Organizational Theory Programmed decisions—repetitive and routine Rules, routines, and standard operating procedures can be developed in advance. Nonprogrammed decisions—novel and unstructured Solutions must be worked out as problems arise.

Organizational Theory Models of organizational decision making Rational model—decision making is a straightforward, three-stage process. This model ignores the uncertainty that typically plagues decision making.

Organizational Theory Models of organizational decision making Carnegie Model—a model that addresses the realities of decision making: Satisficing Bounded rationality Organizational coalitions

Organizational Theory Models of organizational decision making Incrementalist Model—managers select alternative courses of action that are only slightly, or incrementally, different from those used in the past. Often referred to as the “science of muddling through.”

Organizational Theory Models of organizational decision making Unstructured Model—describes how decision making takes place in environments of high uncertainty. Consists of three stages similar to the rational model, but understands that problems may require rethinking alternatives and going back to the drawing board.

Organizational Theory Models of organizational decision making Garbage Can Model—a view of decision making that takes the unstructured process to the extreme The decision-making process is turned around, with organizations as likely to start making decisions from the solution side as from the problem side.

Organizational Theory Learning organization—an organization that purposefully designs and constructs its structure, culture, and strategy to enhance and maximize the potential for organizational learning to take place Managers need to encourage learning at four levels: individual, group, organizational, and interorganizational

Organizational Theory Knowledge management: a type of IT-enabled organizational relationship that has important implications for both organizational learning and decision making Involves sharing and integrating of expertise within and between functions and divisions through real-time, interconnected IT

Organizational Theory Knowledge management: Codification approach - knowledge is carefully collected, analyzed, and stored in databases where it can be retrieved easily by users who input organization-specific commands and keywords Personalization approach –pursued when an organization is facing uncertainty/new problems More reliance on know-how, insight and judgment Identifies resource persons within organization for consultation

Organizational Theory Cognitive Biases Cognitive dissonance: the state of discomfort or anxiety that a person feels when there is an inconsistency between his or her beliefs and actions Decision makers make decisions consistent with their attitudes, images or decisions. Illusion of control: a cognitive bias that causes managers to overestimate extent to which outcomes of an action are under their personal control

Organizational Theory Cognitive Biases Projection: cognitive bias that allows managers to justify and reinforce their own preferences and values by attributing them to others Ego-defensiveness: cognitive bias that leads managers to interpret events in such a way that their actions appear in most favorable light Escalation of commitment: cognitive bias that leads managers to remain committed to losing course of action and refuse to admit that they have made a mistake