 Learning Objectives:  Understand Meaning and Process of Decision making  Explore factors that affect how decisions are made within organisations  Explore Rational and Behavioural decision-making  Understand the styles of decision-making  Appraise how decisions can be improved

 Decision-making is such a powerful dynamic – not simply because decisions reflect our choice and therefore our preference from among their possible consequences  Maintaining status-quo is a decision, recognizing a need to change and even ‘deciding to decide’ is a decision  Decision-making process is what decision makers do in order to deal with this uncertainty

 This approach recommends identification of goals or objectives, developing and evaluating alternatives, rigorously examining their possible consequences and optimality  The other models of decision-making are compared against this model for evaluation  The basic assumption of the rational model is that complete information is available and there can be one correct conception of a problem and solution  Another crucial assumption is that the decision makers consistently assess the advantages and disadvantages of all the alternatives with respect to the goals and objectives within the criteria of choice

 Decision maker essentially does what is needed, ‘to stay out of trouble’ because it is impossible to have standard operating procedures for all the situations  This approach is known as the incrementalist view, an approach of ‘muddling through’ where one is not always approaching one’s goals with a grand plan or an ultimate purpose  On the other hand, does nothing to change the current situation  The political tone of decisionmaking highlights the fact that members gather in a group with preconceived notions, their own needs and perceptions to the decision process

 Precautionary principle of decision making states that when faced with possible harm, danger or a serious problem, one must act in a way that plausibly can address the same in a cost-effective manner  Lack of systematic or scientific evidence of its cost effectiveness if not established in a certain manner should not prevent the action  The Garbage Can Model of Decision-making describes decision-making in organisations where the objectives are vague, ambiguous - not clearly defined as in the rational model, the involvement of participants is fluctuating in the amount of time and effort given, and choices are inconsistent and not well defined

 Bounded Rationality  Heuristics and Biases: ‘hidden traps’  Representativeness Hueristic  Availability Hueristic  Anchoring or Adjustment Hueristic  Interpreting on the basis of Decision framing  Status-quo Bias  Escalation of commitment  Allowing perceptual selectivity to creep into decisions

 Individual Limitations  Individual decision makers succumb to the biases and heuristics because of some known factors: limited ability, slow learning and fear  Interpersonal Barriers to Decision Making  These barriers are more destructive when important decisions are being taken, than in routine course of actions. It is believed that such barriers arise in the first place when parties find it difficult to trust the other and cannot openly deal with the decision matter

 Providing for group decision making  The groups can resort to six basic ways to arrive at a decision: (1) Taking a vote from individuals and then averaging the decision (2) Leader taking the decision after individual members have made their suggestions (3) Committee decision (4) Majority Vote (5) Consensus and (6) Consensus after majority vote  Using creativity in order to improve decisions  Brain Storming for fuller exploration of alternatives  Supporting creativity across organisational processes  Group decision making and technology

 Managerial styles of decision-making  Charismatic  Thinkers  Skeptic  Followers  Controllers

 Decision-making and functioning in Organisations in India: Management Styles  Conservative style has a bias for preserving and extending what has worked so far  Entrepreneurial style supporting risk taking and innovation  Professional style using the systematic knowledge of management practice  Bureaucratic style emphasizing preference for formal rules, and accountability  Organic style emphasizing interactive growth based on feedback from changing environment  Authoritarian style with preference for discipline and obedience  Participative style with ideology of collective and consensus-based decisions, voicing diverse opinions of those affected by decisions, before the decision is finalized  Intuitive style of management keeps faith on experience, common sense and rules of thumb  Familial style anchored in the preference for cohesiveness and loyalty  Altruistic style based on philosophy that organisation is an instrument of creating larger social good and not just profit maximization