Decision Making Tools

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  DECISION MAKING TOOLS How to make better decisions Good decision making is an essential skill for career success generally, and effective leadershipparticularly. If you can learn to make timely and well-considered decisions, then you can oftenlead your team to spectacular and well-deserved success. However, if you make poor decisions,your team risks failure and your time as a leader will, most likely, be brutally short. The techniques in this section help you to make the best decisions possible with the informationyou have available. They help you map out the likely consequences of decisions, work out theimportance of individual factors and choose the best course of action to take. 1.) Pareto AnalysisChoosing the Most Imortant Changes to Ma!e  areto analysis is a very simple technique that helps you to choose the most effective changes tomake. It uses the areto principle - the idea that by doing ! # of work you can generate $ # of theadvantage of doing the entire %ob&. areto analysis is a formal technique for finding the changesthat will give the biggest benefits. It is useful where many possible courses of action arecompeting for your attention.  o# to $se tool% To start using the tool, write out a list of the changes you could make. If you have a long list,group it into related changes.Then score the items or groups. The scoring method you use depends on the sort of problem youare trying to solve. 'or e(ample, if you are trying to improve profitability, you would score optionson the basis of the profit each group might generate. If you are trying to improve customer satisfaction, you might score on the basis of the number of complaints eliminated by eachchange.   The first change to tackle is the one that has the highest score. This one will give you the biggestbenefit if you solve it.The options with the lowest scores will probably not even be worth bothering with - solving theseproblems may cost you more than the solutions are worth. E&amle%  ) manager has taken over a failing service center. He commissions research to find out whycustomers think that service is poor. He gets the following comments back from the customers*+.hones are only answered after many rings. !.taff seem distracted and under pressure. .ngineers do not appear to be well organi/ed. They need second visits to bring e(traparts. This means that customers have to take more holiday to be there a second time. 0.They do not know what time they will arrive. This means that customers may have to bein all day for an engineer to visit. 1.taff members do not always seem to know what they are doing. 2.ometimes when staff members arrive, the customer finds that the problem could havebeen solved over the phone.The manager groups these problems together. He then scores each group by the number of complaints, and orders the list* ã Lack of staff training:  items 1 and 2* 1+ complaints ã Too few staff  * items +, ! and 0* !+ complaints ã Poor organization and preparation:  item * ! complaints3y doing the areto analysis above, the manager can better see that the vast ma%ority of problems 425#6 can be solved by improving staff skills.7nce this is done, it may be worth looking at increasing the number of staff members. )lternatively, as staff members become more able to solve problems over the phone, maybe theneed for new staff members may decline.  It looks as if comments on poor organi/ation and preparation may be rare, and could be causedby problems beyond the manager8s control. 3y carrying out a areto )nalysis, the manager is able to focus on training as an issue, rather than spreading effort over training, taking on new staff members, and possibly installing a newcomputer system. Key oints% areto )nalysis is a simple technique that helps you to identify the most important problem tosolve.To use it* ã 9ist the problems you face, or the options you have available ã Group options where they are facets of the same larger problem ã  )pply an appropriate score to each group ã :ork on the group with the highest scoreareto analysis not only shows you the most important problem to solve, it also gives you a scoreshowing how severe the problem is. '.) Paire( Comarison Analysis or!ing O$t the *elati+e Imortan,eo- Di--erent Otions  aired ;omparison )nalysis helps you to work out the importance of a number of options relative to each other. It is particularly useful where you do not have ob%ective data to base this on. This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage. aired ;omparison )nalysis helps you to set priorities where there are conflicting demands on your resources. It is also an ideal tool for comparing <apples with oranges< - completely different options such as whether to invest in marketing, a new IT system or a new piece of machinery. These decisions are usually much harder than comparing three possible new IT systems, for e(ample.  o# to $se tool% 'or each comparison, you will decide which of the two options is most important, and then assign a score to show how much more important it is. 'ollow these steps to use the technique*+.9ist the options you will compare. )ssign a letter to each option. !.=ark the options as row and column headings on the worksheet. .>ote that the cells on the table where you will be comparing an option with itself have been blocked out - there will never be a difference in these cells? 0.The cells on the table where you will be duplicating a comparison are also blocked out. 1.:ithin the remaining cells compare the option in the row with the one in the column. 'or each cell, decide which of the two options is more important. :rite down the letter of the more important option in the cell, and score the difference in importance from 4no difference6 to  4ma%or difference6. 2.'inally, consolidate the results by adding up the total of all the values for each of the options. @ou may want to convert these values into a percentage of the total score. E&amle%  )s a simple e(ample, an entrepreneur is looking at ways in which she can e(pand her business. he has limited resources, but also has the options she lists below* ã (pand into overseas markets ã (pand in home markets ã Improve customer service ã Improve quality'irstly she draws up the aired ;omparison )nalysis table in 'igure +*


Jul 23, 2017
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