Organizational Organizational Decision making Decision making

ModelsModels

U.KALPANADEVI MBA

Organizational decision making: the process of responding to a problem by searching for and selecting a solution or course of action that will create value for organizational stakeholders

Types: Programmed Decision Non-Programmed Decision

Decision Making - Types

Programmed Decision– Routine, virtually automatic decision making that

follows established rules or guidelines.

Non-Programmed Decision– Nonroutine decision made in response to unusual or

novel opportunities and threats.– The are no rules to follow since the decision is new.

Individual Decision Making

Rational approach – ideal method for how managers should make decisions

Bounded rationality perspective – how decisions are made under severe time and resource constraints

Steps in the Rational Approach

Limitations for the Rational Decision Making Model requires a great deal of time requires great deal of information assumes rational, measurable criteria are available and

agreed upon assumes accurate, stable and complete knowledge of all

the alternatives, preferences, goals and consequences assumes a rational, reasonable, non – political world

Bounded Rationality Perspective

There is a limit to how rational managers can be—time and resource constraints– Nonprogrammed decisions

Constraints and Tradeoffs– Constraints impinge the decision maker

The Role of Intuition– Experience and judgment rather than logic

Constraints and Tradeoffs During Nonprogrammed Decision Making

Organizational Decision Making

Management Science Approach

Carnegie Model

Incremental Decision Model

Garbage Can Model

Unstructured model

Management Science Approach

Similar to rational individual approach– Structured

Based on technology

Management Science Approach

Use of statistics to identify relevant variables

Remove human element

Very successful for military problems

Good tool for decisions where variables can be indentified and measured

A drawback of management science is that quantitative data are not rich and lack tacit knowledge

The Carnegie Model Introduces a set of more realistic assumptions

about the decision-making process– Satisficing: limited information searches to identify

problems and alternative solutions

– Bounded rationality: a limited capacity to process information

– Organizational coalitions: solution chosen is a result of compromise, bargaining, and accommodation between coalitions

Carnegie Model

Differences Between the Rational and Carnegie Models

Rational model Carnegie model

Information is available Limited information is available

Decision making is costless Decision making is costly

Possible alternatives are generated

Limited range of alternatives are generated

Solution is chosen by unanimous agreement

Solution is chosen by bargaining and compromise

Soln chosen is best for the orgn Soln chosen is satisficing for the orgn

Incremental Decision Process Model

Focuses on sequence of events from problem discovery to solution

Garbage Can Model -

a theory that contends

that decisions in organizations are random and

unsystematic

Problems

Solutions

Choiceopportunities

Participants

Garbage Can Model

Garbage Can Model

Pattern or flow of multiple decisions Think of the whole organization Explain decision making in high

uncertainty - organized anarchy:– Problematic preferences– Unclear, poorly understood technology– Turnover

Streams of events instead of defined problems and solutions

Consequences of the Garbage Can Model

1. Solutions may be proposed even when problems do not exist

2. Choices are made without solving problems

3. Problems may persist without being solved

4. A few problems are solved

Garbage Can Model

Unstructured Decision Making Model

Takes place when uncertainty is high Unprogrammed decisions Not a sequential process Involves unpredictable decisions

Contingency Decision-Making

Two dimensions– Problem consensus– Technical knowledge about solutions

Design Essentials

Most decisions are not made in a logical manner

Individuals make decisions, but organizational decisions are not made by a single individual

Conflict exists when problems are not agreed on

The garbage can model has become a description of decision-making

Organizations operate in high-velocity environments

Allowing biases to cloud decision making can have negative consequences

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