7.

1 IntroductionChoice creates tension as we worry about "what if" we had selected the other
option•The complexity of decision making in organizations arises from structural divisions•Decisions
shape the plans that guide action throughout the organization, and so have a direct influence on
whether they add value or not•Good decision makers continuously engage with new people and
ideas•7.2 Managing decisionsA decision is a specific commitment to action (usually a commitment of
resources) in the form of a plan to deal with a problem•Decision making is the process of identifying and
defining problems and opportunities, and making plans to resolve them•Gathering information is at the
center of the process•Setting goals or objectives- the endsClarifya.Set out decision criteria- factors that
are relevant in making a decision-and then weight themSome criteria can be measured objectively but
some are subjectivei.b.1.Specifying what has to be done to achieve the goals- the meansIdentify
alternativesa.Weigh the pros and cons to each alternativeb.Compare alternatives to the criteria needed
to reach the goalsc.Use a decision tree to eliminate choices progressively as criteria or events are added
to the treed.2.Implementing what has to be doneBe weary of scare resourcesa.3.Monitoring
progressForm of controla.Learn from experience instead of jumping forward into the future with no
reflection on past decisionsb.4.7.3 Programmed and non-programmed decisions

7.3 Programmed and non-programmed decisionsProgrammed decisionsFamiliara.Information required

is easy to define and obtainb.Situation is well structuredc.Follow a set procedure, rule, or
policyd.Requires analytical techniquese.Made by people lower down in the corporate governance
hierarchyf.1.Non-programmed decisionsNovel or unusuala.Unique solutionsb.Information required is
unclear, vague, or open to several interpretationsc.Great uncertainty and many interestsd.Requires
judgement and intuitione.Made by people higher up in the corporate governance hierarchyf.2.7.4
Decision-making conditionsCertaintyAll information is available regarding the costs and benefits of each
alternativea.1.Risk refers to situations where the decision maker can estimate the likelihood of the
alternative outcomes, possibly using statistical methods2.Uncertainty is when people are clear about
their goals but have very little information about which course of action is most likely to
succeed3.Ambiguity describes a situation where the goal is unclear and people are uncertain about how
to achieve the goalRapidly changing circumstancesa.Unclear links between decision
elementsb.4.Dependency on past events, future events, and events in other parts of the
organization5.7.5 Decision making modelsJames Thompson distinguished decisions on 2
dimensionsAgreement or disagreement○Relationship between cause and affect: certain or
uncertain○•Computational strategy- rational modelAgreement and certain cause and effecta.Goal is
clear and there are several ways to achieve itb.Rational and logical rather than intuitive and
personalc.Make a decision bySpecifying the goal and intended economic outcomei.Gather information
about the costs and benefits to each alternative ii.

Gather information about the costs and benefits to each alternative solutionii.Select the solution that
will probably bring the greatest economic returniii.Judgmental strategy- administrative, incremental,
and intuitionalAgreement and uncertain cause and effecta.Administrative model of decision making
describes how people make decisions in uncertain, ambiguous situationsHerbert Simoni.Bounded
rationality leads to satisficingWe cannot comprehend all the possible options so we select our choice
from a limited part of a whole, choosing the first solution that is "good enough"1)Accept satisficing
rather than maximizing solutions2)ii.Recognizes human limitationsiii.b.Incremental modelsCharles
Lindblomi.Policy unfolds not from a single event but from the accumulation of small decisionsii.Branch
method as opposed to root methodBuild out, step by step, and by small degrees from the current
situation1)iii.Recognizes human limitationsiv.c.Intuitional modelsKleini.Non-conscious mental process of
basing decisions on experience and accumulated judgement (tacit knowledge)ii.Act quickly on what
seems like very little informationiii.d.Creative approachese.2.Compromise strategy- political
modelDisagreement and certain cause and affecta.Organizations contain groups with diverse interests,
goals, and valuesb.Information is ambiguous and incompletec.Personal interests may take the
leadd.Debate, bargain, discuss, negotiatee.3.Inspirational strategy- garbage can modelFour independent
streams of activities must meetChoice opportunitiesi.Participantsii

Participantsii.Problemsiii.Solutionsiv.7.6 Biases in decision makingPeople use heuristics to process

information- simple rules or mental shortcuts that simplify making decisions•Prior hypothesis biasPaying
more attention to what supports their beliefs and ignoring what is inconsistenta.1.Representativeness
biasGeneralizing from a small sample or a single episodea.2.Optimism biasUnderestimate costs and
overestimate benefits of a proposala.Human tendency to exaggerate talentsb.3.Illusion of
controlHuman tendency to overestimate our ability to control activities and eventsa.4.Escalating
commitmentIncreased commitment to a previous decision despite evidence that it may have been
wronga.5.Emotional attachment6.7.7 Group decision makingVroom and Yetton's decision
modelInfluence the quality and acceptability of decisionsa.Involve subordinates in making decisionsb.5
leadership stylesAI (autocratic)Manager makes decision alone1)i.AII (information seeking)Manager
obtains information from subordinates but ultimately makes decision alone1)ii.CI (consulting)Share the
problem with subordinates to get their ideas and suggestions but then manager ultimately makes
decision1)iii.CII (negotiating)Share the problem with subordinates in a group setting and then make a
decision that may or may not reflect the subordinates' influence1)iv.G (Group)Share the problem with
subordinates in a group setting and 1)

Share the problem with subordinates in a group setting and make a decision that has the support of the
group1)Irving Janis and groupthinkGroupthink is a pattern of biased decision making that occurs in
groups that become too cohesive- members strive for agreement among themselves at the expense of
accurately and dispassionately assessing relevant informationa.Inability of groups involved to consider a
range of alternatives rationally or to see the likely consequences of the choice they madeb."a mode of
thinking that people engage in when they are deeply involved in a cohesive in-group, when the
members' striving for unanimity overrides their motivation to realistically appraise alternative courses of
action" -Janisc.Pressures for agreement and harmony within the group have the unintended effects of
discouraging individuals from raising issues that run counter to the majority opiniond.