Centralised and Decentralised Approach: In centralised approach to decision-making, maximum decisions are taken by top-level managers though some responsibility is delegated to middle-level managers. Game Theory 9. Decision-making is a daily activity for any human being. Optimum and efficient utilization of resources; Aids in Problem solving and facing business challenges In a decision-making procesâ¦ By considering others’ perspectives on how to approach and surmount a specific challenge, you can become more aware of your own implicit biases and manage your team with a greater level of emotional intelligence. Then, because of your love for this car, you may say to yourself that the fuel economy of the car and the innovative braking system are the most important criteria. The golden arches of the âMâ of the McDonaldâs logo inspired his solution: he would design the de-icer as a series of Mâs!Â This represented the illumination stage. Take a look at the Ethics in Practice box to see an example of how one particular manager puts these techniques into practice to make good decisions. While it can be argued that management is decision making, half of the decisions made by managers within organizations fail. With the flattening of organizations and intense competition among organizations, individuals and organizations are driven to be creative in decisions ranging from cutting costs to creating new ways of doing business. Our guess is that you rarely sit down and complete all eight steps in the rational decision-making model. However, decisions that are unique and important require conscious thinking, information gathering, and careful consideration of alternatives. For example, if you are looking to purchase a house, you may be willing and able to invest a great deal of time and energy to find your dream house, but if you are looking for an apartment to rent for the academic year, you may be willing to take the first one that meets your criteria of being clean, close to campus, and within your price range. When it comes to business organizations, decision-making is a habit and a process as well. Yet when CEOs, financial analysts, and healthcare workers are asked about the critical decisions they make, seldom do they attribute success to luck. It is the first major purchase of your life, and you want to make the right choice. From there, build your team and manage group dynamics to analyze the problem and craft a viable solution. For example, before you come to class, you make simple and habitual decisions such as what to wear, what to eat, and which route to take as you go to and from home and school. “Psychological safety is essential—first and foremost—for getting the information and perspectives out,” says HBS Professor Amy Edmondson in Management Essentials. Of course, the outcome of this decision will be related to the next decision made; that is where the evaluation in step 8 comes in. Explore our eight-week online course Management Essentials, and discover how you can influence the context and environment in which decisions get made at your organization. The Decision-Making Process While decisions makers can use mental shortcuts with programmed decisions, they should use a systematic process with nonprogrammed decisions. Approaches to Decision-Making: Decisions can be taken in different ways. Even the best and correct decision may become ineffective if these aspects are ignored; because in decision-making there are so many inside and outside chains of unavoidable reactions. Nobel Prizeâwinning economist Herbert Simon observed that while the rational decision-making model may be a helpful tool for working through problems, it doesnât represent how decisions are frequently made within organizations. These are as follows, 1. What was the context? If each is equally important, then there is no need to weight them, but if you know that price and gas mileage are key factors, you might weight them heavily and keep the other criteria with medium importance. Self-paced programs (with deadlines) are offered on the HBS Online course platform. Figure 11.9 The Creative Decision-Making Process, Researchers focus on three factors to evaluate the level of creativity in the decision-making process. 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