What Is Managerial Decision Analysis?

Managerial decision analysis refers to the methods by which managers apply the managerial responsibility of decision-making to the solving of complex problems that may arise in the workplace. The types of decisions managers make may either be a private one that is related to the internal affairs of a company, or a public one that has repercussions beyond the company’s internal affairs. An analysis of the way in which the manager arrives at such decisions includes an analysis of the criteria the manager uses to arrive at the choice, how the manager applies the choice, and the types of risk-assessment tools the manager applies.

One of the characteristics of a managerial decision analysis is that the final decision-making falls to one individual. Concerning a branch or outlet of a larger organization, the decision maker is the manager. Such a manager makes decisions relating to that branch alone. In the headquarters of the organization, the decision-maker would be the company’s CEO who would have to give an account behind risky decisions to the shareholders and other stakeholders.

As part of the managerial decision analysis, a manager may make decisions under certain types of circumstances. For instance, a manager may make decisions under conditions of pure uncertainty. This type of decision occurs when the manager simply lacks knowledge of the situation or lacks the resources needed to arrive at the outcome of a decision. A manager may also make a decision under risk, meaning that he or she is aware that there are uncertainties associated with the decision he or she does not have the capacity to fully control. There is a correlation between the personality of a manager and the types of decisions he os she makes. For instance, highly emotional managers may be liable to make risky decisions that are influenced by their excitable nature. Managers with calmer personalities may be able to make less-risky decisions, even under pressure.

It is the job of the decision-maker under managerial decision analysis to choose the best possible choice from a number of alternatives. This is because the decision of the manager has a snowball impact on the other employees and people affiliated to the organization. Some of the results of the manager’s decision may be unintended, while others may be the result of taking calculated risks that serve as mitigating measures to even greater risks that would result from not taking action.