Making Better Decisions November 13, 2012 - ASQ Orange...

© Bolero Associates LLC 2006 All rights reserved.

Making Better Decisions November 13, 2012

Tailored for ASQ Orange Empire

Presented by Dave Nagy Phone: 714.634.4441 x 102

Cell & Text Msg: 714.883.9305 [email protected]

11/20/2012 © Bolero Associates LLC 2006 All rights reserved.

Focus: Decision Making

Understand the individual and environmental factors

that influence decision making

Learn the steps in the decision-making process Apply tools and techniques for improving decision-

making success


Decision Making:

A choice made from available alternatives

Not a stand-alone function – part of a process

A common core of all 5 management functions

Part of every manager’s job


Approaches to Decision Making:

Response to recurring problems Programmed

Nonprogrammed

Response to problems and opportunities that have unique circumstances, unpredictable results, and important consequences.


Programmed Decisions

• Involve problems or situations that occur often

• Circumstances and solutions are predictable

Examples:

- how to pay employees

- how to file an expense report

- how to process new-hire paperwork


Programmed Decision


Approaches to Decision Making:

Response to recurring problems Programmed

Nonprogrammed

Response to problems and opportunities that have unique circumstances, unpredictable results, and important consequences.


Non-Programmed Decisions

• Made in response to problems and opportunities that have unique circumstances

• May provide unpredictable results

• Are often situations with multiple variables or have never occurred before


Decision-Making Factors: Individual

• Personality Style (Temperament Style)

• Decision-making Style:

Autocratic – Participative – Free-Rein

• Relationship with Manager


Decision-Making Factors: Environmental

Internal Environment • Corporate Culture

• Organizational Systems

• Work Group

External Environment

• Industry/business

• External Customers

• Government Regulations


The Decision Making Process

Define the Problem or Opportunity

Identify Limiting Factors

Develop Potential Alternatives

Analyze the Alternatives

Select the Best Alternative

Implement the Decision

Establish a Control System

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step 7


Get it Right from the Start

Most Critical Step in the Process

Problems involve:

Symptom: signal something is wrong Root Cause: produces the symptoms


Identify the Root Cause

Examine Current State to Uncover Root

Cause

Define the Desired State

(Goal)

Symptom: Employee Turnover

Identify the Gap

Root Cause: Inexperienced managers lack core management skills


Understand the Gap

No management training program

No accountability for turnover

Haven’t identified key competencies of successful managers

No standards for hiring or promoting management candidates

No early detection process (feedback) to red-flag potential problems

Gap Analysis

11/20/2012

© Bolero Associates LLC 2006 All rights reserved.

Force-Field Analysis: Balance between forces that favor change and resist change

Root Problem: Inexperienced managers lack core management skills

Driving Forces Restraining Forces Status Quo


Generate Ideas

Alternatives should address the root cause and address limiting factors by strengthening driving forces and/or removing or weakening restraining forces

1. Brainstorming (group or individual): Go for quantity versus quality

2. Mind Mapping (concept maps) http://www.mindgenius.com

3. Pareto Analysis (choosing What to Change)

http://www.mindgenius.com/�

http://www.mindtools.com/pages/article/newTED_02.htm�


Evaluate Alternatives

Paired Comparison Analysis - Calculating the relative importance of different options Grid Analysis - Making a choice by identifying key criteria and assigning values Decision Trees - Choosing by valuing different options PMI - Weighing the pros and cons of a decision Force Field Analysis - Analyzing the pressures for and against change Six Thinking Hats - Looking at a decision from different perspectives Cost/Benefit Analysis (Payback Analysis) - Seeing whether a decision makes financial sense Decision Tree – Create graphic picture of potential decision

Simulation – Create a model of a real activity or process














Tips and tools

• Consider the importance of the decision

• What will the ripple effects be?

• What will the impact be on people?

• What is the impact on other departments, customers, etc?

• Individual or group: which is better?

• Can you involve those “affected” in your decision?

• www.mindtools.com

• Introduction to decision making skills

• How good is your decision making?

http://www.mindtools.com/�


Tips and tools

www.mindtools.com

• Choosing Between Options

• Grid Analysis, Paired Comparison, Decision Tree, etc

• Deciding Whether to Go Ahead

• PMI, Force Field Analysis, Risk Analysis, etc

• Financial Decision Making

• Cost Benefit Analysis, Cash Flow Forecasting, etc

• Improving Decision Making

• Group Decision Making


Tips and tools Grid Analysis Making a Decision By Weighing Up Different Factors (Also known as Decision Matrix Analysis, Pugh Matrix Analysis, and Multi-Attribute Utility Theory)

Example A caterer needs to find a new supplier for his basic ingredients. He has four options. Factors that he wants to consider are:

• Cost. • Quality. • Location. • Reliability. • Payment options.

Firstly he draws up the table shown in Figure 1, and scores each option by how well it satisfies each factor:


Tips and tools Grid Analysis Firstly he draws up the table shown in Figure 1, and scores each option by how well it satisfies each factor: Figure 1: Example Grid Analysis Showing Unweighted Assessment of How Each Supplier Satisfies Each Factor

Factors: Cost Quality Location Reliability Payment Options Total

Weights:

Supplier 1 1 0 0 1 3




Figure 1: Example Grid Analysis Showing Unweighted Assessment of How Each Supplier Satisfies Each Factor


Tips and tools Grid Analysis Next he decides the relative weights for each of the factors. He multiplies these by the scores already entered, and totals them. This is shown in Figure 2: Figure 2: Example Grid Analysis Showing Weighted Assessment of How Each Supplier Satisfies Each Factor


Factors: Cost Quality Location Reliability Payment Options Total

Weights: 4 5 1 2 3

Supplier 1 4 0 0 2 9 15

Supplier 2 0 15 (3) 2 4 3 24

Supplier 3 8 10 (2) 1 6 0 25

Supplier 4 8 15 3 6 0 32

This makes it clear to the caterer that Supplier 4 is the best option, despite the lack of flexibility of its payment options.


Tips and tools Force Field Analysis Analyzing the Pressures For and Against Change


To carry out a Force Field Analysis, use a blank sheet of paper or whiteboard, or download our worksheet. Then describe your plan or proposal for change in a box in the middle of the paper. List the forces for change in a column on the left-hand side, and the forces against change in a column on the right-hand side. As you do this, consider the following questions:

• What business benefit will the change deliver? • Who supports the change? Who is against it? Why? • How easy will it be to make the change? Do you have enough

time and resources to make it work? • What costs are involved? • What other business processes will be affected by the

change? • What are the risks?

http://www.mindtools.com/pages/article/worksheets/ForceFieldAnalysisDownload.htm�

http://www.mindtools.com/pages/article/newTMC_07.htm�


Tips and tools Figure 1: Example Grid Analysis Showing Unweighted Assessment of How Each Supplier Satisfies Each Factor

(Click image to view full size.)

http://www.mindtools.com/media/Diagrams/Force-Field-Analysis-ExampleLARGE.jpg�

http://www.mindtools.com/media/Diagrams/Force-Field-Analysis-ExampleLARGE.jpg�


Tips and tools Force Field Analysis Using Your Analysis


Once you've done your Force Field Analysis, you can use it in two ways: To decide whether or not to move forward with the decision or change. To think about how you can strengthen the forces that support the change and weaken the forces opposing it, so that the change is more successful. If you had to implement the project in the example above, the analysis might suggest a number of changes that you could make to the initial plan. You could:

• Train staff ("Cost" +1) to minimize the fear of technology ("Staff uncomfortable with new technology" -2).

• Show staff that change is necessary for business survival (new force that supports the change, +2).

• Show staff that new machines would introduce variety and interest to their jobs (new force that supports the change, +1).

• Raise wages to reflect new productivity ("Cost" +1, "Loss of overtime" -2). • Install slightly different machines with filters that eliminate pollution ("Impact on

environment" -1). These changes would swing the balance from 11:10 (against the plan), to 13:8 (in favor of the plan).


Take Action


Boosting Decision-Making Success

1. Understand how different styles make decisions (self and others)

2. Allow ample time for the process

3. Know when to involve others

4. Encourage others to make decisions & provide coaching support

5. Learn from past decisions

6. Prioritize decisions and don’t spend equal time on each

7. Treat the root cause versus symptom

8. Seek quality information

9. Know when to hold off (Just-in-time approach) and when to act (understand the risks)

10. Ask for help


Group Decision Making

Advantages

Broader perspective Diversity broadens the

view More satisfactory

decision Opportunity for

discussion Less uncertainty Encourages buy-in

Disadvantages

Compromise Groupthink Difficulty in performing

certain tasks Difficulty in taking the

initiative No one person has the

responsibility for final decision


It’s a Wrap

Focus: Decision Making In this session, we… Looked at the individual and environmental factors that

influence decision making Discussed the steps in the decision-making process Applied tools and techniques for improving

decision-making success

Making Better Decisions November 13, 2012 - ASQ Orange...

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