Decision Making Skills

2.1.  Decision Making Skills

Mangers are at the same time the decisions makers. It is easy to make decisions, but making the right one is difficult. What criteria should an effective manager have upon the decision-making aspect? Let’s start with a simple review of the decision making process.

Decision-making is formally defined as the process of identifying and solving problems. The process containing 2 major stages: problem identification and problem solution. According to the rational approach, there are 8 steps for each stage:[8]

Figure 2: Decision-making process

The point of rational approach is that manager should try to use systematic procedures to arrive at good decisions. Actually in practice, there are many uncertainties when applying this model to make decisions due to the following type of information constraints imposed up people:[9]

·     Limited attention

·     Limited memory

·     Limited comprehension

·     Limits to communication

These, plus other factors, have given rise to the notion that rational process indecision is bounded. Herbert Simon, in this regard, has proposed that, “within bounded rationality, individuals and groups often base their decisions on satisfying the search for what is good enough in the circumstances, rather than optimizing.”[10]Often, managers have to face vast number of information and required to make a decision in a short time, it is impossible for him to analysis each problem and weigh each alternatives from the limited mental capacity. [11] Therefore there is a limit to how rational a manager can be.

Many models are built upon the uncertainty of the solution searching steps, while in all actuality managers are not making the decision in a vacuum. They can use formulas or models to aid their decision making process. Therefore, it is important for an effective manager to pay attention to the following points when making the decisions:

The intuitive decision-making process always plays an important role in combination with the rational process. Managers build up long experience with organizational issues, which provides them with a gut feeling or hunch about the correct response. The large organizational decisions are not only complex, but also ambiguous. In such a situation; previous experience and judgment are needed to incorporate intangible elements. Most of the time, without solid proof that problems exist, the intuition will tell the managers that there is or could be a problem that requires him to act before he is able to sit down and analyze the problem.

An effective manager knows how to cooperate with the internal and external resources. Of course, as decision-makers, the manager should not become an “autocrat”. Voice from internal will be listened, and sharing the opinions and having joint discussions to reach the interpretation of the goals and problems accordingly the agreement will be easier to reach and find solutions to the problem. External comments or reactions have great impact on decisions makers. On one hand, managers are easily misled by the hypothesis given from the external environment and can forget to look broader and further. On the other hand, proactively utilizing the external resource can help managers to see better and further; therefore, objective evaluation of those opinions will be helpful to generate wide range of the problem solving approach.

Creativity is vital to search for more alternatives during the crisis moment. When there are few possibilities to solve the problem, people can easily stick to the first seeming possible solution and start to convince themselves that there is no other better ones. Therefore they are stuck in the corner and forget to look for the other alternative. Dynamic thinking and radioactive mentality will help the manager to look the situation from a different view, there fore create the new approach.

An effective manager will not only look to the short-term profit. He sees further. He must be able to judge where the future business will be lead to from the decision made today. Those decisions, which bring profits today but will undermine business tomorrow, will be dropped.

The difficult decisions are always accompanied by the ethical issues. The best solution for the company’s profit might not be the right ones according to the laws or regulations. On making decisions, the ethical dilemmas cannot be neglected, and the outcomes of unethical behavior can affect reputations, trust and career path. Results have been as severe as loss of employment, physical harm to individuals, corporate bankruptcy and even impacts to the economy.

The scandals of 2002, including Enron and WorldCom, resulted in regulations having created a cultural shift particularly in financial fields that has renewed emphasis on ethical business behavior. What distinguishes mediocre level managers from the truly effective managerial leader is an ethical dimension. There exists different moral stages that guide people in their everyday decision-making. Those people in the “principled level…make a clear effort to define moral principles apart from the authority of the groups to which they belong or society in general”[12]

Learn from the formal fail experience is very important. Managers are apt to stumble down the same failure-prone path over and over again without learning. Learning is thwarted when leaders do not tolerate mistakes. In such an environment, people conceal bad out comes. Consequently, people in the same company, or the same person in different period will repeat the similar mistake. A good manager will see the mistakes as an education and correct himself constantly according to the new situations. Generally speaking, to be an effective decision maker, managers need to work closely with their team and “integrate their faith, values and business practices”. [13] In the presentation we will use the case from “Nestle Company” to show why bad decisions had been made and what the consequences are. [14]