Learning Objectives: Understand Meaning and Process of Decision

making

Explore factors that affect how decisions are made within organisations

Explore Rational and Behavioural decision-making

Understand the styles of decision-making

Appraise how decisions can be improved

Decision-making is such a powerful dynamic – not simply because decisions reflect our choice and therefore our preference from among their possible consequences

Maintaining status-quo is a decision, recognizing a need to change and even ‘deciding to decide’ is a decision

Decision-making process is what decision makers do in order to deal with this uncertainty

This approach recommends identification of goals or objectives, developing and evaluating alternatives, rigorously examining their possible consequences and optimality

The other models of decision-making are compared against this model for evaluation

The basic assumption of the rational model is that complete information is available and there can be one correct conception of a problem and solution

Another crucial assumption is that the decision makers consistently assess the advantages and disadvantages of all the alternatives with respect to the goals and objectives within the criteria of choice

Decision maker essentially does what is needed, ‘to stay out of trouble’ because it is impossible to have standard operating procedures for all the situations This approach is known as the incrementalist view,

an approach of ‘muddling through’ where one is not always approaching one’s goals with a grand plan or an ultimate purpose

On the other hand, does nothing to change the current situation

The political tone of decisionmaking highlights the fact that members gather in a group with preconceived notions, their own needs and perceptions to the decision process

Precautionary principle of decision making states that when faced with possible harm, danger or a serious problem, one must act in a way that plausibly can address the same in a cost-effective manner Lack of systematic or scientific evidence of its

cost effectiveness if not established in a certain manner should not prevent the action

The Garbage Can Model of Decision-making describes decision-making in organisations where the objectives are vague, ambiguous - not clearly defined as in the rational model, the involvement of participants is fluctuating in the amount of time and effort given, and choices are inconsistent and not well defined

Bounded RationalityHeuristics and Biases: ‘hidden traps’

Representativeness Hueristic Availability Hueristic Anchoring or Adjustment Hueristic

Interpreting on the basis of Decision framing

Status-quo BiasEscalation of commitmentAllowing perceptual selectivity to creep

into decisions

Individual Limitations Individual decision makers succumb to the

biases and heuristics because of some known factors: limited ability, slow learning and fear

Interpersonal Barriers to Decision Making These barriers are more destructive when

important decisions are being taken, than in routine course of actions. It is believed that such barriers arise in the first place when parties find it difficult to trust the other and cannot openly deal with the decision matter

Providing for group decision making The groups can resort to six basic ways to arrive at

a decision: (1) Taking a vote from individuals and then averaging the decision (2) Leader taking the decision after individual members have made their suggestions (3) Committee decision (4) Majority Vote (5) Consensus and (6) Consensus after majority vote

Using creativity in order to improve decisions Brain Storming for fuller exploration of alternatives Supporting creativity across organisational

processes

Group decision making and technology

Managerial styles of decision-making Charismatic

Thinkers

Skeptic

Followers

Controllers

Decision-making and functioning in Organisations in India: Management Styles

Conservative style has a bias for preserving and extending what has worked so far

Entrepreneurial style supporting risk taking and innovation

Professional style using the systematic knowledge of management practice

Bureaucratic style emphasizing preference for formal rules, and accountability

Organic style emphasizing interactive growth based on feedback from changing environment

Authoritarian style with preference for discipline and obedience

Participative style with ideology of collective and consensus-based decisions, voicing diverse opinions of those affected by decisions, before the decision is finalized

Intuitive style of management keeps faith on experience, common sense and rules of thumb

Familial style anchored in the preference for cohesiveness and loyalty

Altruistic style based on philosophy that organisation is an instrument of creating larger social good and not just profit maximization