Introduction Role Of Management In An Organizations Management in all business and organizational activities is the act of coordinating the efforts of people to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources. Since organizations can be viewed as systems, management can also be defined as human action, including design, to facilitate the production of useful outcomes from a system. This view opens the opportunity to 'manage' oneself, a prerequisite to attempting to manage others. The 21st century has brought with it a new workplace, one in which everyone must adapt to a rapidly hanging society with constantly shifting demands and opportunities. The economy has become global and is driven by innovations and technology and
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Introduction Role Of Management In An Organizations
Management in all business and organizational activities is the act of coordinating the efforts of
people to accomplish desired goals and objectives using available resources efficiently and
effectively. Management comprises planning, organizing, staffing, leading or directing,
and controlling an organization (a group of one or more people or entities) or effort for the
purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation
of human resources, financial resources, technological resources, and natural resources.
Since organizations can be viewed as systems, management can also be defined as human action,
including design, to facilitate the production of useful outcomes from a system. This view opens
the opportunity to 'manage' oneself, a prerequisite to attempting to manage others.
The 21st century has brought with it a new workplace, one in which everyone must
adapt to a rapidly hanging society with constantly shifting demands and opportunities.
The economy has become global and is driven by innovations and technology and
organizations have to transform themselves to serve new customer expectations.
Today’s economy presents challenging opportunities as well as dramatic uncertainty.
The new economy has become knowledge based and is performance driven. The
themes in the present context area ‘respect’, participation, empowerment, teamwork and
self management. In the light of the above challenges a new kind of leader is needed to
guide business through turbulence. Managers in organizations do this task.
A manager is someone who coordinates and oversees the work of other people so that
organizational goals can be accomplished. It is not about personal achievement but
helping others do their job. Managers may also have additional work duties not related
to coordinating the work of others. Managers can be classified by their level in the organization,
The term “Levels of Management’ refers to a line of demarcation between various managerial positions in an organization. The number of levels in management increases when the size of the business and work force increases and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories:
Managers at all these levels perform different functions. The role of managers at all the three levels is discussed below:
LEVELS OF MANAGEMENT1. Top Level of Management
It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -
a. Top management lays down the objectives and broad policies of the enterprise.b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.c. It prepares strategic plans & policies for the enterprise.d. It appoints the executive for middle level i.e. departmental managers.e. It controls & coordinates the activities of all the departments.f. It is also responsible for maintaining a contact with the outside world.g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of the enterprise.
2. Middle Level of Management
The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the policies and directives of the top management.
b. They make plans for the sub-units of the organization.c. They participate in employment & training of lower level management.d. They interpret and explain policies from top level management to lower level.e. They are responsible for coordinating the activities within the division or department.f. It also sends important reports and other important data to top level management.g. They evaluate performance of junior managers.h. They are also responsible for inspiring lower level managers towards better performance.
3. Lower Level of Management
Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees”. In other words, they are concerned with direction and controlling function of management. Their activities include -
a. Assigning of jobs and tasks to various workers.b. They guide and instruct workers for day to day activities.c. They are responsible for the quality as well as quantity of production.d. They are also entrusted with the responsibility of maintaining good relation in the organization.e. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher
level and higher level goals and objectives to the workers.f. They help to solve the grievances of the workers.g. They supervise & guide the sub-ordinates.h. They are responsible for providing training to the workers.i. They arrange necessary materials, machines, tools etc for getting the things done.j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.l. They motivate workers.m. They are the image builders of the enterprise because they are in direct contact with the workers.
Functions of Management or Management Functions
Management consists of the functions given below. It is based on Henri Fayol's thinking on the functions of management.
1. Planning: generating plans of action for immediate, short term, medium term and long term periods.
2. Organizing: organizing the resources, particularly human resources, in the best possible manner.
3. Staffing: positioning right people right jobs at right time.
4. Directing (includes leading, motivating, communicating and coordinating): Communicate and coordinate with people to lead and enthuse them to work effectively together to achieve the plans of the organization.
5. Controlling (includes review and monitoring): evaluating the progress against the plans and making corrections either in plans or in execution.
Each of these functions is explained in some detail below.
1. Planning
Planning is decision making process.
It is making decisions on future course of actions.
Planning involves taking decisions on vision, mission, values, objectives, strategies and policies of an organization.
Planning is done for immediate, short term, medium term and long term periods.
It is a guideline for execution/implementation.
It is a measure to check the effectiveness and efficiency of an organization.
2. Organizing
Organizing involves determination and grouping of the activities.
Designing organization structures and departmentation based on this grouping.
Defining the roles and responsibilities of the departments and of the job positions within these departments.
Defining relationships between departments and job positions.
Defining authorities for departments and job positions.
3. Staffing
It includes manpower or human resource planning.
Staffing involves recruitment, selection, induction and positioning the people in theorganization.
Decisions on remuneration packages are part of staffing.
Training, retraining, development, mentoring and counseling are important aspects of staffing.
It also includes performance appraisals and designing and administering the motivational packages.
4. Directing
It is one of the most important functions of management to translate company's plans into execution.
It includes providing leadership to people so that they work willingly and enthusiastically.
Directing people involves motivating them all the time to enthuse them to give their best.
Communicating companies plans throughout the organization is an important directing activity.
It also means coordinating various people and their activities.
Directing aims at achieving the best not just out of an individual but achieving the best through the groups or teams of people through team building efforts.
5. Controlling
It includes verifying the actual execution against the plans to ensure that execution is being done in accordance with the plans.
It measures actual performance against the plans.
It sets standards or norms of performance.
It measures the effective and efficiency of execution against these standards and the plans.
It periodically reviews, evaluates and monitors the performance.
If the gaps are found between execution levels and the plans, controlling function involves suitable corrective actions to expedite the execution to match up with the plans or in certain circumstances deciding to make modifications in the plans
The 10 roles are then divided up into three categories, as follows:
Category Role
Interpersonal Figurehead
Leader
Liaison
Informational Monitor
Disseminator
Spokesperson
Decisional Entrepreneur
Disturbance Handler
Resource Allocator
Negotiator
Let's look at each of the ten roles in greater detail.
Interpersonal Category
The roles in this category involve providing information and ideas.
1. Figurehead – As a manager, you have social, ceremonial and legal responsibilities. You're
expected to be a source of inspiration. People look up to you as a person with authority,
and as a figurehead.
2. Leader – This is where you provide leadership for your team, your department or perhaps
your entire organization; and it's where you manage the performance and responsibilities
of everyone in the group.
3. Liaison – Managers must communicate with internal and external contacts. You need to
be able to network effectively on behalf of your organization.
Informational Category
The roles in this category involve processing information.
4. Monitor – In this role, you regularly seek out information related to your organization and
industry, looking for relevant changes in the environment. You also monitor your team, in
terms of both their productivity, and their well-being.
5. Disseminator – This is where you communicate potentially useful information to your
colleagues and your team.
6. Spokesperson – Managers represent and speak for their organization. In this role you're
responsible for transmitting information about your organization and its goals to the people
outside it.
Decisional Category
The roles in this category involve using information.
7. Entrepreneur – As a manager, you create and control change within the organization.
This means solving problems, generating new ideas, and implementing them.
8. Disturbance Handler – When an organization or team hits an unexpected roadblock, it's
the manager who must take charge. You also need to help mediate disputes within it.
9. Resource Allocator – You'll also need to determine where organizational resources are
best applied. This involves allocating funding, as well as assigning staff and other
organizational resources.
10. Negotiator – You may be needed to take part in, and direct, important negotiations within
your team, department, or organization.
10 Roles That Managers Perform in Organizations
Creating the Vision
Successful organizations are led by visionary leaders with a clear understanding of the organization's mission statement. Part of the manager's role is to lead his team in developing the mission statement. This helps everyone focus on the organization's main purpose.
Implementing the Vision
It is also the manager's role to implement the mission statement by breaking it down into specific, achievable goals. Managers help the workers to recognize how the work they do relates to the overall goal of the organization.
Facilitating Change
Dynamic organizations are always changing, and managers help facilitate the change through their role as change agents. They do this by fully understanding and accepting the need to change and by conveying this rationale to the staff.
Mentoring
Managers who are visionary leaders constantly mentor their staff. It's their role to recognize talent and groom employees for positions of additional responsibility. They contribute to the professional development of their employees by conducting performance appraisals and encouraging personal growth and increased productivity.
Gathering Information
It's the manager's role to gather all relevant information. Managers stay in touch with their superiors and are aware of new trends that might be implemented in the future. They maintain an "open-door" policy with their employees to keep up-to-date with issues that might be causing resentment or discontent among them.
Evaluating Information
It's also the manager's role to evaluate information when it is received, to determine who should receive the information and how it will be communicated. Managers use their judgment to decide what is relevant to pass on to their supervisors and what to share with their workers.
Communicating
Managers must communicate information at the most suitable time, using the most appropriate method of communication whether it be face-to-face at a meeting, via electronic technology or in print.
Decision-Making
Managers are constantly involved in decision-making, whether it's for smaller issues such as what time workers will take their breaks or for more important matters such as firing an employee for a transgression. The decision-making role is a critical one and involves resource allocation and negotiation.
Building Relationships
A vital management role revolves around the interpersonal relationships managers have with their subordinates and with their superiors. A manager's level of competency is directly related to the success of these relationships. Managers who develop a climate of trust find it easier to do their job. It's easier for them to get their workers to follow directions and it's easier to take direction from their supervisors.
Controlling Climate
Managers are also responsible for facilitating healthy interpersonal relationships among staff members. Employees are more productive when the relationships in the workplace are supportive and collaborative instead of filled with poisonous back-stabbing. It's the role of the manager to foster a positive climate.
In the late 1960s, Henry Mintzberg conducted a precise study of managers at work. Heconcluded that managers perform 10 different roles, which are highly interrelated.Management roles refer to specific categories of managerial behavior. Overall there areten specific roles performed by managers which are included in the following threecategories.
1)Interpersonal roles include figurehead, leadership, and liaison activities.
2) Informational roles include monitoring, disseminating, and spokespersonactivities.
3) Decisional roles include entrepreneur, disturbance handler, resource allocator,and negotiator.
.Management Skills
Managers need certain skills to perform the challenging duties and activities associatedwith being a manager. Robert L. Katz found through his research in the early 1970s thatmanagers need three essential skills
1) Technical skills are job-specific knowledge and techniques needed toproficiently perform specific tasks.
2) Human skills are the ability to work well with other people individually and ina group.
3) Conceptual skills are the ability to think and to conceptualize about abstract andcomplex situations.These skills reflect a broad cross-section of the important managerial activities that areelements of the four management functions
Organizational structure
Organizational structure
Having the appropriate structure is vital for an organisation or business to meet its aims and objectives. A business may be structured by:
functions - activities such as customer service, marketing, operations, finance or IT location - where regional divisions of the business take responsibility for a specific function or
particular products, whether locally, nationally or internationally product or services - where the business is divided into the particular products made or services
provided.All organisations have employees working at different levels of responsibility. At the bottom, a business depends on its operatives to produce the products or services. Team leaders often perform the day-to-day management role, with operational managers setting direction and strategy for the business as a whole. The number of employees in each level will depend on the business’ organisational structure.
Hierarchical structure
Large organisations, like British Gas, tend to have tall (or hierarchical) structures. A tall structure will have many different levels of employees all reporting upwards to team leaders and then up to operational management. It will have a wide chain of command with a narrow span of control. The chain of command refers to the number of levels within an organisation. The span of control is the number of employees who are directly supervised by one person.A tall structure can often lead to slower communication channels and decision-making. British Gas divides its business activities by products (gas and electricity), by services (maintenance and repairs) and also by functions, for example, customer services.
Flat structure
A flat organisational structure has fewer layers of management and wider spans of control. This means operatives can access and communicate with managers more easily and quickly. This relies on workers taking more responsibility for decision-making. This can create a more motivated workforce. This type of structure is often seen in newly set-up or smaller businesses.A benefit of this structure is that it allows the business to change rapidly to respond to the market, customers or competitors. However, this only applies if the staff are well trained and capable of making effective responses.
Matrix structure
A matrix structure pulls together employees who combine the relevant product and functional expertise in order for the business to meet its goals. The people selected come from different levels and departments within the business. This structure can be used in both hierarchical and flat organisations.Matrix structures are frequently used for specific projects. Individual team members may come from different parts of the business, regardless of their location. Once a project is completed, the matrix will be disbanded and a new structure set up appropriate for the next project.
The main objectives of management are:
1. Getting Maximum Results with Minimum Efforts - The main objective of management is to secure maximum outputs with minimum efforts & resources. Management is basically concerned with thinking & utilizing human, material & financial resources in such a manner that would result in best combination. This combination results in reduction of various costs.
2. Increasing the Efficiency of factors of Production - Through proper utilization of various factors of production, their efficiency can be increased to a great extent which can be obtained by reducing spoilage, wastages and breakage of all kinds, this in turn leads to saving of time, effort and money which is essential for the growth & prosperity of the enterprise.
3. Maximum Prosperity for Employer & Employees - Management ensures smooth and coordinated functioning of the enterprise. This in turn helps in providing maximum benefits to the employee in the shape of good working condition, suitable wage system, incentive plans on the
one hand and higher profits to the employer on the other hand.
4. Human betterment & Social Justice - Management serves as a tool for the upliftment as well as betterment of the society. Through increased productivity & employment, management ensures better standards of living for the society. It provides justice through its uniform policies.
Significant changes in the internal and external environments have a measurable impacton management. Security threats, corporate ethics scandals, global economic andpolitical uncertainties, and technological advancements have had a great impact on themanager’s job.Two significant changes facing today’s managers are importance of customers to themanager’s job and Importance of innovation to the manager’s jobOrganizations need managers. An organization is a deliberate arrangement of people toaccomplish some specific purpose. Organizations share three common characteristics:(1) Each has a distinct purpose (2) Each is composed of people (3) Each develops somedeliberate structure so members can do their work. Although these three characteristicsare important in defining what an organization is, the concept of an organization ischanging. The characteristic of new organizations of today include: flexible workarrangements, employee work teams, open communication systems, and supplieralliances. Organizations are becoming more open, flexible, and responsive to changes.Organizations are changing because the world around them has changed and iscontinuing to change. These societal, economic, global, and technological changes havecreated an environment in which successful organizations must embrace new ways ofgetting their work done.The importance of studying management in today’s dynamic global environment can beexplained by looking at the universality of management, the reality of work, and therewards and challenges of being a manager.
CURRENT TRENDS AND ISSUESThe following are the current concepts and practices are changing the way managers dotheir jobs today.Globalization: Organizational operations are no longer limited by national borders.Managers throughout the world must deal with new opportunities and challengesinherent in the globalization of business.Ethics: Cases of corporate lying, misrepresentations, and financial manipulations havebeen widespread in recent years. Managers of firms such as Enron, ImClone, GlobalCrossing, and Tyco International have placed their own self-interest ahead of otherstakeholders’ welfare. While most managers continue to behave in a highly ethicalmanner, abuses suggest a need to “upgrade” ethical standards. Ethics education isincreasingly emphasized in college curricula today. Organizations are taking a moreactive role in creating and using codes of ethics, ethics training programs, and ethicalhiring procedures.Workforce diversity: It refers to a workforce that is heterogeneous in terms of gender,race, ethnicity, age, and other characteristics that reflect differences. Accommodatingdiverse groups of people by addressing different lifestyles, family needs, and workstyles is a major challenge for today’s managers..Entrepreneurship: It is the process whereby an individual or group of individuals useorganized efforts to pursue opportunities to create value and grow by fulfilling wantsand needs through innovation and uniqueness, no matter what resources theentrepreneur currently has.nt on others’ work performance.
Social Responsibility and Managerial Ethics
This chapter discusses issues involving social responsibility and managerial ethics andtheir effect on managerial decision making. Both social responsibility and ethics areresponses to a changing environment and are influenced by organizational cultureManagers regularly face decisions that have dimensions of social responsibility.Examples include employee relations, philanthropy, pricing, resource conservation,product quality, and doing business in countries that violate human rights
SOCIAL RESPONSIBILITY
Two opposing views of social responsibility are presented:
The classical view is the view that management’s only social responsibility is tomaximize profits. The socio economic view is the view that management’s socialresponsibility goes beyond the making of profits to include protecting and improvingsociety’s welfare.A four stage model shows how social responsibility progresses in organizations Socialresponsibility may progress from the stance of obeying all laws and regulations whilecaring for stockholders’ interests (Stage 1) to the point of demonstrating responsibilityto society as a whole (Stage 4), which characterizes the highest socioeconomiccommitment.Social Obligations to Responsiveness to Responsibility: Social obligation occurs when a firm engages in social actions because of its obligation to meet certain economic andlegal responsibilities. Social responsiveness is seen when a firm engages in socialactions in response to some popular social need. Social responsibility is a business’sintention, beyond its legal and economic obligations, to do the right things and act inways that are good for societyThe Greening of ManagementA number of highly visible ecological problems and environmental disasters (e.g.,Exxon Valdez oil spill, mercury poisoning in Japan, Three Mile Island, Chernobyl)brought about a new spirit of environmentalism. Recognizing the close link between anorganization’s decisions and activities and its impact on the natural environment iscalled the greening of management.Values-based management is an approach to managing in which managers are guidedby the organization’s shared values in their management practices. Purposes of SharedValues are:1) They act as guideposts for managerial decisions and actions.2) Shared values serve to shape employee behavior and to communicate what theorganization expects of its members.3) Shared corporate values can influence an organization’s marketing efforts.4) Shared values are a way to build team spirit in organizations.
MANAGERIAL ETHICSThe term ethics refers to principles, values, and beliefs that define what is right andwrong behavior.Factors That Affect Employee Ethics1. Stages of Moral Development. Research confirms three levels of moraldevelopment. Each level has two stages.a) The first level is called preconventional. At this level, the individual’s choicebetween right or wrong is based on personal consequences involved.b) At the second stage, which is labeled conventional, moral values reside inmaintaining expected standards and living up to the expectations of others.c) The third level—the principled level—the individual makes a clear effort todefine moral principles apart from the authority of the groups to which theperson belongs.d) Research on the stages of moral development indicates that people proceedsequentially through the six stages of these three levels, with no guarantee ofcontinued development at any stage. The majority of adults are at Stage 4. Thehigher the stage an employee reaches, the more likelihood that he or she willbehave ethically.2. Individual Characteristics: A person joins an organization with a relativelyentrenched set of values.a. Values are basic convictions about what is right and wrong. Values are broadand cover a wide variety of issues.b. Ego strength is a personality measure of the strength of a person’s convictions.Individuals who score high on ego strength are likely to resist impulses to actunethically and are likely do what they think is right.c. Locus of control is a personality attribute that measures the degree to whichpeople believe they control their own fate. Individuals with an internal locus ofcontrol think that they control their destiny, while persons with an external locusof control are less likely to take personal responsibility for the consequences oftheir behavior and are more likely to rely on external forces. Externals believethat what happens to them is due to luck or chance.3. A third factor influencing managerial ethics is structural variables. The existenceof structural variables such as formal rules and regulations, job descriptions, writtencodes of ethics, performance appraisal systems, and reward systems can stronglyinfluence ethical behavior.4. The content and strength of an organization’s culture influences ethical behavior.a. An organizational culture most likely to encourage high ethical standards is onethat is high in risk tolerance, control, and conflict tolerance.b. A strong culture exerts more influence on managers than does a weak one.c. However, in organizations with weak cultures, work groups and departmentalstandards strongly influence ethical behavior.5. Finally, the intensity of an issue can affect ethical decisions. Six characteristicsdetermine issue intensitya. Greatness of harm
b. Consensus of wrongc. Probability of harmd. Immediacy of consequencese. Proximity to victimf. Concentration of effectImproving Ethical BehaviorOrganizations can take a number of actions to cultivate ethical behavior amongmembers. Some of those are”1) The selection process for bringing new employees into organizations should beviewed as an opportunity to learn about an individual’s level of moraldevelopment, personal values, ego strength, and locus of control.2) A code of ethics is a formal statement of an organization’s primary values andthe ethical rules it expects employees to follow. In addition, decision rules canbe developed to guide managers in handling ethical dilemmas in decisionmaking.3) Top management’s leadership and commitment to ethical behavior is extremelyimportant since the cultural tone for an organization is established by its topmanagers4) Employees’ job goals should be tangible and realistic, because clear andrealistic goals reduce ambiguity and motivate rather than punish. Job goals areusually a key issue in the performance appraisal process.5) If an organization wants employees to uphold high ethical standards, thisdimension must be included in the appraisal process. Performance appraisalsshould include this dimension, rather than focusing solely on economicoutcomes.6) Ethics training should be used to help teach ethical problem solving and topresent simulations of ethical situations that could arise. At the least, ethicstraining should increase awareness of ethical issues.7) Independent social audits evaluate decisions and management practices in termsof the organization’s code of ethics and can be used to deter unethical behavior.8) Organizations can provide formal protective mechanisms so that employeeswith ethical dilemmas can do what is right without fear of reprisal.Social Entrepreneurship: A social entrepreneur is an individual or organization whoseeks out opportunities to improve society by using practical, innovative, andsustainable approaches.Social impact management: Managers are increasingly expected to act responsibly inthe way they conduct business. Managers using a social impact management approachexamine the social impacts of their decisions and actions. When they consider howtheir actions in planning, organizing, leading and controlling will work in light of thesocial context within which business operates, managers become more aware ofwhether they are leading in a responsible manner.
The success of effectively managing these activities as a part of the manager job, it is
recommended that you select one team member at a time and spare adequate effort and time.
The newer approach to these activities are widely accepted and practiced by the world’s
greatest managers and form the part of managerial competencies, the approach to each of
these activities are outlined below:
Selection of person: Conventionally, any selection of person in a team is based on the
person’s experience, intelligence, persistency etc but the newer approach urges mangers to
select people based on the talent. The world over, effective mangers today spend significant
time and energy to select talent for the organization and not just mere individuals to fill a
role/vacancy.
Setting Expectations from the team members: To fulfill the targets, good managers often
contract on the right steps to be taken with the team members. However, one managerial
competency that very few managers possess is that of doing the same thing by defining the
outcomes and not only the steps
Motivate the team members: Often Managers make the mistake of motivating team members
by supporting/helping them to identify and overcome weaknesses and as a result focus on the
weakness of individuals. World’s greatest managers in fact focus on the strengths of team
members and teach them to capitalize on the strengths.
Develop and nurture the team members: Traditionally, the managers’ role in the team
members’ development is outlined to help him to learn and get promoted. However, good
managers make a difference if they help the team members to identify the right fit for them.
The background and context of these four key activities to managers’ success in the role of
a catalyst is outlined in details in the book, First, Break All The Rules. These activities
weave the Managerial duties and responsibilities of every manager job globally.
Decision Making: The Essence of the Manager’s Job
Everyone in an organization makes decisions, but decision making is particularly
important in a manager’s job. Decision making is such an important part of all four
managerial functions that decision making is said to be synonymous with managing.
The Decision-Making Process
A decision is a choice made from two or more alternatives. The decision-making
process is a set of eight steps that include the following:
_ Identifying a problem: A problem is a discrepancy between an existing state
and a desired state of affairs. In order to identify a problem, a manager should
be able to differentiate the problem from its symptom; he should be under
pressure to taken action and must have the authority and resources to take
action.
_ Identifying decision criteria: Decision criteria are criteria that define what is
relevant in a decision.
_ Allocating weights to the criteria: The criteria identified in the previous step
of the decision-making process may not have equal importance. So he decision
maker must assign a weight to each of the items in order to give each item
accurate priority in the decision.
_ Developing alternatives: The decision maker should then identify viable
alternatives that could resolve the problem.
_ Analyzing alternatives: Each of the alternatives are then critically analyzed by
evaluating it against the criteria established in Steps 2 and 3.
_ Selecting an alternative: The next step is to select the best alternative from
among those identified and assessed. If criteria weights have been used, the
decision maker would select the alternative that received the highest score in
Step 5.
_ Implementing the alternative: The selected alternative is implemented by
effectively communicating the decision to the individuals who would be
affected by it and their commitment to the decision is acquired.
_ Evaluating decision effectiveness: The last step in the decision-making process
is to assess the result of the decision in order to determine whether or not the
problem has been resolved.
Managers can make decisions on the basis of rationality, bounded rationality, or
intuition.
1. Rational decision making. Managerial decision making is assumed to be
rational—that is, making choices that are consistent and value-maximizing
within specified constraints. A rational manager would be completely logical
and objective. Rational decision making assumes that the manager is making
decisions in the best interests of the organization, not in his/her own interests.
The assumptions of rationality can be met if the manager is faced with a
simple problem in which (1) goals are clear and alternatives limited, (2) time
pressures are minimal and the cost of finding and evaluating alternatives is
low, (3) the organizational culture supports innovation and risk taking, and
(4) outcomes are concrete and measurable.
2. Bounded rationality. As the perfectly rational model of decision making
isn’t realistic, managers tend to operate under assumptions of bounded
rationality, which is decision-making behavior that is rational, but limited
(bounded) by an individual’s ability to process information.
Under bounded rationality, managers make satisficing decisions, in which they
accept solutions that are “good enough.” Managers’ decision making may be
strongly influenced by the organization’s culture, internal politics, power
considerations, and by a phenomenon called escalation of commitment—
an increased commitment to a previous decision despite evidence that it may
have been wrong.
3. Intuitive decision making. Managers also regularly use their intuition.
Intuitive decision making is a subconscious process of making decisions on
the basis of experience and accumulated judgment. Although intuitive
decision making will not replace the rational decision-making process, it
does play an important role in managerial decision making.