Decision-Making Processes

Organizational Decision Making Is defined as the process of identifying and solving problems Has two stages: problem identification and problem solution Decisions vary in complexity continuum and are categorized as programmed (routine) or non programmed (non-routine)

Individual Decision Making Rational model Bounded Rational Perspective

Steps in the Rational Approach to Decision-Making (1) IDENTIFICATION PROBLEM SOLUTION Monitor Decision Environment Implement Chosen Alternative Define Problem Specify Objectives Diagnose Develop Solutions Evaluate Alternatives Choose Best 1 2 3 4 5 6 7 8

Case Nilgiriside Department store has a number of drivers who operate its fleet of delivery trucks. At the end of the day the crew are required to complete a delivery report that takes 5-10 min. each Preparation of this report has been a frequent source of conflict between the management and the crew The crew often fail to complete the report properly or delay completing it, which causes the supervisor to criticize or threaten them What should be done?????

Individual Decision making: A Comparative Analysis Bounded Rationality Perspective Used when decisions are non-programmed & ill-defined Rely more on intuition & experience rather than sequential logic or explicit reasoning Takes short cut Rational Approach Involves systemic analysis of the problem, choices made & its implementation in a logical step by step manner. Generally used in programmed decisions where decision maker has sufficient time for an orderly thoughtful process

Constraints and Trade-offs During Non-programmed Decision-Making Bounded Rationality: Limited time, information, resources to deal with complex, multidimensional issues Decision/ Choice: Search for a high-quality decision alternative Trade-off Personal Constraints: Desire for prestige, success; personal decision style; and the need to satisfy emotional needs, cope with pressure, maintain self-concept Trade-off Trade-off Trade-off Organizational Constraints: Need for agreement, shared perspective, cooperation, support, corporate culture and structure, ethical values Trade-off

Organizational Decision Making Management Science Approach Carnegie Model Incremental Decision Process Model Garbage Can Model

Management Science Approach Is the analog to rational model of individual decision making Came in to being during WW II Used mathematical and statistical techniques to urgent and large scale military problems eg. Missile trajectory, aiming battleship guns Same approach diffused in to corporations and big businesses Used in quantitative data analysis, operations research Use in situations where variables are measurable

Carnegie Model Based on bounded rationality approach to individual and organizational decision making Organizational level decisions involved many managers and final choice was based on a coalition (alliance) among managers Reason being organizational goals are ambiguous and operative goals are inconsistent Managers tend to be rational but are constraint by time, resources and mental capacities. So they form coalition

Carnegie Model contd.. Decisions made under this model are satisficing rather than optimising problem solutions Means that organizations accept satisfying rather than optimising solution Managers are concerned with immediate problems and short term solutions So they engage in problemistic search (looking around in the immediate environment for solutions) Discussion and bargaining are especially important in problem identification stage of decision making.

Choice Processes in the Carnegie Model Uncertainty Coalition Formation Search Information is limited Managers have many constraints Hold joint discussion and interpret goals and problems Share opinions Establish problem priorities Obtain social support for problem, solution Conduct a simple, local search Use established procedures if appropriate Create a solution if needed Conflict Managers have diverse goals, opinions, values, experience Satisficing Adopt the first alternative that is acceptable to the coalition

The Incremental Decision Process Model Places less emphasis on political and social factors and more on structured sequence of activities undertaken from the discovery of the problem to its solution Major organization choices are usually a series of small choices that combine to produce the major decision. Organizations move through several decision points and may hit barriers along the way called ‘decision interrupts’ which means organization has to look for alternatives.

The Incremental Decision Process Model · Identification Phase: problem recognition Recognition (becoming aware of the problem & the need to take the decision) Diagnosis (systematic & detailed if time permits or or quick & immediate) Development Phase: solution identification Search (look for alternatives within the organizations repertoire of solutions) Screen (eliminate what does not apply) Design (if the above is not applicable design a custom made solution)

The Incremental Decision Process Model contd.. Selection Phase: choosing the solution Judgment: (when final choice falls on a single decision maker & judgment is based on experience) Analysis: (alternatives evaluated in a more systematic manner like management science techniques) Bargaining: (happens when selection involves group of decision makers, so conflict happens, solved through coalition of carnegie model) Authorization: (when decision is finally accepted authorization takes place) Dynamic Factors: (refer to the feedback loops as a result of decision interrupts

Models for Learning Organization Combining the Incremental process and Carnegie models Garbage Can models

PROBLEM IDENTIFICATION Learning Organization Decision Process When Problem Identification and Problem Solution Are Uncertain PROBLEM IDENTIFICATION PROBLEM SOLUTION When problem identification is uncertain, Carnegie model applies Political and social process is needed Build coalition, seek agreement, and resolve conflict about goals and problem priorities When problem solution is uncertain, Incremental process model applies Incremental, trial-and-error process is needed Solve big problems in little steps Recycle and try again when blocked

Garbage Can Model of Decision-Making Deals with the pattern or flow of multiple decisions as opposed to how a single decision is made (as in Incremental and Carnegie models) Are applied to organic structures operating in highly uncertain environment Termed as organized anarchies

Garbage Can Model: Characterisrtics Decision process is not seen as a sequence of steps beginning with a problem and ending with a solution A solution may be around when there is no problem A problem may have no solution Garbage can is a mix of problems, potential solutions, capabilities of participants and choice opportunities

Garbage Can Model: consequences Solutions may be proposed even when problems do not exist Choices are made even without solving problems Problems may persist without being solved A few problems are solved

Illustration of Independent Streams of Events in the Garbage Can Model of Decision-Making Problems Solutions Middle Management Problems Solutions Choice Opportunities Participants Participants Participants Choice Opportunities Choice Opportunities Department A Solutions Department B Problems Solutions Choice Opportunities Participants Choice Opportunities Problems Solutions Choice Opportunities Participants Problems Participants Solutions Problems Problems Solutions Participants Participants

Contingency Framework for Using Decision Models Problem Consensus Certain Uncertain 1 2 Certain Individual: Rational Approach Computation Organization: Management Science Individual: Bargaining, Coalition Formation Organization: Carnegie Model Solution Knowledge 3 Individual: Judgment Trial-and-error Organization: Incremental Decision Process Model 4 Individual: Bargaining and Judgment Inspiration and Imitation Learning Organization: Carnegie and Incremental Decision Process Models, Evolving to Garbage Can Uncertain