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 Salary Increase Decisions

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KMBA Fall 2007 Salary Increase Decisions
Differential is the difference between the
highest and lowest award. Numbers in red
indicate candidate was not represented by a group
member. RW was represented in this group.
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Ranks of Salary Increases KMBA Fall 2007
Numbers in red indicate candidate was not
represented by a group member.
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KMBA Salary DecisionsFall 2006
Differential is the difference between the
highest and lowest award Numbers in red indicate
candidate was not represented by a group member.
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Ranks of Salary Increases KMBA Fall 2006
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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
• Group norms and roles
• Organizational norms and systems
• National culture values

• Psychological influences
• Personality and ability
• Perception process
• Personal values
• Experiences and knowledge
• Cognitive Style MBTI

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Cognitive Style Preferences

• Preferences with regard to how we gather and
  process information about the world
• Does not denote a skill but a desired way of
  information gathering and processing (can
  override preferences)
• Myers-Briggs Type Indicator (MBTI) is a popular
  measure of cognitive style

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Extraversion vs. Introversion(E vs. I)

• Extraversion (E)
• Process information through social interaction
• Verbalizes ideas
• Thinks out loud
• Prefers face to face communication

• Introversion (I)
• Processes information internally
• Develops ideas and makes decisions alone
• Responds after reflection
• Prefers written forms of communication

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Sensing vs. Intuition (S vs. N)

• Sensing (S)
• Collects data through senses
• Prefers inductive reasoning
• Focus on details
• Learns through experience
• Focus on parts rather than whole system
• Use data (evidence) rather than theory to guide
  decisions

• Intuition (N)
• Integrates data into internal models
• Prefers deductive thinking
• Focus on global view
• Learns theoretically
• Sees the connection and integration among parts
  of a system
• Uses theory to guide decisions

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Thinking vs. Feeling (T vs. F)

• Thinking (T)
• Decides analytically by using facts and
  principles
• Is logical and objective
• Examines links between causes and effects to make
  decisions
• Use objective criteria in decision making

• Feeling (F)
• Decides on the basis of subjective values, needs,
  and feelings
• Is more subjective and value in decision process
• Decision making may not be rational
• Use more subjective criteria in decision making

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Judging vs. Perceiving (J vs. P)

• Judging (J)
• Emphasize decision making and coming to closure
• Prefers order and structure in decision making
• Difficulty multi-tasking (is more linear)
• May develop entire plan before beginning action
• Likes to find a formula or template to guide
  decision making

• Perceiving (P)
• Emphasize the gathering of information over
  decision making
• Prefers to remain flexible and open to new
  options
• Has difficulty coming to closure
• Likes multi-tasking (is more non-linear)
• Prefers lateral thinking

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Types of Business Students

• Typical student type ESTJ
• 65 E
• 65 S
• 70 T
• 70 J
• Typical faculty type INTJ
• More descriptions www.typelogic.com

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Implications of Cognitive Style

• Employee selection and placement
• Individual career choice
• Decision making
• Team building and counseling
• Instruction or training

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Intuition in Decision Making

• Alternative to rational models
• Intuition as
• Experience/expertise (more N types)
• Intuition as gut feeling (more F types)
• Role of feedback and learning in honing intuition
• Integration of rational and intuitive decision
  making

Intuition is sometimes wrong, but never in
doubt.
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Additional Models of Decision Making

• Incremental Managers choose actions close to
  past actions to reduce the risk (stable
  environments)
• Unstructured Managers use judgment and
  intuition to make decisions in a series of little
  steps that result in a major decision over time
  (dynamic environments)

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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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Potential Problems in Decision Making

• Heuristics or shortcuts
• 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?)
• Values show up in decision goals and criteria
• Special case Ethical values at work

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Ethical Approaches

• Utilitarianism or consequence-based ethics
• Proponents John Stuart Mill and Jeremy Bentham
• Theory of duties/obligations/rights
• Proponent Immanuel Kant
• Theory of justice or fairness
• Proponent John Rawls
• Ethics of care
• Proponent Carol Gilligan

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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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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