Decision-making is formally defined as the process of identifying and solving problems. The process containing 2 major stages: problem identification and problem solution. According to the rational approach, there are 8 steps for each stage:8
Figure 2:Decision-making process
The point of rational approach is that manager should try to use systematic procedures to arrive at good decisions. Actually in practice, there are many uncertainties when applying this model to make decisions due to the following type of information constraints imposed up people:9
Limits to communication
These, plus other factors, have given rise to the notion that rational process indecision is bounded. Herbert Simon, in this regard, has proposed that, "within bounded rationality, individuals and groups often base their decisions on satisfying the search for what is good enough in the circumstances, rather than optimizing."10Often, managers have to face vast number of information and required to make a decision in a short time, it is impossible for him to analysis each problem and weigh each alternatives from the limited mental capacity. 11 Therefore there is a limit to how rational a manager can be.
Many models are built upon the uncertainty of the solution searching steps, while in all actuality managers are not making the decision in a vacuum. They can use formulas or models to aid their decision making process. Therefore, it is important for an effective manager to pay attention to the following points when making the decisions:
The intuitive decision-making process always plays an important role in combination with the rational process. Managers build up long experience with organizational issues, which provides them with a gut feeling or hunch about the correct response. The large organizational decisions are not only complex, but also ambiguous. In such a situation; previous experience and judgment are needed to incorporate intangible elements. Most of the time, without solid proof that problems exist, the intuition will tell the managers that there is or could be a problem that requires him to act before he is able to sit down and analyze the problem.
An effective manager knows how to cooperate with the internal and external resources. Of course, as decision-makers, the manager should not become an "autocrat". Voice from internal will be listened, and sharing the opinions and having joint discussions to reach the interpretation of the goals and problems accordingly the agreement will be easier to reach and find solutions to the problem. External comments or reactions have great impact on decisions makers. On one hand, managers are easily misled by the hypothesis given from the external environment and can forget to look broader and further. On the other hand, proactively utilizing the external resource can help managers to see better and further; therefore, objective evaluation of those opinions will be helpful to generate wide range of the problem solving approach.
Creativity is vital to search for more alternatives during the crisis moment. When there are few possibilities to solve the problem, people can easily stick to the first seeming possible solution and start to convince themselves that there is no other better ones. Therefore they are stuck in the corner and forget to look for the other alternative. Dynamic thinking and radioactive mentality will help the manager to look the situation from a different view, there fore create the new approach.
An effective manager will not only look to the short-term profit. He sees further. He must be able to judge where the future business will be lead to from the decision made today. Those decisions, which bring profits today but will undermine business tomorrow, will be dropped.
The difficult decisions are always accompanied by the ethical issues. The best solution for the company's profit might not be the right ones according to the laws or regulations. On making decisions, the ethical dilemmas cannot be neglected, and the outcomes of unethical behavior can affect reputations, trust and career path. Results have been as severe as loss of employment, physical harm to individuals, corporate bankruptcy and even impacts to the economy.
The scandals of 2002, including Enron and WorldCom, resulted in regulations having created a cultural shift particularly in financial fields that has renewed emphasis on ethical business behavior. What distinguishes mediocre level managers from the truly effective managerial leader is an ethical dimension. There exists different moral stages that guide people in their everyday decision-making. Those people in the "principled level...make a clear effort to define moral principles apart from the authority of the groups to which they belong or society in general"12
Learn from the formal fail experience is very important. Managers are apt to stumble down the same failure-prone path over and over again without learning. Learning is thwarted when leaders do not tolerate mistakes. In such an environment, people conceal bad out comes. Consequently, people in the same company, or the same person in different period will repeat the similar mistake. A good manager will see the mistakes as an education and correct himself constantly according to the new situations. Generally speaking, to be an effective decision maker, managers need to work closely with their team and "integrate their faith, values and business practices". 13 In the presentation we will use the case from "Nestle Company" to show why bad decisions had been made and what the consequences are.14
Conflict Management Skills
According to Jean Miller from TIG (Taking It Global) "Conflict is the source of all growth and is an absolute necessity if one is to be alive."15 An effective manager must be able to manage conflict and also learn from it to help the organization to grow and be challenged. Conflict is not always negative but can prove to have some positive outcomes as well. The effective manager can balance this delicate relationship and works hard to handle conflict with care.
As further stated in the article, conflict can be viewed as something to manage or something to resolve. John Burton, one of the world's leading scholars in the field of conflict resolution commented "...resolution means terminating conflict by methods that are analytical and that get to the root of the problem." Miller explains that "conflict management is a multi-disciplinary, analytical, problem-solving approach to conflict that seeks to enable participants to work collaborately towards its management."16
Conflict is not easily avoided in any organization; therefore, an effective manager is prepared by knowing how he will approach certain issues before they happen. There are many books and articles written that address this topic in great detail. An effective manager will consult these items and use his or her own judgment in taking the advice of these publications.
According to James Cribbin, there are three basic kinds of conflict as follows: Approach-Approach, Avoidance-Avoidance, and Approach-Avoidance.17 Approach-Approach would seem to be the most straight forward type of conflict as there are two alternatives that are equally feasible. If an employee is not being productive in the company this affects how the manager's boss views that department. The manager wants to please his boss but also stay on good terms with his employee. In each case the manager needs to approach the other person with open communication and deal with the situation.
Avoidance-Avoidance is very difficult because whatever decision is made to have negative consequences. If a manager knows that his boss is cheating the company financially, he must make a decision. Tell on his boss and suffer the wrath, or stay quiet and sacrifice his ethics. He would like to avoid the conflict on either side, but staying quiet may not be an option.
The last type of conflict according to Cribbin is Approach-Avoidance. He gives a clear example of a manager put in a situation in which he must make a decision that will affect himself and his family. He wants to approach the situation but also avoid it completely. He is given a great promotion in the company but must move his family from his nice comfortable town to a large metropolis city. Cribbin has outlined the options he has and portrays what a difficult situation this could really be:
Accept the position and move
Accept the position, leave the family in the small town and visit them on the weekends.
Bribe the family to make the move.
Ask the family to try to the new city for a year and then assess the situation.
He can refuse the promotion.
He can try to stall in making the decision and hope that something different will turn up.
He can try to convince his superiors that he can take the promotion and contribute more from where he already is.
He can get another job.18