2 Organizational Decision Making Is defined as the process of identifying and solving problemsHas two stages: problem identification and problem solutionDecisions vary in complexity continuum and are categorized as programmed (routine) or non programmed (non-routine)
3 Individual Decision Making Rational modelBounded Rational Perspective
4 Steps in the Rational Approach to Decision-Making (1) IDENTIFICATIONPROBLEMSOLUTIONMonitorDecisionEnvironmentImplementChosenAlternativeDefineProblemSpecifyObjectivesDiagnoseDevelopSolutionsEvaluateAlternativesChooseBest12345678
5 CaseNilgiriside 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. eachPreparation of this report has been a frequent source of conflict between the management and the crewThe crew often fail to complete the report properly or delay completing it, which causes the supervisor to criticize or threaten themWhat should be done?????
6 Individual Decision making: A Comparative Analysis Bounded Rationality PerspectiveUsed when decisions are non-programmed & ill-definedRely more on intuition & experience rather than sequential logic or explicit reasoningTakes short cutRational ApproachInvolves 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
7 Constraints and Trade-offs During Non-programmed Decision-Making Bounded Rationality:Limited time, information,resources to deal with complex,multidimensional issuesDecision/Choice:Search fora high-qualitydecisionalternativeTrade-offPersonal Constraints:Desire for prestige, success;personal decision style; andthe need to satisfy emotionalneeds, cope with pressure,maintain self-conceptTrade-offTrade-offTrade-offOrganizational Constraints:Need for agreement, sharedperspective, cooperation,support, corporate culture andstructure, ethical valuesTrade-off
8 Organizational Decision Making Management Science ApproachCarnegie ModelIncremental Decision Process ModelGarbage Can Model
9 Management Science Approach Is the analog to rational model of individual decision makingCame in to being during WW IIUsed mathematical and statistical techniques to urgent and large scale military problems eg. Missile trajectory, aiming battleship gunsSame approach diffused in to corporations and big businessesUsed in quantitative data analysis, operations researchUse in situations where variables are measurable
10 Carnegie ModelBased on bounded rationality approach to individual and organizational decision makingOrganizational level decisions involved many managers and final choice was based on a coalition (alliance) among managersReason being organizational goals are ambiguous and operative goals are inconsistentManagers tend to be rational but are constraint by time, resources and mental capacities. So they form coalition
11 Carnegie Model contd..Decisions made under this model are satisficing rather than optimising problem solutionsMeans that organizations accept satisfying rather than optimising solutionManagers are concerned with immediate problems and short term solutionsSo 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.
12 Choice Processes in the Carnegie Model UncertaintyCoalition FormationSearchInformation islimitedManagers havemany constraintsHold joint discussionand interpret goalsand problemsShare opinionsEstablish problemprioritiesObtain social supportfor problem, solutionConduct a simple,local searchUse establishedprocedures ifappropriateCreate a solutionif neededConflictManagers havediverse goals,opinions, values,experienceSatisficingAdopt the firstalternativethat is acceptableto the coalition
13 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 solutionMajor 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.
14 The Incremental Decision Process Model · Identification Phase: problem recognitionRecognition (becoming aware of the problem & the need to take the decision)Diagnosis (systematic & detailed if time permits or or quick & immediate)Development Phase: solution identificationSearch (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)
15 The Incremental Decision Process Model contd.. Selection Phase: choosing the solutionJudgment: (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
16 Models for Learning Organization Combining the Incremental process and Carnegie modelsGarbage Can models
17 PROBLEM IDENTIFICATION Learning Organization Decision Process When Problem Identification and Problem Solution Are UncertainPROBLEM IDENTIFICATIONPROBLEM SOLUTIONWhen problem identification isuncertain, Carnegie modelappliesPolitical and social process isneededBuild coalition, seek agreement,and resolve conflict about goalsand problem prioritiesWhen problem solution isuncertain, Incremental processmodel appliesIncremental, trial-and-errorprocess is neededSolve big problems in little stepsRecycle and try again whenblocked
18 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 environmentTermed as organized anarchies
19 Garbage Can Model: Characterisrtics Decision process is not seen as a sequence of steps beginning with a problem and ending with a solutionA solution may be around when there is no problemA problem may have no solutionGarbage can is a mix of problems, potential solutions, capabilities of participants and choice opportunities
20 Garbage Can Model: consequences Solutions may be proposed even when problems do not existChoices are made even without solving problemsProblems may persist without being solvedA few problems are solved
21 Illustration of Independent Streams of Events in the Garbage Can Model of Decision-Making ProblemsSolutionsMiddle ManagementProblemsSolutionsChoiceOpportunitiesParticipantsParticipantsParticipantsChoice OpportunitiesChoice OpportunitiesDepartment ASolutionsDepartment BProblemsSolutionsChoiceOpportunitiesParticipantsChoiceOpportunitiesProblemsSolutionsChoiceOpportunitiesParticipantsProblemsParticipantsSolutionsProblemsProblemsSolutionsParticipantsParticipants
22 Contingency Framework for Using Decision Models ProblemConsensusCertainUncertain12CertainIndividual:Rational ApproachComputationOrganization:Management ScienceIndividual:Bargaining, CoalitionFormationOrganization:Carnegie ModelSolutionKnowledge3Individual:JudgmentTrial-and-errorOrganization:Incremental DecisionProcess Model4Individual:Bargaining and JudgmentInspiration and ImitationLearning Organization:Carnegie and IncrementalDecision Process Models,Evolving to Garbage CanUncertain