Problem solving and decision making
MANAGEMENT SKILLS Dr Thai Van Vinh Part 4: Problem Solving & Decision Making Topics • Decision making and problem solving • The nature of decision making as part of management • Decision making approaches • Factors in decision making • Problem solving: making the most of opportunities • Thinking ‘outside the box’ and creativity Learning Outcomes • Upon completion of this module, you should be module able to comprehend: – The nature of decision-making and problem solving as part of management – Important factors in decision making – Various approaches to decision making and problem solving l i Decision Making and Problem Solving • Managers make many decisions – some small, small some large • It can be generally argued that decision making y f g j is the very essence of a manager’s job • The ability to make good decisions is central to the th management of the organisation t f th i ti • Solving p g problems is purposeful and satisfying for p p y g those of us who love business Welcome them! Decision Making and Problem Solving (C) • Many authors and managers use the terms decision making and problem solving interchangeably and others treat decision making i h bl d h d ii ki as a sub-category of problem solving • Decision making is commonly defined as the act of choosing from among alternatives while a problem (or opportunity) is a situation offering strong potential for significant gain if t t ti l f i ifi t i appropriate actions are taken Decision Making and Problem Solving (C) • In ancient times, a king had a boulder p , g placed on a roadway y Then he hid himself and watched to see if anyone would remove the huge rock Some of the kingdom’s wealthiest merchants and courtiers came by and simply walked around it it Many loudly blamed the King for not keeping the roads clear, but none did anything about getting the big stone out of the way way Then a peasant came along, carrying a load of vegetables along vegetables On approaching the boulder, he laid done his burden and tried to move the stone to the side of the road After much pushing and straining he finall s cceeded He noticed a p rse straining, finally succeeded purse…where here the boulder had been The purse contained many gold coins and a note from the King indicating that the gold was for the person who removed the b ld from the roadway h d h boulder f h d • The peasant learned what many never understand: every obstacle presents an opportunity to improve one’s condition Decision Making as Part of Management • Decision making is important in every area of a manager’s job • Planning – What are the organisation’s long-term objectives? – What strategies will best achieve these objectives? – What should the organisation’s short-term objectives be? – How difficult should individual goals be? ff g ? Decision Making as Part of Management (C) • Organising – How many subordinates should I have report directly to me? – How much centralisation should there be in the organisation? – How should jobs be designed? • Leading – How I handle employees who appear to be low in motivation? ti ti ? – How will a specific change affect worker productivity? d ti it ? Decision Making as Part of Management (C) • Controlling – What activities in the organisation need to be controlled? – How should these activities be controlled? – When is a performance deviation significant? – When should I discipline a problem employee? Decision Making as Part of Management: Programmed and Non Programmed Decisions Non-Programmed • Programmed decisions: – made in routine, repetitive, well-structured situations with predetermined decision rules – may be based on habit, or established policies, rules and procedures and stem from prior experience or technical knowledge about what works or does not work in a given situation g – are programmed to the extent that they are repetitive and routine and that a definite approach has been pp worked out for handling them – Ex: standardised routines for handling customer g complaints or employee discipline 10 Decision Making Approaches: The Qualitative Approach – The PDCA Cycle 25 Factors in Decision Making • The way in which a manager makes a decision depends on six factors: – The situation; – The competence of the person involved in implementing the decision; – The time available to implement the decision; – The stakeholders involved; – The value (both dollar and strategic terms) or critical importance of the decision; and – The effectiveness of those involved in implementation (team cohesion) 26 Problem Solving: Making the Most of Opportunities • It is suggested that 80% of upper level managers upper-level were aware of a major problem before it actually occurred occ rred – This allows the conclusion that it is possible to identify a problem before something goes wrong • Managers who view p g problems as opportunities pp tend to be both more innovative and successful – This suggests that managerial effort would be far better spent on the question: ‘How can I make something out of this? than on seeing only the this?’ negatives in a difficult or disappointing situation 27 Problem Solving: Looking Further • When you are faced with – a problem or issue that is difficult to deal with, bl i h i diffi l d l ih – if it is an important problem that will not resolve itself, and – if you are the p y person who must decide what to about it, – Then you are in a problem solving situation Then, 28 Problem Solving: The Process 29 Problem Solving: The Process (C) • A principal instrument for effective problem solving and decision making is employee participation • The basic step approach can be utilised to ensure – the correct information is gathered reviewed and gathered, options chosen, and – staff participate in the process and gain commitment to a decision 30 Problem Solving: Removing Root Causes Root Causes • “Root Causes” are those problems that, if that removed, solve a number of related problems • No manager can expect to id if all problems identify ll bl and trace all root causes • This is possible, however, with assistance of staff – Seeking assistance from staff to find root ca ses has causes the added benefit to the communication process that it enables staff to understand the problems and why nderstand h their removal is important 31 Problem Solving: Removing Root Causes (C) WHAT IS WRONG STEP ANALYSIS IN THEORY IN THE REAL WORLD Diagnose the problem: Sort symptoms into categories Suggest causes Observe what is lacking Note barriers to resolving the problem STEP PROBLEMS What's wrong? What are current symptoms? y p What are disliked facts contrasted with preferred situation? WHAT MIGHT BE DONE STEP APPROACHES What are possible strategies or prescriptions? What are some theoretical cures? Generate broad ideas about what might be done done STEP ACTION IDEAS What might be done? What specific steps might be taken to deal with the problems? 32 Effective Decision Making Process • Effective decision making process involves several steps: – – – – identify the problem; generate alternative solutions; evaluate e al ate and choose an alternative; and alternati e; implement and monitor the chosen solution • Which step is the most important? • As a manager you must observe the symptoms g y y p and treat the cause There is no right or efficient way to the 33 wrong thing! Improving Problem Solving: Overcoming Barriers • A father and son are driving to work one morning A morning terrible accident occurs The father is killed instantly and the son is badly injured An ambulance injured arrives at the accident scene and the son is rushed to hospital When they carry him into the emergency hospital room the nurse says ‘He’s in terrible shape We’ve got to get him into surgery.’ They rush him down the tt t hi i t ’ Th h hi d th hall to the operating theatre The surgeon walks in, takes one look at him and says, ‘I’m sorry I can’t operate on him; he’s my son’ • How can this be? 34 Improving Problem Solving: Overcoming Barriers C) • Your ability to make effective and creative decisions can be stifled by preconceptions influenced by o r infl enced b your perception of your world o r orld – Perception is affected by cultural background, by our life experiences, our attitudes and beliefs – personal, moral, ethical, religious, social and cultural; and it is natural to make decisions so that they ‘fit in’ with our view of the world – No decision is ever made that is not affected by personal perception 35 Improving Problem Solving: Overcoming Barriers C) • Personal perception can be a barrier to creative and effective decision making – your perception of a situation may not ‘allow’ or i f i i ‘ ll ’ encourage you to think in ways that would be innovative and often successful i i d f f l • The best way to put things right is to learn not to y p g g them incorrectly the next time you them – once we are aware of what we were doing wrong, we wrong can take evasive action before we make the same mistake again 36 Improving Problem Solving: Overcoming Barriers C) • A further barrier to effective problem solving is termed satisficing – Managers take the first solution that comes along that appears to satisfy the problem – This may be a suitable approach for some problems, y pp p , but it does rule out the generation and evaluation of alternatives and optimisation p 37 Thinking ”Outside the Box” and Creativity • A fundamental part of effective decision making decision-making is evaluating alternatives – This should not be done until a number of alternatives have been generated – It’s important to possess “both/and” thinking e.g It s both/and thinking, e g Japanese showed the Americans that it is possible to p produce high quality products at low cost g q yp • Brainstorming is a very powerful tool for generating ideas – It is not as widely used as it could be because of people s people’s initial resistance 38 So What? Perhaps the measure of success is not p f whether you have a tough problem to deal ith but h th d l with – b t whether you have th h the same problem the next year 39 ... of decision- making and problem solving as part of management – Important factors in decision making – Various approaches to decision making and problem solving l i Decision Making and Problem Solving. ..Topics • Decision making and problem solving • The nature of decision making as part of management • Decision making approaches • Factors in decision making • Problem solving: making the most... you are in a problem solving situation Then, 28 Problem Solving: The Process 29 Problem Solving: The Process (C) • A principal instrument for effective problem solving and decision making is employee