Information Management, and Decision Making

information management entails organizing, retrieving, acquiring and maintaining information

Defination

• Information management (IM) is the collection and management of information from one or more sources and the distribution of that information to one or more audiences. Management means the organization of and control over the structure, processing and delivery of information.

The three principles of managing information

• Information is only relevant, and therefore needed, if it is used to make a decision. Since very few decisions are made as a result of receiving management accounts, sales forecasts, etc., should they be thrown into the waste paper basket?

• Information is only required when decisions have to be made. Since directors of a company make long term decisions, should staff have to work overtime to produce the information required for them “yesterday”?

• Information needs only to be sufficiently accurate to make a decision. So no more quoting of forecast sales for year 3 as “£926,369” i.e. to 0.0001%

The implications

• Since decisions cannot change the past, only the future, information should primarily be concerned with forecasting

• You need to communicate your objectives to your information providers, so that they  can help you achieve them.

The practice

When deciding which information you need regularly: • Determine what your objectives are • Decide what decisions you need to make to achieve those

objectives • Decide what information is necessary to support those decisions • Determine when the decisions have to be made • Decide on the accuracy necessary to make the decision • When asking for information – tell the provider what decision you

wish to make or, if it is confidential, be clear in your own mind what it is.

• When asked to provide information, ask what decision is to be made, based on it (assuming such a question won’t result in termination of employment).

What is a decision?

• A decision is like a physical force. A force changes the speed and/or direction of an object, such as a block of wood sliding on a table. A decision changes the speed and/or direction of the events to which it is applied. Unless it is a decision to do nothing.

Introduction to Decision Making

Levels of Decision Making• Strategic Decision Making. These decisions are usually

concerned with the major objectives of the organization, such as "Do we need to change the core business we are in?" They also concern policies of the organization, such as "Do we want to support affirmative action?“

• Management Control. These decisions affect the use of resources, such as "Do we need to find a different supplier of packaging materials?" Management-level decisions also determine the performance of the operational units, such as "How much is the bottleneck in Production affecting the overall profit and loss of the organization, and what can we do about it?"

• Knowledge-Level Decision Making. These decisions determine new ideas or improvements to current products or services. A decision made at this level could be "Do we need to find a new chocolate recipe that results in a radically different taste for our candy bar?"

• Operational control. These decisions determine specific tasks that support decisions made at the strategic or managerial levels. An example is "How many candy bars do we produce today?"

                                                                                                                             

                                                                   

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Technical-rational or classicalperspective

• Basically views people as machines. The manager's job is to keep the machine running smoothly and in concert with all the other machines. The manager is also responsible for creating an administration that keeps the machine well-oiled and fixes any broken parts.

Behavioral Perspective

• We all know that humans aren't machines. They don't work in isolation from other humans, and there are many more factors to take into consideration when managing humans rather than machines. The behavioral perspective takes these important characteristics into account. Just as humans are living, breathing, ever-changing beings, so too are organizations

The Cognitive Perspective and Postmodern Era

• To be successful, the cognitive perspective says an organization must create and use information to its utmost advantage. The organization must gather, create, store, disseminate, and use information and knowledge. The effective manager will make sense of the situation, help the organization act in its best interest, and create the proper infrastructure for information- and knowledge-processing to the advantage of the organization.

Types of Decisions

-Structured

-Unstructured

Types of Decisions and Types of Systems

Stages of Decision Making

Individual Models of Decision Making

• The Rational Model-The rational model of human behavior says that people will evaluate the situation and determine what they want the result to be. They will determine the alternative courses of action, know the consequences of each course, and then pick the course with the biggest payoff. If it were only that easy!

EG.

• Think about some of the decisions you've made recently. Did you have an absolutely clear understanding of the situation and know exactly what you wanted the end result to be? Probably not if you did not evaluate the decision closely and thoroughly.

Bounded Rationality and Satisfying

• Sometimes people will follow the rational model to a certain extent, with a lot of compromising throughout the decision-making process, by using bounded rationality. That is, they will look at several alternatives, briefly evaluate the consequences of the alternatives, and then pick the solution that will get them closest to where they want to be (satisfying).

Muddling Through

• Compromise is a very common occurrence in decision-making. Your club needs to raise dues to pay for a new piece of equipment. Some of your members don't want to purchase the equipment and others want the best brand on the market. A spirited discussion takes place with each side presenting conflicting opinions. After a while, you agree to purchase a used piece costing only half of the original price. You muddled through the decision-making process until everyone agreed on the solution. As it turns out, the decision was similar to one made several years before. By following the previous decision, your group practiced incremental decision making.

SUMMARY

• An organization must examine the theory it most closely follows and then design the information system to fit. Above all, managers communicate. Make that process easier, cheaper, faster, and more efficient and you've increased the worth of that manager tremendously. Increase the number of people and entities the manager can communicate with, and you reduce the number of managers required.

• You should remember that every decision causes change and that people react to change in many different ways. Some people embrace change; others abhor it. But you can't make a decision without causing a change somewhere.

• Understanding how an organization makes decisions can help increase the success of the decisions made.

• Using information systems in the decision-making process should be a positive exercise. That is,the system should help managers at all levels make better decisions, more efficiently, to the benefit of a greater number of people, and to improve the organization.