Decision Making

Decision making is a conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs.

Decisions are largely influenced by perceptions Decisions occur as a reaction to a problem Decision making is a process to reduce uncertainity not eliminate it as knowledge about all the alternatives is seldom possible Decision making is a dynamic and recursive process
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Decision = choice made from available

alternatives

Decision Making = process of

identifying problems and opportunities and resolving them

Programmed Decisions

Situations occurred often enough to enable decision rules to be developed and applied in the future Made in response to recurring organizational problems Nonprogrammed Decisions in response to unique, poorly defined and largely unstructured, and have important consequences to the organization

Many decisions that managers deal with every day involve at least some degree of uncertainty and require nonprogrammed decision making
May be difficult to make Made amid changing factors Information may be unclear May have to deal with conflicting points of view
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The most often used definition of rationality is that it is a means to an end . So a rational decision maker makes consistent, value maximizing choices within specified constraints i.e he follows a six step rational decision making model as given below

1. 2. 3. 4. 5. 6.

Construct. Compile. Collect. Compare. Consider. Commit.

Construct a clear picture of what must be decided prcisely. Compile a list of requirements that must be met. Collect information on alternatives that meet the requirements.
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Compare alternatives that meet the requirements. Consider the "what might go wrong" factor with each alternative.
Commit to a decision and follow through with it.

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Be sure you are right ,and then go ahead. -Davy Crockett Doing whats right isnt hard, knowing wt is right is. -Lyndon Johnson
Once you made your mark, watch out for erasers. -Will Rogers
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 Classical Model Administrative Model Political Model

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Logical decision in the organizations best economic interests

Assumptions

Decision maker operates to accomplish goals that are known and agreed upon Decision maker strives for condition of certainty gathers complete information Criteria for evaluating alternatives are known Decision maker is rational and uses logic Normative = describes how a manager should and provides guidelines for reaching an ideal decision
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Herbert A. Simon
How nonprogrammed decisions are made--uncertainty/ambiguity

Two concepts are instrumental in shaping the administrative model

Bounded rationality: people have limits or boundaries on how rational they can be
Satisficing: means that decision makers choose the first solution alternative that satisfies minimal decision criteria

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Closely resembles the real environment

Closely resembles the real environment in which most managers and decision makers operate
Useful in making non-programmed decisions Decisions are complex Disagreement and conflict over problems and solutions are normal

Coalition = informal alliance among manages who support a specific goal

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EXPERTISE Individuals must have abilities, knowledge, proficiencies ,and similar expertise in their field of endeavor

INTRINSIC TASK MOTIVATION Desire to work on something because its interesting, involving, exciting ,satisfying or personally challenging

CREATIVITY SKILLS personality characteristics associated with creativity, the ability to use analogies and the talent to see familiar in different ligh

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Risk Propensity = willingness to undertake risk with the opportunity of gaining an increased payoff
Implementation = using managerial, administrative, and persuasive abilities to translate the chosen alternative into action

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Differences among people with respect to how they perceive problems and make decisions Not all managers make decisions the same
Directive style Analytical style Conceptual style Behavioral style

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People who prefer simple, clear-cut solutions to problems Make decisions quickly May consider only one or two alternatives Efficient and rational Prefer rules or procedures

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Complex solutions based on as much data as they can gather Carefully consider alternatives Base decision on objective, rational data from management control systems and other sources Search for best possible decision based on information available

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Consider a broad amount of information

More socially oriented than analytical style Like to talk to others about the problem and possible solutions Consider many broad alternatives Relay on information from people and systems

Solve problems creatively

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Have a deep concern for others as individuals

Like to talk to people one-on-one

Understand their feelings about the problem and the effect of a given decision upon them

Concerned with the personal development of others

May make decisions to help others achieve their goals
Experiential Exercise: Whats Your Personal Decision Style?

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Given the increasing scrutiny business is under to behave in an ethical and socially responsible way , ethical considerations should be an important criterion in organizational decision making. Here are 3 different ways to frame decisions ethically: Adapt the utilitarian criterion- Decisions should be made solely on the basis of their
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outcomes or consequences .This is consitent with goals such as efficiency productivity and high profits. Focus on rights- Decisions should be consistent with fundamental liberties and privileges so as to respect and protect the basic rights of individuals ,such as the right to privacy, to free speech and to due process.
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Focus on justice- This requires individuals to impose and enforce rules fairely and impartially so that there is an equitable distribution of benefits and costs.

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