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Scenarios what are they used for? Why is Managerial Judgement so important?

Introducing the Scenarios Approach

As leaders, managers need to make decisions on a wide range of issues, from minor to game-changing. Often, the decisions are complex, and information may not be clear or available, and there may be time or cost factors, different stakeholders, etc,. Also, we are only human so we cannot expect perfection every time. However, it will be very useful to know that our manager has effective managerial judgement – right? So how can we find out – apart from waiting for the manager to get things right or disastrously wrong?!

 

Models of Managerial Decision Making

There are quite a few theoretical models of managerial decision making. We looked into many of these but immediately saw the limitations of these approaches. A few will be described here so we have an understanding of such management models.

1

The Rational Decision Making Model:

This model was seen to be highly effective by many management theorists. According to the rational model, managers engage in a decision-making process which is totally rational. They have all the relevant information needed to take decisions. They are also aware of different possible alternatives, outcomes and ramifications, and hence make rational decisions. Of course we now know that it is rare to be able to obtain all the information we want and to make an ‘optimal’ rational decision when dealing with a complex situation. However, as it focuses on ‘optimal’ this model is still used as a benchmark against other decision making models.

2

‘Satisfying’ Decision Making Model:

Managers are restricted by both their abilities and the quality of the information to make optimal decisions. Rather, they will accept the first reasonably satisfactory option rather than to proactively work towards the optimal solution.

3

The Incremental Decision Making Model:

Managers focus on short-cuts and making minimal effort to solve issues. They may not want to use all the available information.

4

The Garbage Can Decision Making Model:

So, picture the chaotic mess within a garbage can! Therefore decisions are rather chaotic and random. It can be influenced by things that may not be at all important or relevant.

Does this help us measure the quality of decision making by managers?

These models are interesting and they may help us identify individuals who may have a preference for one or more models. They are just simple ‘type’ models of management based on theories i.e. are you this type or that type of manager? However, pigeon-holing people into ‘types’ is a bit simplistic and they do not really work in helping us measure the quality of decision making for managers. Also, they do not explain how individuals acquire their managerial decision making skills – since I think we know that they did not learn this at school.

What is the Difference Between Decision Making and Managerial Judgement?

Most people probably think “not much”. But let us look at this a little bit closer. If anything, ‘decision making’ implies making decisions based on available information. The skills to analyse information and make objective decisions. Whereas, ‘judgement’ implies that the information is not clearly defined or all readily available, so one needs to ‘weigh’ things up. In particular, we are dealing with people. Have you noticed that people are all different? We all have different views – and subjective views at that. So ‘weighing’ things up or judging how best to handle situations can be quite challenging.

Therefore, when we refer to managerial decision making where the information is not likely to be all clearly defined and all readily available, it will have the same meaning as managerial judgement. Hence, we have taken a view to focus on ‘managerial judgement’.

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