What techniques or tools can managers use to improve programmed and non-programmed decisions?

Having read Chapter 5 on decision making, learning, creativity, and entrepreneurship, you are now familiar with some of the techniques and tools that managers use for making good decisions or having good decisions in place. You should have a clear understanding of the difference between programmed and non-programmed decisions.

Índice Show

Required Resources
Top Decision-Making Techniques & Tools
Marginal Analysis
SWOT Diagram
Decision Matrix
Pareto Analysis
The Next Step: Reviewing Your Decision & Making Adjustments

Post by Day 3 a 150 – to 500- word statement in the Discussion thread that answers both of the following questions:

What techniques or tools can managers use to improve programmed and non-programmed decisions?
Why are these techniques effective?
Which techniques or tools would you use as a manager and why?

Support your work with specific citations from the Learning Resources. You are allowed to draw from additional sources to support your argument, but you must cite using APA standards. All quoted material must be identified, cited, and referenced per APA standards.

You are encouraged to enrich your posting with your personal examples, experience, or insights.

Edit your postings carefully for spelling, grammar, and punctuation errors.

Respond by Day 6 with at least 75 words each to two or more of your colleagues’ postings in one or more of the following ways:

Ask a probing question.
Share an insight from having read your colleague’s posting.
Offer and support an opinion.
Make a suggestion.
Expand on your colleague’s posting.

Please note that that you are expected to post and respond to class Discussions a minimum of 2 different days each week (1 day to submit your post, another to respond to your colleagues). Points will be deducted if you do not participate in the course Discussion on at least on 2 days during the week.

Return to this Discussion in a few days to read the responses to your posting and responses. Note what you have learned and the insights that you gained as a result of participating in this Discussion.

Required Resources

Readings

Jones, G. R., & George, J. M. (2014). Essentials of contemporary management (6th ed.). New York, NY: McGraw-Hill.
- Chapter 5, “Decision Making, Learning, Creativity, and Entrepreneurship” (pp. 154–183)
  This chapter addresses the concepts of “programmed” and “non-programmed” decisions. The authors also review the rational or classical approach to decision making, as well as the administrative model, which seeks to explain why decisions are often flawed. This chapter also introduces the possibilities and the problems inherent in group decision processes, and describes the role of creativity and learning in decision making and entrepreneurship.
  
  Focus on the definitions and concepts provided throughout this chapter. After reading this chapter, ask yourself how decisions have been made in your current or former workplace. What kinds of decisions were programmed? Where was the guidance to make programmed decisions? Was there a rational process used to make non-programmed decisions? Were any group processes used to gather information and perspectives, or generate ideas? Concerning the rational or Classical Approach to decision making; how are each of the steps in the decision-making process critical to choosing the right course of action? What efforts have you seen, in your present or past workplaces, to increase organizational learning or encourage creativity? Did those efforts or lack of efforts contribute to the successes or problems of the organization?
- Chapter 6, “Planning, Strategy, and Competitive Advantage” (pp.184–221)
  This chapter addresses the concept of a “competitive advantage” and how, through planning and strategic decisions, a competitive advantage can be obtained. The authors explain planning levels, types, and time frames, along with their correlation to levels of management and perspectives of the company’s operations and environment. The concept of “strategy” is discussed at length, along with various approaches to formulating a strategy with examples provided to help the reader understand the complexity and variety of strategic planning.
  
  Focus on the definitions and concepts provided throughout this chapter. Consider the differences between adopting a domestic strategy and a global strategy, as well as a low-cost strategy and a differentiation strategy. Ask yourself, what companies that you know of have a competitive advantage in some area over their competitors? How do they use their competitive advantage to secure, build, or expand their business? Can you identify a clear strategy they have implemented to take advantage of their competitive advantage? Would you select the same strategy, or would you implement a different strategy? Does your employer have a competitive advantage? Does your employer appear to have a business strategy? Why or why not?

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Business leaders make hundreds of decisions every day, many of which influence the success of the business as a whole. No pressure, right? That’s why one of the top skills sought after for managers is the ability to make efficient, informed, and effective business decisions.

The typical decision-making process involves defining the problem, gathering information, identifying alternatives, choosing among the alternatives, and reviewing/monitoring the results. There are many different decision-making techniques that are used by managers to help them choose among the alternatives and make a decision. In some instances, it may be a combination of a couple of different decision-making strategies that help them achieve the best results. What works for some organizations may not work for others, and what works for making one decision may not work for the next. We’ve compiled this list to help narrow things down and give you an idea of what some of the more popular tools and strategies for decision-making are.

Top Decision-Making Techniques & Tools

Marginal Analysis

Marginal analysis weighs the benefits of input or activity against the costs. This type of analysis helps business leaders determine whether an activity or input is providing the maximum return on investment (ROI). Marginal analysis is an effective tool for decision-making because it takes preferences, resources, and informational constraints into account, so managers can make more optimal decisions based on this information.

To conduct a marginal analysis, you need to change a variable, such as the quantity of input you use, or the volume of output you produce. Once you’ve identified that variable, determine what the increase in total benefits would be if one more unit of the control variable were added. This is considered the marginal benefit of the added unit. Likewise, the marginal cost of the added good should also be calculated. The marginal cost is – you guessed it – the increase in total cost if one more unit of the control variable were added. If the marginal benefit outweighs the marginal cost, then there is a “net benefit” and the marginal unit of the variable should be added.

SWOT Diagram

When you are planning to make a significant change in your business, SWOT diagrams can help you break down the situation into four distinct quadrants:

Strengths: What does your company do better than its competitors? Think of both internal and external strengths that you possess.
Weaknesses: Where can your company improve? Try to take a neutral approach and consider what factors may be hurting your business.
Opportunities: Look at your strengths and think of how you can leverage them to create new openings for your business. Also, consider how eliminating a specific weakness could open you up to a new opportunity.
Threats: Determine what challenges stand in the way of achieving your goals. Identify the primary threats to your organization.

A SWOT Analysis can help you identify the forces that influence a strategy, action, or initiative. This information can then be used to guide you in the right direction and support your business decisions. To get the full picture, it’s essential to take multiple viewpoints into account. When you enlist the help of other team members and stakeholders, it is easier to spot trends, patterns, and connections between the quadrants. Taking a collaborative approach can also offer deeper insight into potential opportunities and threats you may not have been able to identify alone.

Decision Matrix

When you are dealing with multiple choices and variables, a decision matrix can bring clarity to the disarray. A decision matrix is similar to a pros/cons list, but it allows you to place a level of importance on each factor. That way, you can more accurately weigh the different options against each other.

How to Create a Decision Matrix:

List your decision alternatives as rows
List relevant factors as columns
Establish a consistent scale to assess the value of each combination of alternatives and factors
Determine how important each factor is towards making your final decision and assign weights accordingly
Multiply your original ratings by the weighted rankings
Add up the factors under each decision alternative
The option that scores the highest wins

Decision Matrix Example:

In this example, a company is trying to make a decision about which vendor they should work with for an upcoming project. The factors they are using to evaluate each option are: capabilities, reputation, reliability, and price. They care more about the capabilities and price than the reputation and reliability of the vendor, so they weighted the importance of those factors accordingly. Based on the results from their decision matrix, they should be able to confidently decide on Vendor 2.

Pareto Analysis

The Pareto Principle helps in identifying changes that will be the most effective for your business. The principle is named after economist Vilfredo Pareto, who found that an 80/20 distribution occurs regularly in the world. In other words, 20% of factors frequently contribute to 80% of the organization’s growth.

An example of this principle applying to business management would be 80% of sales coming from 20% of your customers. A business can leverage the Pareto Principle by identifying the characteristics of the top 20% of their customers and finding more customers like them. When you can identify what small changes will make the largest impact, you are able to prioritize the decisions that have the highest level of influence. This allows managers to dedicate their energy and resources to what will actually move the needle for their business.

The Next Step: Reviewing Your Decision & Making Adjustments

Once you’ve determined which decision-making strategies work best for you, you can’t stop there. Being able to consistently make the right decisions is too important. In fact, decision effectiveness is 95% correlated with financial performance, so it is critical for managers to keep track of the decisions they make and how they turn out. Decision-making is an ongoing process, and the best way to keep up is to use data dashboards.

Enterprise Reporting software allows managers and executives to get information from multiple data sources in one system, so they can see how the business is performing against their goals. Plus, company data can be accessed in real-time, so managers can make quick decisions and adjustments based on what is working and what is not. Interested in seeing how a dashboard can help you make more informed, objective decisions?

Click here to download our Ultimate Guide to Dashboard Best Practices.