Decision making is a complex process that can be seen to involve many different stages or events before an actual decision is made. Essentially, decision making is concerned with the processing of generating options and then choosing among them. Decisions in organizations can be divided into various groups, and each decision has various phases. For instance: operational decisions, usually with short-term effects and of a routine nature; tactical decisions, usually with medium-term effects and of a nonroutine nature; strategic decisions, usually with long-term effects concerning the organization’s goals.
Moreover, decisions can be classified into various types. Many are routine, with considerable guidance available on how and what to do, given company policy and prior history. These may be considered well-structured and they are called programmed in the sense that organizations have a program to deal with them. Other decisions have to be more creative because they are made about phenomena that are new or where there is a limited amount of data or experience to go on. These may be considered ill structured or unique and they are called nonprogrammer.
There is strong evidence among traditional theories of a polarization between unitary and pluralist approaches to decision making. Unitary approaches to decision making posit a general agreement about goals and the best means to achieve them. Pluralist approaches to decision making emphasize conflict and power struggles between individual coalitions in organizations in circumstances in which participants have substantial knowledge and information. The basis of most of the traditional models of decision making is choice. Decision making in this approach can be defined as a response to a situation requiring a choice.
There are various models of decision making with different assumptions about aspects of decision making, such as the preference and goals of participants; the types of conditions with which different styles and processes of decision making are associated; the nature of power and authority implicit in them; expected results and outcomes; and the underlying values, beliefs, and dominant rationale. Under the rational model of decision making, the assumption is made that participants have agreed in advance that making a decision is the right process to follow and that the rules and language of decision making are understood by all. The rational model aims at making optimal decisions on the basis of a careful evaluation of alternative courses of action. The model views the decision-making process as a sequential series of activities leading from an initial recognition of a problem, through the delineation and evaluation of alternative courses of action, and the selection of the preferred alternative to the implementation of action.
The administrative model of decision making is based on the actual behavior of decision makers, proposing that organizational decision making is a product of bounded rationality. This model recognizes the influence of nonrational, emotional, and unconscious elements in human thinking and behavior on suboptimal efforts to reach decisions and the existence of group pressures that limit the appearance of optimizing behaviors as well as the limited availability of perfect information and time and cost considerations attached to information gathering and evaluation. Thus, decision making leads to a satisfying rather than a rational decision, which broadly satisfies the parameters of a problem rather than searching for an ideal or optimal solution.
Incrementalism introduces the notion of mutual adjustment and gradual change, reflecting the troublesome character of decision-making processes arising from the competing interests and values that are brought into play in complex decision-making processes. It proposes that the decision maker does not attempt to roll out all possible alternatives before tackling a problem, but rather places limits on the alternatives to be considered, based on the current state of knowledge, and solves the problem through making small and gradual changes.
The garbage can model of decision making assumes that some organizations display characteristics of organized anarchy, for instance, problematic goals, unclear methods, and fluid participation. Under such conditions, where clear criteria of choice are absent, extraneous matters tend to get lumped into the decision making process, and solutions often bear little relation to problems. According to this model, the factors that influence decision making in organizations are the range of issues-cum-solutions-cum-problems that happen to be in the garbage can at a particular time and the total demands upon the decision makers at that time. In this sense, it could be argued that the model is based on circumstantial rationality.
The political model is pluralistic in nature, recognizing the role of various stakeholders as well as of conflict and conflict resolution in the decision-making process. According to this model, organizations are portrayed as consisting of shifting coalitions, and decision making is about reconciling the interests of different stakeholders.
Many decisions may also be affected by the effectiveness of group behavior. In the case of successful groups, a phenomenon that can lead to the escalation of bad decisions is referred to as groupthink, which is defined by Irving Janis as the “deterioration of mental efficiency, reality testing and moral judgment that results from in-group pressures.” The primary condition of groupthink is group cohesion, underwritten by a history of individual and group success. Groupthink has the following symptoms: (a) an illusion of invulnerability, with excessive optimism and risk taking; (b) pressures on individual members to conform and reach consensus, meaning that unpopular ideas may be suppressed; (c) the continuing search for group consensus can result in collective rationalization by members, which leads them to discount warnings and negative information; and (d) an unquestioned belief in the morality of the group that leads members to be convinced of the logical correctness of what they are doing and ignore the ethical or moral consequences of decisions. With groupthink, members’ striving for unanimity—their need for consensus—overrides their motivation to realistically appraise alternative courses of action.
To prevent or reduce the effects of groupthink, managers can encourage each member of the group to evaluate their own and others’ ideas openly and critically; ask influential members to adopt an initial external stance on solutions; discuss plans with disinterested outsiders to obtain reactions; use expert advisers to redesign the decision-making process; assign a devil’s advocate role to one or more group members to challenge ideas; explore alternative scenarios for possible external reactions; use subgroups to develop alternative solutions; and meet to reconsider decisions prior to implementation.
Finally, there have been recent developments that recognize some of the limitations of traditional decision-making literature and have led to a shift away from decisions to other concerns such as action; from choice to that of change in the context of decision making or to the interpretation of action. These revisions acknowledge that the concept of a decision is problematic and individuals in organizations are not often faced with clear-cut rational choices. In fact, decision makers often value ambiguity and they can see how events unfold and influence interpretations of them so that they can look good and avoid blame.
- Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions (Harper, 2008);
- Kenneth Chelst and Yavuz Burak Canbolat, Value Added Decision Making for Managers (Chapman & Hall, 2009);
- Malcolm Gladwell, Blink: The Power of Thinking Without Thinking (Little, Brown and Co., 2005);
- David Hardman, Judgment and Decision Making (Wiley-Blackwell, 2009);
- Anne Houlihan, “Empower Your Employees to Make Smart Decisions,” Supervision (v.68/7, July 2007);
- Göktuğ Morçöl, Handbook of Decision Making (CRC/Taylor & Francis, 2007)
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