• (8, 13, 4, 11, 12)

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Styles in Uncertainty

• Minimax Minimize the maximum degree of regret
  for your choice.
• Regret table How much could you regret your
  choice?
• Per situation, what are the differences between
  what you got and what you could have gotten?
• Per alternative, which alternative has the lowest
  maximum degree of regret.