Issue link: https://industrialmanagement.epubxp.com/i/249982
Making the right decisions; connecting, interfacing and integrating Management is about making decisions – hopefully the right ones Bringing a research and development project to a successful conclusion is a complex endeavor, and the record number of senior managers retiring has resulted in a loss of human capital that is difficult to replace. This is of particular concern in defense and aerospace, where leaders have noted the significant challenges in replacing skilled managers. New managers must make the right decisions even when they don't have their predecessors' experience. Good technical skills and intuition may not be enough. Consider the following example. After your promotion to project manager, congratulations may be in order. Unfortunately, your first task could be to lay off all 60 team members because you just lost funding for next year. Two possible projects are on the horizon. The first project is a sure thing that will keep 20 team members on the payroll. The second project will keep the entire team employed, but you think you have just a 33 percent chance of winning that one. What do you do? Try this problem another way. The first project is a sure thing, but you will have to lay off 40 team members. You estimate a 66 percent chance of losing the second project, but if you lose, you lay off your entire team. Now what do you do? If you fall back on your technical skills, you might run the numbers and realize the outcomes are all the same. But probabilities don't help when you have to let a team member go face to face. What about using your intuition? This can be even more difficult. In practice, when we word decisions this way, most managers prefer to keep 20 team members rather than taking a chance and losing all 60. When we reword the problem to stress how many team members we lay off, managers switch their answer. They pick the risky option and try to save all 60 team members. Choices that involve gains, such as keeping team members, result in managers being risk averse. They go with the sure thing. The same choices involving losses, such as losing team members, spark managers to take risks. They take the small chance of keeping everyone. The challenge we face as managers is making the right decision. Notice that I didn't say the optimal decision because often there isn't one. As managers we need sufficient understanding and insight into problems so we are aware of the consequences of our decisions. This is referred to as a requisite model; another way of looking at it is we don't have buyer's remorse. Thinking about thinking. It might be just what we need for the right decision. —PaulComponationisthedirectorofgraduateeducationforengineering managementatIowaStateUniversity. 8 Industrial Management