Methods of managerial decision-making and their characteristics


2019-07-11 20:00:31




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Management decision is the choice of one possible alternative. The selection is made based on the analysis of the causes subject to resolution of the situation. Responsibility for them is a major function of management. Methods of development and management decisions are diverse and not like each other. The task of the Manager is to choose the right method and properly apply it.

Stages of managerial decision-making

The Manager, before which arises a particular problem, should not rush headlong to solve it and not have to grab for one, for another. The process and methods of managerial decision-making are linked, however, selecting any way of the theory of management recommends to follow several stages of preparation and implementation of choice. They can be divided into pre-and post.

Preparation steps

The decision Algorithm:

  1. To Identify the problem. At this stage of the total number of tasks facing the organization, select one particular that needs to be solved. At the same time a date is set to solve. It is impossible to solve all at once, and you can't solve a problem forever.
  2. Record the facts. Here documented the conditions of the problem, and identifies the causes of this situation. So the problem is not repeated again and again, the decision must be final and to address those causes.
  3. Search for solutions to the problem. Here managers used a variety of methods for the selection of alternatives. Main – to select a specific method and not to follow all the techniques at once. The list of alternatives must be clear and finite.
  4. Optimize the list of alternatives of action. Narrowing to list two or three alternatives that satisfy the conditions of sufficient material, human, financial and time resources. Stage is especially important in the case of collective choice. Initiate discussions of the many variants easily, and permanently transform the meeting into an empty talk shop. Complicated and the organization of the voting procedure.

Final steps



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  • Decision.

At this point, the system selects one of the alternatives, and the Manager or a collective body taking responsibility for this choice. It must be documented, with indication of deadlines, responsibilities and resources. Sometimes as a backup option (so-called “Plan B”) is one of the ones included in the short list of options. This is done in difficult and emergency situations to ensure that in case of failure of the preferred option not to repeat the entire procedure of choice and go directly to the solution.

  • Implementation decisions.

At this stage is concretized and detailed General action plan formulated in the document. The plan is executed, the results report to the Manager or collegial body.


Methods of development and making management decisions

It also requires a systematic approach. Methods of the theory of management decisions can be classified:

  • The group of persons engaged in the choice - group and individual.
  • The applied approach is intuitive and rational.
  • In the field of science, which is based on the method - social, probabilistic, economic, etc.

Any classification is conditional, the same in fact the method can belong to multiple classes. The Manager's job is not to delve into the classification, and to select appropriate methods for managerial decision-making. And in the end pick the best.

Group techniques

The Group methods of managerial decision-making refers to the use of the synergy of multiple intelligences on the one hand and responsibility on the other. Used collegial management bodies. Can also be applied to the sole exercise of choice by the Manager and used in this case as supplementary information.

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The Main expert methods of managerial decision-making the following:

  • Consensus. Is the conduct of discussions, negotiations and mutual concessions as long as all members of the group (or a predetermined number of them) do not agree with a particular option.
  • Voting. Accepted the option for which are qualified according to pre-established procedure, most of the participants.
  • Delphi. Is a series of closed anonymous surveys of experts. Maximally eliminates the influence of experts on each other. Is applied, subject to the availability of sufficient time.

It Should be remembered that the allocation of responsibilities should be agreed in advance.

Personal methods

They are as follows:

  • Method Franklin. Is the mapping for each version of the pros and cons. Select the alternative that produces the greatest benefits at the least cost of resources.
  • Simple prioritization. Choice alternative with maximum usefulness.
  • The first Method is acceptable. iterates through the options until youfound the first minimally acceptable.
  • The Assignment to the authority or “expert”.
  • Flipism, or at random. Catches the coin, we consult astrologers, etc.
  • System of support of decision-making. support software solutions.
    a Random method of selection solutions

There are other, less common approaches.

Methods of decision-making from the point of view approach

Another classification of methods – the applied approach:

  1. Intuitive. Manager operates on the basis of personal feelings and hunches. In real life a well-functioning intuition is a reflection of the unconscious experience of the acceptance of past decisions.
  2. Common sense. the Choice is made by analogy on the basis of available historical knowledge or personal experience.
  3. Best practices. is Based on quantitative and/or qualitative analysis of the situation. May be contrary to the accumulated by the individual or organization experience.

Mathematical methods for management decisions

Related to rational quantitative methods. Based on some mathematical model of a situation in which there is organization and where you want to make a choice. Mathematical models and methods for managerial decision-making are many and varied:

  1. Game Theory. Synthesis of military science and gambling. Method of strategic simulation of the response of the simulated enemy in the conditions of the external environment, which are the sellers, buyers, competitors etc.
  2. The Theory of mass service. Operational situational modelling resource allocation for better customer service based on specified criteria. Examples: minimizing the customer wait in the queue of customers of the Bank or the gas station, the plan repair of equipment to minimize downtime
  3. Inventory Management. MRP II and ERP, theory of operative order planning, delivery and spending of resources, optimization of warehouse stocks and storage of finished products.
  4. Simulation. the behavior of the real system is predicted on the basis of studying behaviors under different impact models created with a certain degree of similarity.
  5. Model of linear programming. Finding the best balance between resources and needs, to optimize utilization of equipment.
  6. An Economic analysis. Based on macro - and microeconomics that describes the behavior of the market and individual businesses respectively. Is used most often because it offers a simple and easily scalable in terms of the specific company and the market situation models and algorithms of calculations. The essence of this method is to determine the conditions of economic profitability of certain actions in a particular situation.
  7. Equity method. is Based on the structure of material, financial and other balances and the study of the displacement of the point of equilibrium under certain management conditions.
  8. Payment matrix. is Based on risk analysis and probabilistic methods. By assessing the likelihood of risks affecting the achievement of the goal, selected the solution with minimum sum of risks.
  9. Decision Tree Constructed a schematic representation (in the form of a branching tree) of action choices with the indication of their financial (or other quantitative) indicators. According to predefined criteria selects the optimal solution is characterized by maximum probability and the best performance.
    decision Tree
  10. Prediction. Consists in predicting the direction of the object or situation on the basis of experience and relevant indicators, and extrapolation of these trends for the future.
    Group decision-making method

The Manager generally does not perform calculations and analytical calculations personally. Its role is to correctly set the task of subordinate analysts and host analysis.

Errors when making decisions

Many of the management errors arise from the wrong choice. If an error is detected in the early stages of implementation, the chances of fixing it are high, and the cost of corrective actions is small. If the same error is detected after the last time, the ability to fix it are greatly reduced, and the costs, respectively, repeatedly grow.

Price error in the decision

Incorrect choice of alternatives is influenced by two groups of factors internal and external to the head, exercising the choice.

Internal factors errors

Are Determined by the properties of the individual who made the choice:

  • Understand and process the data.
  • The Nuances of personal development.
  • Individual or group value system.
  • Motivation.

As example is:

  • The adoption of the trivial solution;
  • Unintentional adjustment information expected;
  • Support forirrelevant situation last experience;
  • Unjustified and excessive risk;
  • Procrastination (delaying a decision);
  • Incorrect assessment of the significance of particular information, the underestimation of resources etc.

To minimize such negative impact, a leader needs to develop the appropriate personal qualities, and above all the ability to make independent decisions. For this we need to develop critical thinking, to focus only on those source data that are crucial in a particular situation.

External factors errors

Defines the negative influence of the environment:

  • Misguided sense of duty.
  • The influence of the audience.
  • Lack of time.
  • The Influence of advertising.
  • The Influence of authority.

A Good Manager is able to abstract from the negative effects of the environment, focusing entirely on the situation and the upcoming selection.

Errors caused by lack of control of execution of the decision

Sometimes, the solution itself might be correct, but to fulfill it and to achieve the desired results is not possible. Execution control is an essential function of management.

An Error could be:

  • Incorrect in setting goals for performers;
  • Incorrect definition of criteria for goal achievement;
  • The error in the task of time.

The Most dangerous error is an incorrect setting goals performers. The correct goal should be measurable, achievable, time-related and relevant to the situation (the so-called criterion of goal-setting S. M. A. R. T.).

How to avoid implementation errors

Choosing the right solution

To minimize the risk of errors in the course of making and implementing decisions, the leader should:

  • Goal setting exercise in accordance with the criteria of S. M. A. R. T.
  • Clearly define the criteria for the selection.
  • To Consider only relevant information.
  • To Abide by the terms of the decision. For this we need to choose appropriate methods of managerial decision-making.
  • To Implement a clear and sustained execution control.
  • Carefully assign responsibility, areas of responsibility and deadlines.

To Avoid mistakes will also help a compulsory stage of the analysis after execution. Methods of analysis of managerial decision making is simple. You need to determine how well it is implemented, what was successful and what could be done better. This analysis will be useful to the future.

The role of the Manager in decision making

With all the variety of methods of analysis of the situation and choices the responsibility for it lies on the head. In the area of responsibility of the Manager include the selection of management decisions, management techniques. Management decisions - this is the most unique product produced by the head. That is why he is paid a higher salary than his subordinates.

What are the methods of managerial decision-making to choose how to select information that is relevant to the situation, how to determine criteria for achieving the result? To do this, the Manager must have theoretical knowledge and practical experience of many selections. Cannot be discounted and it is difficult to formalize, but an important factor that distinguishes successful managers of all - luck. Historians of entrepreneurship referred to as long chain consistently correct decisions, leading a business or organization to success.

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