11

Decision-Making Decision-Making ProcessesProcesses

22

Organizational Decision MakingOrganizational Decision Making

Is defined as the process of Is defined as the process of identifying and solving problemsidentifying and solving problems

Has two stages: problem Has two stages: problem identification and problem solutionidentification and problem solution

Decisions vary in complexity Decisions vary in complexity continuum and are categorized as continuum and are categorized as programmed (routine) or non programmed (routine) or non programmed (non-routine)programmed (non-routine)

33

Individual Decision MakingIndividual Decision Making

Rational modelRational model Bounded Rational PerspectiveBounded Rational Perspective

44

Steps in the Rational Approach to Steps in the Rational Approach to Decision-Making (Decision-Making (11))

MonitorDecision

Environment

ImplementChosen

Alternative

DefineDecisionProblem

Specify Decision

Objectives

DiagnoseProblem

DevelopAlternativeSolutions

EvaluateAlternatives

ChooseBest

Alternative1

2

345

6

78

55

CaseCase Nilgiriside Department store has a number Nilgiriside Department store has a number

of drivers who operate its fleet of delivery of drivers who operate its fleet of delivery trucks.trucks.

At the end of the day the crew are required At the end of the day the crew are required to complete a delivery report that takes 5-to complete a delivery report that takes 5-10 min. each10 min. each

Preparation of this report has been a Preparation of this report has been a frequent source of conflict between the frequent source of conflict between the management and the crewmanagement and the crew

The crew often fail to complete the report The crew often fail to complete the report properly or delay completing it, which properly or delay completing it, which causes the supervisor to criticize or causes the supervisor to criticize or threaten themthreaten them

What should be done?????What should be done?????

66

Individual Decision making: A Individual Decision making: A Comparative AnalysisComparative Analysis

Rational ApproachRational Approach Involves systemic analysis Involves systemic analysis

of the problem, choices of the problem, choices made & its made & its implementation in a implementation in a logical step by step logical step by step manner.manner.

Generally used in Generally used in programmed decisions programmed decisions where decision maker has where decision maker has sufficient time for an sufficient time for an orderly thoughtful processorderly thoughtful process

Bounded Rationality Bounded Rationality PerspectivePerspective

Used when decisions are Used when decisions are non-programmed & ill-non-programmed & ill-defineddefined

Rely more on intuition & Rely more on intuition & experience rather than experience rather than sequential logic or explicit sequential logic or explicit reasoningreasoning

Takes short cutTakes short cut

77

Trade-off

Trade-off

Trade-off

Constraints and Trade-offs Constraints and Trade-offs During Non-programmed Decision-During Non-programmed Decision-

MakingMaking

Personal Constraints:Desire for prestige, success;personal decision style; and

the need to satisfy emotional needs, cope with pressure,

maintain self-concept

Organizational Constraints:Need for agreement, sharedperspective, cooperation,

support, corporate culture and structure, ethical values

Bounded Rationality:Limited time, information,

resources to deal with complex,multidimensional issues

Decision/Choice:

Search fora high-quality

decisionalternative

Trade-off

Trade-off

88

Organizational Decision MakingOrganizational Decision Making

Management Science ApproachManagement Science Approach Carnegie ModelCarnegie Model Incremental Decision Process ModelIncremental Decision Process Model Garbage Can ModelGarbage Can Model

99

Management Science ApproachManagement Science Approach

Is the analog to rational model of individual Is the analog to rational model of individual decision makingdecision making

Came in to being during WW IICame in to being during WW II Used mathematical and statistical techniques to Used mathematical and statistical techniques to

urgent and large scale military problems eg. urgent and large scale military problems eg. Missile trajectory, aiming battleship gunsMissile trajectory, aiming battleship guns

Same approach diffused in to corporations and Same approach diffused in to corporations and big businessesbig businesses

Used in quantitative data analysis, operations Used in quantitative data analysis, operations researchresearch

Use in situations where variables are measurableUse in situations where variables are measurable

1010

Carnegie ModelCarnegie Model Based on bounded rationality approach to Based on bounded rationality approach to

individual and organizational decision makingindividual and organizational decision making Organizational level decisions involved many Organizational level decisions involved many

managers and final choice was based on a managers and final choice was based on a coalition (alliance) among managerscoalition (alliance) among managers

Reason being organizational goals are ambiguous Reason being organizational goals are ambiguous and operative goals are inconsistentand operative goals are inconsistent

Managers tend to be rational but are constraint Managers tend to be rational but are constraint by time, resources and mental capacities. So they by time, resources and mental capacities. So they form coalitionform coalition

1111

Carnegie Model contd..Carnegie Model contd.. Decisions made under this model are satisficing Decisions made under this model are satisficing

rather than optimising problem solutionsrather than optimising problem solutions Means that organizations accept satisfying rather Means that organizations accept satisfying rather

than optimising solutionthan optimising solution Managers are concerned with immediate Managers are concerned with immediate

problems and short term solutions problems and short term solutions So they engage in problemistic search (looking So they engage in problemistic search (looking

around in the immediate environment for around in the immediate environment for solutions)solutions)

Discussion and bargaining are especially Discussion and bargaining are especially important in problem identification stage of important in problem identification stage of decision making.decision making.

1212

Choice Processes in the Choice Processes in the Carnegie ModelCarnegie Model

Hold joint discussionand interpret goals and problems

Share opinions

Establish problem priorities

Obtain social supportfor problem, solution

Adopt the firstalternativethat is acceptableto the coalition

Conduct a simple,local search

Use established procedures ifappropriate

Create a solutionif needed

Managers havediverse goals,opinions, values,experience

Information is limitedManagers havemany constraints

Uncertainty Coalition Formation Search

Satisficing

Conflict

1313

The Incremental Decision Process The Incremental Decision Process ModelModel

Places less emphasis on political and Places less emphasis on political and social factors and more on structured social factors and more on structured sequence of activities undertaken from the sequence of activities undertaken from the discovery of the problem to its solutiondiscovery of the problem to its solution

Major organization choices are usually a Major organization choices are usually a series of small choices that combine to series of small choices that combine to produce the major decision.produce the major decision.

Organizations move through several Organizations move through several decision points and may hit barriers along decision points and may hit barriers along the way called ‘decision interrupts’ which the way called ‘decision interrupts’ which means organization has to look for means organization has to look for alternatives.alternatives.

1414

The Incremental Decision The Incremental Decision Process ModelProcess Model

· · IdentificationIdentification PhasePhase: : problem recognitionproblem recognition– RecognitionRecognition (becoming aware of the problem & the (becoming aware of the problem & the

need to take the decision)need to take the decision)– Diagnosis Diagnosis (systematic & detailed if time permits or or (systematic & detailed if time permits or or

quick & immediate)quick & immediate) Development PhaseDevelopment Phase: : solution identificationsolution identification

– Search Search (look for alternatives within the organizations (look for alternatives within the organizations repertoire of solutions)repertoire of solutions)

– Screen Screen (eliminate what does not apply)(eliminate what does not apply)– Design Design (if the above is not applicable design a custom (if the above is not applicable design a custom

made solution)made solution)

1515

The Incremental Decision Process The Incremental Decision Process Model contd..Model contd..

Selection PhaseSelection Phase: : choosing the solutionchoosing the solution– Judgment: Judgment: ((when final choice falls on a single decision when final choice falls on a single decision

maker & judgment is based on experience) maker & judgment is based on experience) – Analysis: Analysis: (alternatives evaluated in a more systematic (alternatives evaluated in a more systematic

manner like management science techniques)manner like management science techniques)– Bargaining: Bargaining: (happens when selection involves group of (happens when selection involves group of

decision makers, so conflict happens, solved through decision makers, so conflict happens, solved through coalition of carnegie model)coalition of carnegie model)

– Authorization: Authorization: (when decision is finally accepted (when decision is finally accepted authorization takes place)authorization takes place)

Dynamic FactorsDynamic Factors:: (refer to the feedback loops as a result (refer to the feedback loops as a result of decision interruptsof decision interrupts

1616

Models for Learning OrganizationModels for Learning Organization

Combining the Incremental process Combining the Incremental process and Carnegie modelsand Carnegie models

Garbage Can modelsGarbage Can models

1717

Learning Organization Decision Process When Learning Organization Decision Process When Problem Identification and Problem Solution Are Problem Identification and Problem Solution Are

UncertainUncertain

When problem identification isuncertain, Carnegie model applies

Political and social process isneeded

Build coalition, seek agreement,and resolve conflict about goalsand problem priorities

When problem solution is uncertain, Incremental process model applies

Incremental, trial-and-errorprocess is needed

Solve big problems in little steps

Recycle and try again when blocked

PROBLEM IDENTIFICATION PROBLEM SOLUTION

1818

Garbage Can Model of Decision-MakingGarbage Can Model of Decision-Making

Deals with the pattern or flow of multiple Deals with the pattern or flow of multiple decisions as opposed to how a single decisions as opposed to how a single decision is made (as in Incremental and decision is made (as in Incremental and Carnegie models)Carnegie models)

Are applied to organic structures operating Are applied to organic structures operating in highly uncertain environmentin highly uncertain environment

Termed as organized anarchiesTermed as organized anarchies

1919

Garbage Can Model: CharacterisrticsGarbage Can Model: Characterisrtics

Decision process is not seen as a Decision process is not seen as a sequence of steps beginning with a sequence of steps beginning with a problem and ending with a solutionproblem and ending with a solution

A solution may be around when there is no A solution may be around when there is no problemproblem

A problem may have no solutionA problem may have no solution Garbage can is a mix of problems, Garbage can is a mix of problems,

potential solutions, capabilities of potential solutions, capabilities of participants and choice opportunitiesparticipants and choice opportunities

2020

Garbage Can Model: consequencesGarbage Can Model: consequences

Solutions may be proposed even Solutions may be proposed even when problems do not existwhen problems do not exist

Choices are made even without Choices are made even without solving problemssolving problems

Problems may persist without being Problems may persist without being solvedsolved

A few problems are solvedA few problems are solved

2121

Illustration of Independent Streams of Events in Illustration of Independent Streams of Events in the Garbage Can Model of Decision-Makingthe Garbage Can Model of Decision-Making

ProblemsSolutionsChoice

OpportunitiesParticipants

ProblemsSolutionsChoice

OpportunitiesParticipants

ProblemsSolutionsChoice

OpportunitiesParticipants

Choice OpportunitiesChoice Opportunities

Participants Participants

Middle Management

Problems Solutions

Solutions

Participants

ProblemsProblems

Solutions

ChoiceOpportunities

Problems

Participants

Participants

Solutions

Department A Department B

2222

Certain Uncertain

Contingency Framework for Using Contingency Framework for Using Decision ModelsDecision Models

ProblemConsensus

Individual: Rational Approach Computation

Organization: Management Science

Individual: Bargaining, Coalition Formation

Organization: Carnegie Model

Individual: Judgment Trial-and-error

Organization: Incremental Decision Process Model

Individual: Bargaining and Judgment Inspiration and ImitationLearning Organization: Carnegie and Incremental Decision Process Models, Evolving to Garbage Can

SolutionKnowledge

Certain

Uncertain

4

21

3