Scribd
Upload
58 views

Decision Making: Types of Decisions

The document discusses various models of decision making: rational decision making which follows systematic steps; bounded rationality which accepts limitations and chooses satisfactory options; intuitive decision making which arrives at decisions without conscious reasoning; and creative decision making which generates new ideas. It also discusses factors that influence organizational creativity like team composition and process, leadership, and culture. Effective decision making involves elements from different models depending on the situation.

Uploaded by

Stella Bùi
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
58 views

Decision Making: Types of Decisions

The document discusses various models of decision making: rational decision making which follows systematic steps; bounded rationality which accepts limitations and chooses satisfactory options; intuitive decision making which arrives at decisions without conscious reasoning; and creative decision making which generates new ideas. It also discusses factors that influence organizational creativity like team composition and process, leadership, and culture. Effective decision making involves elements from different models depending on the situation.

Uploaded by

Stella Bùi
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 8

Decision making 

refers to making choices among alternative courses of action


which may also include inaction. While it can be argued that management is
decision making, half of the decisions made by managers within organizations
ultimately fail.  [1] Therefore, increasing effectiveness in decision making is an
important part of maximizing your effectiveness at work.

Individuals throughout organizations use the information they gather to make a wide
range of decisions. These decisions may affect the lives of others and change the
course of an organization..

It is important to remember that decisions have consequences.

Types of Decisions
Most discussions of decision making assume that only senior executives
make decisions or that only senior executives’ decisions matter. This is a
dangerous mistake.

 Peter Drucker

•
Types of decisions:

Programmed decisions.

routine problems that arise regularly and can be addressed


through standard responses.

Nonprogrammed decisions.

• Involve nonroutine problems that require solutions specifically


tailored to the situation at hand

Classical decision theory.

– Views the decision maker as acting in a world of complete certainty.

Behavioral decision theory.

– Accepts a world with bounded rationality and views the decision


maker as acting only in terms of what he/she perceives about a given
situation.

How are decisions made


in organizations?
Steps in systematic decision making.

– Recognize and define the problem or opportunity.

– Identify and analyze alternative courses of action, and estimate their


effects on the problem or opportunity.

– Choose a preferred course of action.

– Implement the preferred course of action.

– The systematic decision-making process may not be followed where


substantial change occurs and many new technologies prevail.

– Novel decision techniques may yield superior performance in certain


situations.
– Ethical consequences of decision making must be considered

Examples of Decisions Commonly Made Within Organizations

In this chapter we are going to discuss different decision-making models designed to


understand and evaluate the effectiveness of nonprogrammed decisions. We will
cover four decision-making approaches, starting with the rational decision-making
model, moving to the bounded rationality decision-making model, the intuitive
decision-making model, and ending with the creative decision-making model.

Making Rational Decisions


The rational decision-making model describes a series of steps that decision makers
should consider if their goal is to maximize the quality of their outcomes. In other
words, if you want to make sure that you make the best choice, going through the
formal steps of the rational decision-making model may make sense.

Steps in the Rational Decision-Making Model


.

Making “Good Enough” Decisions


The bounded rationality model of decision making recognizes the limitations of our
decision-making processes. According to this model, individuals knowingly limit
their options to a manageable set and choose the first acceptable alternative without
conducting an exhaustive search for alternatives. An important part of the bounded
rationality approach is the tendency tosatisfice (a term coined by Herbert Simon
from satisfy and suffice), which refers to accepting the first alternative that meets your
minimum criteria. For example, many college graduates do not conduct a national or
international search for potential job openings. Instead, they focus their search on a
limited geographic area, and they tend to accept the first offer in their chosen area,
even if it may not be the ideal job situation. Satisficing is similar to rational decision
making. The main difference is that rather than choosing the best option and
maximizing the potential outcome, the decision maker saves cognitive time and
effort by accepting the first alternative that meets the minimum threshold.
Making Intuitive Decisions
The intuitive decision-making model has emerged as an alternative to other decision making
processes. This model refers to arriving at decisions without conscious reasoning. A total of

89% of managers surveyed admitted to using intuition to make decisions at least sometimes
and 59% said they used intuition often. [6] Managers make decisions under challenging

circumstances, including time pressures, constraints, a great deal of uncertainty, changing


conditions, and highly visible and high-stakes outcomes. Thus, it makes sense that they

would not have the time to use the rational decision-making model. Yet when CEOs,
financial analysts, and health care workers are asked about the critical decisions they make,

seldom do they attribute success to luck. To an outside observer, it may seem like they are
making guesses as to the course of action to take, but it turns out that experts systematically

make decisions using a different model than was earlier suspected. Research on life-or-death
decisions made by fire chiefs, pilots, and nurses finds that experts do not choose among a list

of well thought out alternatives. They don’t decide between two or three options and choose
the best one. Instead, they consider only one option at a time.

Making Creative Decisions


In addition to the rational decision making, bounded rationality, and intuitive
decision-making models, creative decision making is a vital part of being an effective
decision maker. Creativity is the generation of new, imaginative ideas. With the
flattening of organizations and intense competition among companies, individuals
and organizations are driven to be creative in decisions ranging from cutting costs to
generating new ways of doing business. Please note that, while creativity is the first
step in the innovation process, creativity and innovation are not the same thing.
Innovation begins with creative ideas, but it also involves realistic planning and
follow-through. Innovations such as 3M’s Clearview Window Tinting grow out of a
creative decision-making process about what may or may not work to solve real-
world problems.
The Creative Decision-Making Process

A NASA scientist describes his decision-making process leading to a creative


outcome as follows: He had been trying to figure out a better way to de-ice planes to
make the process faster and safer. After recognizing the problem, he immersed
himself in the literature to understand all the options, and he worked on the problem
for months trying to figure out a solution. It was not until he was sitting outside a
McDonald’s restaurant with his grandchildren that it dawned on him. The golden
arches of the M of the McDonald’s logo inspired his solution—he would design the
de-icer as a series of Ms. [8] This represented the illumination stage. After he tested
and verified his creative solution, he was done with that problem, except to reflect on
the outcome and process.
How Do You Know If Your Decision-Making Process Is Creative?
Researchers focus on three factors to evaluate the level of creativity in the decision-making
process. Fluency refers to the number of ideas a person is able to generate. Flexibility refers to
how different the ideas are from one another. If you are able to generate several distinct

solutions to a problem, your decision-making process is high on flexibility. Originality refers


to how unique a person’s ideas are.
Dimensions of Creativity

Ideas for Enhancing Organizational Creativity


Team Composition
o Diversify your team to give them more inputs to build on and more opportunities to create
functional conflict while avoiding personal conflict.
o Change group membership to stimulate new ideas and new interaction patterns.
o Leaderless teams can allow teams freedom to create without trying to please anyone up
front.

 Team Process
o Engage in brainstorming to generate ideas. Remember to set a high goal for the number of
ideas the group should come up with, encourage wild ideas, and take brainwriting breaks.
o Use the nominal group technique in person or electronically to avoid some common group
process pitfalls. Consider anonymous feedback as well.
o Use analogies to envision problems and solutions.

 Leadership
o Challenge teams so that they are engaged but not overwhelmed.
o Let people decide how to achieve goals, rather than telling them what goals to achieve.
o Support and celebrate creativity even when it leads to a mistake. Be sure to set up processes
to learn from mistakes as well.
o Role model creative behavior.

 Culture
o Institute organizational memory so that individuals do not spend time on routine tasks.
o Build a physical space conducive to creativity that is playful and humorous—this is a place
where ideas can thrive.
o Incorporate creative behavior into the performance appraisal process.

You might also like