Organisational Decision Making models
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The document discusses various models of organizational decision making, including programmed and non-programmed decisions, and highlights concepts like bounded rationality and the Carnegie model. It explains the limitations of rational decision-making and presents alternative models, such as the garbage can model, which describes decision making in chaotic environments. Overall, it emphasizes that decision making within organizations often involves compromises, uncertainties, and is influenced by multiple factors.
Organisational Decision Making models
- 1. OOrrggaanniizzaattiioonnaall DDeecciissiioonn mmaakkiinngg MMooddeellss U.KALPANADEVI MBA
- 2. Organizational decision making: the process of responding to a problem by searching for and selecting a solution or course of action that will create value for organizational stakeholders Types: Programmed Decision Non-Programmed Decision
- 3. Decision Making - Types Programmed Decision – Routine, virtually automatic decision making that follows established rules or guidelines. Non-Programmed Decision – Nonroutine decision made in response to unusual or novel opportunities and threats. – The are no rules to follow since the decision is new.
- 4. Individual Decision Making Rational approach – ideal method for how managers should make decisions Bounded rationality perspective – how decisions are made under severe time and resource constraints
- 5. Steps in the Rational Approach
- 6. Limitations for the Rational Decision Making Model requires a great deal of time requires great deal of information assumes rational, measurable criteria are available and agreed upon assumes accurate, stable and complete knowledge of all the alternatives, preferences, goals and consequences assumes a rational, reasonable, non – political world
- 7. Bounded Rationality Perspective There is a limit to how rational managers can be—time and resource constraints – Nonprogrammed decisions Constraints and Tradeoffs – Constraints impinge the decision maker The Role of Intuition – Experience and judgment rather than logic
- 8. Constraints and Tradeoffs During Nonprogrammed Decision Making
- 9. Organizational Decision Making Management Science Approach Carnegie Model Incremental Decision Model Garbage Can Model Unstructured model
- 10. Management Science Approach Similar to rational individual approach – Structured Based on technology
- 11. Management Science Approach Use of statistics to identify relevant variables Remove human element Very successful for military problems Good tool for decisions where variables can be indentified and measured A drawback of management science is that quantitative data are not rich and lack tacit knowledge
- 12. The Carnegie Model Introduces a set of more realistic assumptions about the decision-making process – Satisficing: limited information searches to identify problems and alternative solutions – Bounded rationality: a limited capacity to process information – Organizational coalitions: solution chosen is a result of compromise, bargaining, and accommodation between coalitions
- 13. Carnegie Model
- 14. Differences Between the Rational and Carnegie Models Rational model Carnegie model Information is available Limited information is available Decision making is costless Decision making is costly Possible alternatives are generated Limited range of alternatives are generated Solution is chosen by unanimous agreement Solution is chosen by bargaining and compromise Soln chosen is best for the orgn Soln chosen is satisficing for the orgn
- 15. Incremental Decision Process Model Focuses on sequence of events from problem discovery to solution
- 17. Garbage Can Model Garbage Can Model - a theory that contends that decisions in organizations are random and unsystematic Problems Solutions Choice opportunities Participants
- 18. Garbage Can Model Pattern or flow of multiple decisions Think of the whole organization Explain decision making in high uncertainty - organized anarchy: – Problematic preferences – Unclear, poorly understood technology – Turnover Streams of events instead of defined problems and solutions
- 19. Consequences of the Garbage Can Model 1. Solutions may be proposed even when problems do not exist 2. Choices are made without solving problems 3. Problems may persist without being solved 4. A few problems are solved
- 21. Unstructured Decision Making Model Takes place when uncertainty is high Unprogrammed decisions Not a sequential process Involves unpredictable decisions
- 22. Contingency Decision-Making Two dimensions – Problem consensus – Technical knowledge about solutions
- 24. Design Essentials Most decisions are not made in a logical manner Individuals make decisions, but organizational decisions are not made by a single individual Conflict exists when problems are not agreed on The garbage can model has become a description of decision-making Organizations operate in high-velocity environments Allowing biases to cloud decision making can have negative consequences
- 25. THANK YOU FOR YOUR ATTENTION
Editor's Notes
- #6: Creative devising, creative ideas, break throughs, brain storms, inspiration
- #7: Assumes that adequate informn obtained in terms of quqlity, quqntitiy & accuracy Questionable proocess today
- #8: Asssumes that mgrs posses intellectual capacity to evaluate all possible alternatives Bounded rationality- a limited capacity to process the informn
- #13: Certain criteria to evaluate possible acceptable solutions Coaliations – temporary unions
- #16: This model used to lessen the chances of making mistakes Course of actions takes place incrementally or slightly
- #17: Mgrs limit by lack of informn & foresight More cautiously one step ata tym