non-programmed decision-making -- decision making in response to novel opportunities and problems
programmed decision-making -- decision making in response to recurring opportunities and problems
performance program -- a standard sequence of behaviors the organizational members followed routinely whenever they encounter a particular type of problem or opportunity
classical decision making model -- a prescriptive approach based on the assumptions that the decision maker has all the necessary information and will choose the best possible solution or response
administrative decision-making model -- a descriptive approach stressing that incomplete information, psychological and social illogical processes, and a decision makers cognitive abilities affect decision-making and that decision makers often to satisfactory, not optimal, solutions
satisficing -- searching for and choosing an acceptable response or solution, not necessarily the best possible one
bounded rationality -- an ability to reason that is constrained by the limitations of the human mind itself
heuristics -- rules of thumb that simplify decision-making
availability heuristic -- the rule of thumb that says an event that is easy to remember is likely to have occurred more frequently than an event that is difficult to remember
representativeness heuristic -- the role of thumb that says similar kinds of events that happened in the past are a good predictor of the likelihood of an upcoming event
base rate -- the actual frequency with which an event occurs
anchoring and adjustment heuristic -- the rule of thumb that says that decisions about how big or small an amount (such as the salary, budget, or level of costs) should be/can be made by making adjustments from some initial amount
escalation of commitment -- the tendency to invest additional time, money, or effort into what were essentially bad decisions or unproductive courses of action
sunk costs -- costs that cannot be reversed and will not be affected by subsequent decision-making
groupthink -- a pattern of faulty decision-making that occurs in cohesive groups whose members strive for agreement at the expense of accurately assessing information relevant to the decision
Devils Advocate -- someone who argues against a cause or position in order to determine its validity
brainstorming -- a spontaneous, participated decision-making technique that groups use to generate a wide range of alternatives from which to make a decision
production blocking -- loss of productivity in brainstorming groups due to various distractions and limitations inherent to brainstorming
nominal group technique (NGT) -- a decision-making technique that includes the following steps: group members generate ideas on their own and write them down, group members communicate their ideas to the rest of the group, and each idea is then discussed and critically evaluated by the group
Delphi technique -- a decision-making technique in which a series of questioning errors is sent to experts on the issue at hand, who never actually meet face-to-face
benchmarking -- selecting a high performance group and using this group as a model
empowerment -- the process of giving employees throughout organization the authority to make decisions and be responsible for their outcomes
organizational learning -- the process through which managers seek to increase organization members desire and ability to make decisions that continuously raise organizational of fish and sea and effectiveness
exploration -- learning that involves organizational member searching for and experimenting with new kinds or forms of organizational behaviors and procedures to increase effectiveness
exploitation -- learning that involves organizational members finding ways to refine and improve existing organizational behaviors and procedures to increase effectiveness
learning organization -- an organization that purposefully take steps to enhance and maximize the potential for explorative and exploitative organizational learning to take place
Summary
The decisions made by employees at all levels and organizations can have major impact on levels of performance and well-being on the extent to which individuals, groups, and whole organizations achieve their goals.
The decision-making is the process by which members of an organization choose how to respond to opportunities and problems. Not programmed decision-making occurs when members of an organization choose how to respond to novel opportunities and problems. Not programmed decision-making involves a search for information. Programmed these fission making occurs when members of an organization respond to recurring opportunities and problems by using standard responses.
The classical model of decision-making is a prescriptive model that assumes that decision makers have access to all the information they need and will make the best decision possible.
A decision maker using the classical model takes these four steps:
- listing all alternatives
- listing the consequences of each alternative
- considering his or her preference for each alternative or set of consequences
- selecting the alternative that will result in the most preferred set of consequences.
There are problems with the classical model because it is not realistic. D. session makers often do not know all the alternatives they can choose from, often do not know the consequences of each alternative, may not be clear about their own preferences, and in many cases lack the mental ability to take into account all the information required by the classical model. Moreover, the classical model can be very time-consuming.
March and Simon's administrative decision-making model is descriptive; it explains how decisions are actually made in organizations. March and Simon propose that decision makers choose how to respond to opportunities and problems on the basis of a simplified and approximate account of the situation called the decision makers definition of the situation. This definition is the result of both psychological and sociological processes. Rather than making optimal decisions, decision makers often satifice, or make unacceptable decision, not necessarily an optimal decision. Satisficing occurs because of bounded rationality.
Heuristics are rules of thumb that simplify decision-making but can lead to errors or biases. The availability heuristic reflects the tendency to determine the frequency of an event and its causes by how easy they are to remember. The availability heuristic can lead to biased decision-making when the frequency of an event and causes is overestimated because they are vivid, extreme, or recent. The representativeness heuristic reflects the tendency to predict the likelihood of an event from the extent to which the event is typical of similar kinds of events that happened in the past.
Representativeness can lead to biased decision-making when decision-makers fail to take into account base rates. The anchoring and adjustment heuristic reflects the tendency to make decisions based on adjustments from some initial account. The anchoring and adjustment heuristic can lead to biased decision-making when the initial amounts were too high or too low.
Escalation of commitment is the tendency of decision-makers to invest additional time, money, or effort into losing courses of action. Escalation of commitment occurs because decision-makers do not want to admit that they have made a mistake, view further commitment of resources as a way to recoup sunk costs, and no more likely to take risks when decisions are framed in negative rather than positive terms.
The advantages of using groups instead of individuals to make decisions include the availability and diversity of members skills, knowledge, and expertise; enhanced memory for facts; capability of air or detection; and greater decision acceptance. The disadvantages of group decision-making include the time it takes to make a decision and the potential for groupthink. Other consequences include diffusion of responsibility, group polarization, and the potential for conflict.
Group decision-making techniques used in organizations include brainstorming, the nominal group technique, and the Delphi technique. Two group decision-making techniques used in total quality management are benchmarking and empowerment.
Two main types of organizational learning that can lead to improve decision-making all our explorative and exploitative learning. Organizations can improve their members ability to make high-quality decisions by encouraging them to develop personal mastery and complex mental models through team learning, by building a shared vision, and through systems thinking.
