Mgmt 301 – Managers as Decision Makers
Exploring Management
[Nathan Neale]
Slide # 1
Slide Title: WSU Online Title Slide
Audio:
[piano introduction]
Slide #2
Slide Title:
 Chapter 4
 Managers as Decisions Makers
Audio:
Welcome back everybody. This week we will talk about managers as decision makers, this is
Chapter 4 in our textbook.
Slide #3
Slide Title: Chapter 4
 How do managers use information to solve problems?
 What are the five steps in the decision-making process?
 What are some current issues in the managerial decision making?
Audio:
We will attempt to answer a few questions: How do managers use information to solve
problems? What are the five steps in the decision-making process? And what are some current
issues in the managerial decision making?
Slide #4
Slide Title: 4.1 Using Information to Solve Problems
 Managers deal with problems posing threats and offering opportunities
 Managers can be problem avoiders, problem solvers, or problems seekers.
 Managers make programmed and nonprogrammed decisions when solving problems.
 Managers can use systematic and intuitive thinking.
Audio:
We will learn that managers deal with problems posing threats and offering opportunities.
Managers can be problem avoiders, problem solvers, or problems seekers. And I’m sure we have
all seen these types of managers without thinking about it. Managers make programmed and
nonprogrammed decisions when solving problems. Managers can use systematic and intuitive
thinking when making decisions.
Slide #5
Slide Title: 4.1 continued – Using Information to Solve Problems
 Managers use different cognitive styles to process information for decision making
 Mangers make decisions under conditions of certainty, risk, and uncertainty.
Audio:
Managers use different cognitive styles to process information for decision making and mangers
make decisions under conditions of certainty, risk, and uncertainty. And I think a lot of times we
focus on uncertainty because these are really what happens in most of our organizations.
Slide #6
Slide Title: Using Information to Solve Problems – Problems Pose Threats and Opportunities
 Problem Solving
o Identifying and taking action to solve problems.
 Knowledge Workers
o Use information to solve problems, describes managers well.
 Performance Threat
o A situation where something is wrong or likely to be wrong
 Performance Opportunity
o A situation that offers the possibility of a better future, if the right steps are taken.
Audio:
Problems that pose threats and opportunities. Problem solving - Identifying and taking action to
solve problems. Knowledge Workers - Use information to solve problems, describes managers
well. A Performance Threat - A situation where something is wrong or likely to be wrong and
this is important to all of us as managers and then performance opportunity – a situation that
offers the possibility of a better future, if the right steps are taken.
Slide #7
Slide Title: Using Information to Solve Problems – Problems Pose Threats and Opportunities
[infographic about skills and roles in the planning, organizing, leading and controlling process]
Audio:
When using information to solve problems, there are three different types of roles. We’ll start
with decisional roles, this is information used for entrepreneurship, resource allocation,
disturbance handling, negotiation. The next one is interpersonal roles and this is information
used for ceremonies, motivation and networking and this is something I focus quite a bit on. And
then information roles – information sought, received, transferred among insiders and outsiders.
And then we need to think about computer literacy, interpersonal skills and how information
competency affects the planning, organizing, leading and controlling process within
management.
Slide #8
Slide Title: Using Information to Solve Problems – Problem Solving Approaches
 Problem avoiders – prefer not to make decisions and ignore problems
 Problem solvers – react to problems as they occur
 Problem seekers – proactive in anticipating threats and opportunities
Audio:
Problem avoiders prefer not to make decisions and ignore problems; they just think that the
problem will go away. If you think about people that postpone work and then not turn it in. From
a student standpoint, you think back in childhood, a lot of people just didn’t turn it in. And then
problem solvers react to problems as they occur. We think about two colors, a lot of times these
are the greens and golds. Then the problem seekers who are proactive in anticipating threats and
opportunities. These may be the orange type of personalities, they are always looking and
thinking about possible issues that may come up, not that their pessimists, just that they’re more
proactive in their approaches.
Slide #9
Slide Title: Using Information to Solve Problems – Types of Decisions
 Programmed decisions
o Applies a solution from past experience to a routine problem

Non-programmed decisions
o Applies a specific solution crafted for a unique problem
Audio:
Programmed decisions apply solutions from past experiences to routine problems. And then nonprogrammed decisions are crafted for a unique problem. So programmed is “do we make a
decision based on outcomes and issues we’ve had in the past, hopefully we learn from the past”
and non-programmed is very specific and basically tailored.
Slide #10
Slide Title: Using Information to Solve Problems – Problem Solving Approaches
 Systematic Thinking
o Approaches problems in a rational and analytical fashion.
 Intuitive Thinking
o Approaches problems in a flexible and spontaneous fashion
[images comparing different thinking approaches]
Audio:
Systematic thinking approaches problems in a rational and analytical fashion. Again I know I
keep going back to the True Color exercise because I really like that. Systematic will be a lot of
the green and golds. And then intuitive thinking approaches problems in a flexible and
spontaneous fashion. This again definitely is the orange, they’re less likely to solve step by step,
they use their imagination. It’s important to know that these types of thinking are best in
different situations. Think about a stable company and stable industry, maybe a systematic
thinking works the best. But let’s say you’re Apple, they are always coming up with a new
product, this is more of an intuitive approach because they want to imagine what the next big
thing is and anticipate the market.
Slide #11
Slide Title: Using Information to Solve Problems – Problem Solving Approaches
 Managers use different cognitive styles
[chart of the four different cognitive styles]
Audio:
Managers definitely use different cognitive styles. We’ll start with sensation thinkers are
impersonal, realistic, and prefer facts. Going back to the True Colors exercise, these are the type
of people that are green – if it’s raining outside and I say ‘Hey it’s raining’ the oranges are going
to say ‘oh okay it’s raining’ while the greens are not only going to look out of the window, they
might not just look out the window, they’re the type of people that will have to go outside and
feel that. So until they have the facts for themselves, they’re not going to move forward. Then
there are intuitive thinkers, they are impersonal, abstract, and idealistic, they like unstructured
problems. And then we have intuitive feelers, who are relationship oriented, abstract, flexible,
this is going to be more of the blue personality that we learned. And then the sensation feelers
who are relationship oriented, but analytical, realistic. These are people that might fall in that
same approach, or they might be a mix between the blues and the gold in their approach to
relationships.
Slide #12
Slide Title: Using Information to Solve Problems – Problem Solving Environments
Managers make decisions with various amounts of information
[chart of the three different environments]
Audio:
Managers make decisions with various amounts of information. Okay and in a perfect world
there’s a certain environment, this offers complete information and possible actions and
consequences. Then there’s a risk environment, this lacks complete information, but there are
some probabilities, you can use statistics, this is where people that like finance and operations
management do the best in my opinion. And then you have the uncertain environment, where it
lacks so much information it is difficult to assign probabilities to the likely outcomes of
alternatives. I think of entrepreneurs, the odds are clearly stacked against them, but they think
they going to be the most successful person ever and this is where they thrive, the true
entrepreneurs.
Slide #13
Slide Title: Using Information to Solve Problems – Problem Solving Environments
[infographic depicting the correlation between risk of failure, type of decision and the resulting
environment]
Audio:
So we’re looking at these three different environments, we see that this risk of failure down
below starts on the left with low and high risk of failure on the right. And then also types of
decisions with programmed on the left and non-programmed on the right. So in a certain
environment where alternative actions are known, you’re going to want to have more program
decisions where the risk of failure is low, versus in a certain environment, where we don’t even
know the correlations between success and failure. You can see that in a certain environment,
there is a high risk of failure, but we want to use a non-programmed decision because a
programmed decision will not fit in that area at all.
Slide #14
Slide Title: 4.2 Steps in The Decision Making Process
 Step 1 is to identify and define the problem.
 Step 2 is to generate and evaluate alternative courses of action.
 Step 3 is to decide on a preferred course of action
 Step 4 is to implement the decisions
 Step 5 is to evaluate results
Audio:
I mentioned earlier that there are five steps in the decision making process. The first is to identify
and define the problem. Step 2 is to generate and evaluate alternative courses of action. Step 3 is
to decide on a preferred course of action. Step 4 is to implement the decisions. Step 5 is to
evaluate results. Many organizations have adopted this in one form or another, I know that I have
worked for some larger companies and they have this. Entrepreneurship, they may not use this as
much, but this is the type of thing, the five step decision making process works really well for
entrepreneurship as well.
Slide #15
Slide Title: 4.2 Steps in The Decision Making Process
[infographic of the detailed decision making process]
Audio:
Here we could see the 5-step decision making processes, but what we are point out is that last
week we talked about ethical behavior, but you want to do an ethical analysis along each line
continually, because ethics and social behaviors – doing the right thing – is so important to
business these days
Slide #16
Slide Title: The Decision Making Process Step 1 – Identify and Define the Problem
 Gather information and decide what should be accomplished
 Common mistakes include
o Identifying the problem too broadly
o Dealing with symptoms rather than problems
o Choosing the wrong problem
[Image of road sign that says ‘Oops!!!’]
Audio:
Step 1 – Identify and define the problem, gather information and decide what should be
accomplished. Common mistakes include: identifying the problem too broadly, dealing with
symptoms rather than problems and choosing the wrong problem. And this happens all of the
time, groupthink is often a culprit here; Choosing the wrong problem – make sure you get to the
right cause.
Slide #17
Slide Title: The Decision Making Process Step 2 – Generate and Evaluate Alternatives
 Who are the stakeholders and how will the alternatives affect them?
 Criteria for evaluating alternatives
o Cost benefit analysis
o Timeliness
o Acceptability
o Ethical soundness
[image of a clock]
Audio:
Step 2 is generated and evaluate alternatives; we need to ask “Who are the stakeholders and how
will the alternatives affect them?” again the last section talked about stakeholders.
Criteria for evaluating alternatives, we need to look at a cost benefit analysis, the timeliness,
acceptability and ethnical soundness of the various alternatives.
Slide #18
Slide Title: The Decision Making Process Step 3 – Decide On A Preferred Course of Action
 Two different outcomes
o Behavioral model leads to satisficing decisions
o Classical model leads to optimizing decisions
[image of personal creativity drivers]
Audio:
Step 3: this involves going forward or deciding on a preferred course of action. There are two
different outcomes, one is behavior models that lead to satisficing decisions, and then there are
classical models that lead to optimizing decisions.
Slide #19
Slide Title: The Decision Making Process Step 4 – Implement the Decision
 Take action on the selected alternative
 Lack of participation error occurs when parties necessary for supporting the decision
were not included in the process
Audio:
Step 4 is taking action on the selected alternative. Lack of participation error occurs when parties
necessary for supporting the decision were not included in the process. So think about that if the
executives are going to make a decision for you but they’ve never worked alongside you, but
they don’t really know, they’re looking at charts and they’re looking at statistics, can they really
get to the root cause? And to think about that as a manager we really need to consider all of the
stakeholders that are incurred especially those that need to support the decision. Because let’s
say I come with an idea and I don't have the full support of my team, they’re not going to
implement it.
Slide #20
Slide Title: The Decision Making Process Step 5 – Evaluate Results
 Did the decision solve the problem?
 Results must be evaluated against objectives set at the beginning of the process.
Audio:
Step 5 – Evaluate the Results, a lot of people stop at after four and they don’t move forward to
five, but we need to consider if the decision solved the problem and we need to consider that the
results must be evaluated against the objectives set at the beginning of the process not what’s
now. Because is it good enough? If it’s good enough now, but it didn’t meet the primary
objectives, maybe we didn’t design this process right.
Slide #21
Slide Title: The Decision Making Process – Ethical Reasoning is Important
Make the ethics “double check”.
Ethical Reasoning
[chart of ethical questions]
Audio:
The last section we talked a lot about – ethics, We want to make sure the ethics are “double
checked”. We want to look at utility – does the decision satisfy all stakeholders? Rights – does
the decision respect the rights and duties of everyone? Justice – is the decision consistent with
the canons of justice? And caring – is the decision consistent with my responsibilities to care?
Care for whom? Care for the stakeholders.
Slide #22
Slide Title: The Decision Making Process – Ethical Reasoning is Important
 Spotlight questions
o How would I feel if my family found out about this decision?
o How would I feel if this decision were published in the local newspaper or posted
on the internet?
o What would the person I know who has the strongest character and best ethical
judgment say about my decision?
[image of spotlight]
Audio:
Again ask the Spotlight questions. Last week we talked about this; How I feel if my family knew
about this, or if it were published in the New York Times, and then I had that person who has
strongest character and the best ethical judgment, I mentioned religious leaders, I talked about
that I have a specific mentor, Dr. Kenneth Butterfield here at WSU.
Slide #23
Slide Title: 4.3 Current Issues in Decision Making
 Personal factors help drive creativity in decision making
 Group decision making has both advantages and disadvantages
 Judgmental heuristics and other biases and traps may cause decision-making errors
 Managers must be prepared for crisis decision making
Audio:
There are current issues in decision making such as Personal factors help drive creativity in
decision making, group decision making has both advantages and disadvantages. We talked a
little bit about that you are currently working on times; you can clearly see the advantages and
disadvantages. Judgment heuristics and other biases and traps may cause decision-making errors
and managers must be prepared for crisis decision making.
Slide #24
Slide Title: Issues in Decision Making – Personal Factors Drive Creativity
[image of factors of creativity]
Audio:
Let’s look at three different personal factors that can drive creativity. The first is task expertise,
this expertise can be gain through a lot of different ways, it could be by going through similar
situations, it could be done by education or research. And then there’s task motivation - this is do
we want to get something done. Then there are creativity skills, these can be learned but a lot of
these are more intuitive. Some of us are more creative than others, but these three are what really
drive creativity in teams and firms.
Slide #25
Slide Title: Issues in Decision Making – Personal Factors Help Drive Creativity
 Creativity – generating a novel idea or unique approach
 Personal creativity drivers
o Task expertise is expanding an existing skill
o Task motivation is the drive to work hard
o Creativity skills include imagination, intuition, holistic processing, right brain
characteristics
Audio:
Know that creativity is generating a novel idea or unique approach. Personal creativity drivers
including task expertise again ant that’s expanding an existing skill and it’s based off of what has
been done in the past. Task motivation is the drive to work hard and the buy-in and if you believe
in that. And creativity skills include imagination, intuition, holistic processing, right brain
characteristics.
Slide #26
Slide Title: Issues in Decision Making – Group Decision Making
[chart comparing group decisions]
Audio:
Again decisions can be good and bad. If they’re good, there’s more information. It provides more
alternatives, it increases our understanding, there is greater acceptance and there’s a greater
commitment. However, it can also be bad because of conformity with social pressures.
Domination by a few members, and I mentioned a couple of weeks ago that working as a
member of a team, some teams decide that no one speaks twice until everyone speaks once. Time
delays are more times required to make decisions when many people are involved.
And a crisis is an unexpected problem that can lead to disaster if not resolved quickly and
appropriately.
Slide #27
Slide Title: Issues in Decision Making – Decision Making Errors
 Heuristics simplify decision making when time or information are scarce. Examples
include a “rule of thumb” or “trial and error”.
[image of silhouette of a man looking confused at a direction post]
Audio:
Heuristics, I don’t know if you have ever heard of heuristics, they simplify the decision making
when timing or information is scarce. The best example is rule of thumb, or trial and error, I
really like the rule of thumb. Things that you have learned in most corporations but we just don’t
have enough information to make a decision we just use heuristics because of rules of thumb.
Slide #28
Slide Title: Issues in Decision Making - Decision Making Errors
 Availability Heuristic occurs when people use information “readily available” as a basis
for assessing a current event or situation
 Representative Heuristic occurs when people assess the likelihood of something
occurring based on its similarity to a stereotyped set of occurrences.
 Anchoring and Adjustment Heuristic involves making decisions based on adjustments to
a previously existing value, or starting point.
Audio:
Decision making errors. Availability Heuristic occurs when people use information “readily
available” but they should really use other information. Representative Heuristic occurs when
people assess the likelihood of something occurring based on its similarity to a stereotyped set of
occurrences. We talked about how stereotypes are bad, sometimes we use stereotypes because
we don’t have other information but this is when we should not be using stereotypes because
they don’t represent the sample even. Anchoring and Adjustment Heuristic involves making
decisions based on adjustments to a previously existing value, or starting point. I want you to
know what Heuristic is. If I was you I’d read this slide or circle this for the exam: representative
heuristics and availability heuristics. Especially, but going forward if you plan on taking any
other management courses or not, please know what heuristics are because these are the types of
things that will come up in your job.
Slide #29
Slide Title: Issues in Decision Making - Decision Making Errors
 Framing Error – solving a problem in the context perceived for example, positive or
negative.
 Confirmation error – only pay attention to information that confirms the decision that has
been made
 Escalating commitment – adding resources to a course of action even if it’s not working.
Audio:
Some errors I’d like to talk about. Framing error – solving a problem in the context perceived for
example positive or negative. Are we in a positive or negative context, it’s all about the way it
was framed. Confirmation error – we only pay attention to the information that confirms the
decision that has been made. We ignore the rest of the things; we ignore the things that tell us not
to do something in favor to paying attention to the things that tell us we should. And escalating
commitment – the addition of resources to a course of action even if it’s not working. I think
about those of you have bought stocks, I used to buy penny stocks, I actually somehow made
money. It was a hobby, but I remember that I would buy a stock believing that it was a good
price, and then the stock would drop in price but instead of selling or leaving it alone, I would
buy more because I would believe that my first decision was right and that buying that stock at 5
cents or 6 cents or a dollar and was the right decision that it would eventually go up, and when it
would eventually drop buy half, I’d buy some more. That’s a simple example of escalating
commitment so please know escalating commitment; I believe that is a very important definition
to know.
Slide #30
Slide Title: Issues in Decision Making - Decision Making Errors
 How to avoid the escalation trap
o Set advance limits on your involvement and commitment to a particular course of
action; stick with these limits.
o Make your own decisions; don’t follow the lead of others, since they are also
prone to escalation
o Carefully determine just why you are continuing a course of action; if there are
insufficient reasons to continue, don’t.
o Remind yourself of the costs of a course of action; consider saving these costs as
a reason to discontinue
[picture of firetrucks]
Audio:
Let’s talk about how to avoid the escalating trap. One is to set advance limits on your
involvement and commitment to a particular course of action; stick within these limits. I think
those of you, who plan to be accountants, this is probably easier. Then make your own decisions;
don’t follow the lead of others, since they are also prone to escalation. And carefully determine
just why you are continuing a course of action; if there are insufficient reasons to continue, don’t.
“But, well my gut…” well your gut is not always right, while managers do need to use their gut
and need to depend on heuristics, but they’re not always right. And then remind yourself of the
costs of a course of action; consider saving these costs as a reason to discontinue. So you think of
sunk costs, well sunk costs are exactly that, they’re sunk.
Slide #31
Slide Title: Issues in Decision Making - Decision Making In Crisis
 Crisis – unexpected situation that can lead to disaster if not handled quickly
 Crisis management programs train managers in decision making and establish plans to
handle emergencies
Audio:
Decision Making In Crisis – a crisis is an unexpected situation that can lead to disaster if not
handled quickly and crisis management programs train managers in decision making and
establish plans to handle emergencies.
Slide #32
Slide Title: Issues in Decision Making - Decision Making In Crisis
 Figure out what is going on
 Remember that speed matters
 Remember that slow counts too
 Respect the danger of the unfamiliar
 Value the skeptic
 Be ready to “fight fire with fire”
Audio:
We need to first figure out what is going on and remember that speed matters and remember that
slow counts too. What that means is that sometimes doing something is better than nothing but
sometimes doing the wrong thing will actually add fuel to the fire. Respect the danger of the
unfamiliar. Value the skeptic. And this can be difficult especially when that skeptic is the same
person that’s a pessimist at all times, but skeptics have their role, they make us think, we need to
stop and really think. And be ready to “fight fire with fire”.