Chapter 12: Enhancing Decision Making

Summary:

As the picture above so eloquently states, information is essential for proper decision making. Today, with the availability of information, decision making takes place at almost every level of an organization, to include the strategic, management, and operational levels. There are 4 distinct levels in decision making: 1) Intelligence, 2) Design, 3) Choice, and 4) Implementation. Below is a graphic aid that demonstrates how the process should flow, but it should be noted that if the chosen solution does not work you can return to a previous step and repeat as necessary.

For these systems to work, however, they must be supported by good information quality, management filters, and organizational culture. A great example of how corporate culture can negatively affect decision making would be the catastrophic crash of companies like Enron and WorldCom.

Managers play a key role in decision making within an organization. The textbook states that these roles fall into an interpersonal, informational, and decisional category each. In the Interpersonal role, managers act as leaders and liaisons to subordinates and other organizational levels. When operating in the informational role, they collect and disseminate the most accurate, up-to-date information to those who need it most. Finally, managers make decisions. They are often the first-line problem solvers and negotiators for any conflict or disturbance that may arise.

Business intelligence describes the infrastructure for warehousing, integrating, and analyzing data that comes from the business environment. Business analytics focused on the specific tools and procedures for analyzing data from the business environment. Both are intended to provide correct and relevant information to the decision makers to assist in the decision making process. This is accomplished through the use of functions such as production reports, dashboards, and the ability to create model scenarios and forecasts.

Within an organization, there are generally three main entities of management that exercise decision making powers. These are lower supervisory, middle management, and executive management. Each of them has a different responsibility and utilizes business intelligence in different ways. Supervisory and middle management usually monitor performance and make fairly structured, or repetitive, decisions. They typically use management information systems to support these decisions, and utilize more complex decisions support systems, which include pivot tables and spreadsheets, to handle any unstructured decisions that may fall in their laps. Executives are responsible for strategic decision making, so they utilize executive support systems such as virtual dashboards that display real-time performance information to affect their decisions.

As discussed in the earlier chapters, sometimes the “wisdom of the group” is a powerful tool. Group decision-support systems (GDSS) were created to make these types of work groups more efficient at achieving their goals. GDSS enables groups to increase size and productivity at the same time, which is usually difficult, because contributions are made simultaneously, as opposed to separately.