Decision Making Processes

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Decision Making Processes
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Decision Making

• The process by which members of an
  organization choose a specific course of action
  to respond to both problems and opportunities.

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Decision Making Process

• Decision making unfolds over time it is not an
  event
• Decision process may be more inquiry-based or
  advocacy-based or somewhere in between

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Decision Making Processes

• Rational Models (prescriptive)
• Administrative Models (descriptive)
• Garbage Can Models (descriptive and political)

Inquiry Based

• Advocacy
• Based

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Components of Decision Making

• Criteria
• Standards that we use to evaluate alternatives
• Alternatives
• Different options from which to choose
• Cause and Effect Beliefs
• Links between alternatives and criteria
• Example Choosing a job

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Rational Model Steps

• List all criteria against which alternatives will
  be judged.
• Attach weights to the criteria.
• Derive extensive list of alternatives from which
  a choice will be made.
• Judge each alternative against each criteria.
• Choose the alternative which best meets each
  criteria (maximizes your preferred outcomes).

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Assumptions of the Rational Model

• People have access to all the information they
  need to make a decision and are able to use this
  information
• Limitless time and effort available to make
  decisions
• People make decisions by choosing the best
  possible solution to a problem or response to an
  opportunity

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Administrative Decision Making Model

• A descriptive approach how we actually make
  decisions
• Incomplete information, psychological and
  sociological processes, and the decision makers
  cognitive abilities affect decision making
  (bounded rationality)
• Decision makers often choose satisfactory, not
  optimal, solutions (they satisfice)

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Influences on Decisions

• Sociological influences
• Groups
• Organizational norms and systems
• National culture

• Psychological influences
• Personality and ability
• Perceptions
• Values
• Experiences and knowledge

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Garbage Can Models

• Occurs under organized anarchy conditions of
  ambiguity in goals and cause and effect
  relationships, limited time, and not much data
• Four streams of events occur problems,
  participants, potential solutions, and choice
  opportunities
• Above are mixed in garbage can and some
  decisions result

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Emergent Phenomena

• What are emergent phenomena?
• How do the existence of emergent phenomena affect
  traditional decision making processes?

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Potential Problems in Decision Making

• Heuristics
• Escalation of commitment
• Groupthink
• Diffusion of responsibility

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Potential Problems in Decision Making

• Polarization
• Interpersonal or emotional conflict
• Lack of procedural fairness
• Appropriate closure

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The Role of Values in Decision Making

• Broad preferences that guide our actions
• Terminal and instrumental values (ends vs. means
  values)
• Intrinsic and extrinsic work values (or, do you
  live to work or work to live?)
• Special case Ethical values at work

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Ethical Approaches

• Utilitarianism or Consequence-based ethics
• The greatest good for the greatest number of
  people
• The end justifies the means
• Moral consequences moral behavior
• Theory of duties/obligations/rights
• Acts should be based on upholding certain
  principles
• Preserving individual rights is foremost
• Kants categorical imperative or the Golden
  Rule
• Theory of justice
• Act with fairness and equity towards everyone
• Due process or procedural justice

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What typical moral dilemmas do managers face?

• Failing to act when one observes unethical
  behavior
• Carrying out decisions/orders that you clearly
  believe are wrong
• Acting unethically because everyone else is
  doing it
• Falsifying data to meet deadlines, quality
  standards, avoid extra work, etc.
• Reducing safety and quality standards for
  products sold in other countries with less strict
  laws

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What typical moral dilemmas do managers face?

• Making phone calls, surfing the internet, playing
  computer games, doing personal business on
  company time
• Lying about being sick or late
• Stealing office supplies for personal use
• Padding expense accounts or stealing monetary
  resources from the company
• Harassment of other employees, including e-mail
• Failure to walk the talk or the say-do gap

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Can we promote ethical decision making and
behavior among managers?

• What obligation do business schools and MBA
  programs in particular have to promote ethical
  managerial behavior?
• What do you think of trying to assess students on
  honesty, integrity and ethics as an admission
  standard?
• What can companies do to promote ethical behavior?