Chapter Eleven

Decision-Making Processes

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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Today’s Business Environment
• • • • • • New strategies Reengineering Restructuring Mergers/Acquisitions Downsizing New product/market development • . . . Etc.
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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Decisions Made Within the Organization
• Complex, emotionally charged issues • More rapid decisions • Less certain environment • Less clarity about means/outcomes • Requires more cooperation
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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A New Decision-Making Process
• Required because
– no one person has enough info to make all major decisions – No one person has enough time and credibility to convince many

• Relies less on hard data • Guided by powerful coalition • Permits trial and error approach
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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Steps in the Rational Approach to Decision-Making

Implement Chosen Alternative Choose Best Alternative

Monitor Decision Environment Define Decision Problem

7 6

8

1

2 3

Evaluate Alternatives

5

4

Specify Decision Objectives

Develop Alternative Solutions

Diagnose Problem

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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Constraints and Trade-offs During Non-programmed Decision-Making
Limited time, information, resources to deal with complex, multidimensional issues

Bounded Rationality:

Trade-off

Trade-off

Trade-off

Desire for prestige, success; personal decision style; and the need to satisfy emotional needs, cope with pressure, maintain self-concept

Personal Constraints:

Trade-off

search for a high-quality decision alternative

Decision/ Choice:

Organizational Constraints:
Need for agreement, shared perspective, cooperation, support, corporate culture and structure, ethical values

Trade-off
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

Sources: Adapted from Irving L. Janis, Crucial Decisions (New York: Free Press, 1989); and A. L. George, Presidential Decision Making in Foreign Policy: The Effective Use of Information and Advice (Boulder, Colo.: Westview Press, 1980).

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Choice Processes in the Carnegie Model
Uncertainty
Information is limited Managers have many constraints

Coalition Formation
Hold joint discussion and interpret goals and problems Share opinions Establish problem priorities Obtain social support for problem, solution

Search
Conduct a simple, local search Use established procedures if appropriate Create a solution if needed

Conflict
Managers have diverse goals, opinions, values, experience

Satisficing
Adopt the first alternative that is acceptable to the coalition
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©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

The Incremental Decision Process Model
• Every step characterized by decision interrupts • Identification Phase – Recognition – Diagnosis • Development Phase – Search – Screen – Design • Selection Phase – Judgment (evaluation – choice) – Analysis (evaluation) – Bargaining (evaluation – choice) – Authorization ©2000
South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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Learning Organization Decision Process When Problem Identification and Problem Solution Are Uncertain
PROBLEM IDENTIFICATION PROBLEM SOLUTION
When problem solution is uncertain, Incremental process model applies Incremental, trial-and-error Process Is needed Solve big problems in little steps

When problem identification is Uncertain, Carnegie model applies Political and social process is Needed Build coalition, seek agreement, And resolve conflict about goals And problem priorities

Recycle and try again when blocked

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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Illustration of Independent Streams of Events in the Garbage Can Model of Decision-Making
Problems Solutions

Middle Management Participants Problems Solutions Choice Opportunities Participants Participants

Choice Opportunities Department A Problems Solutions Choice Opportunities Participants Solutions Problems Solutions Choice Opportunities Problems Participants

Choice Opportunities Department B Problems Solutions Choice Opportunities Participants

Participants

©2000 Problems Solutions South-Western College Publishing 11-10 Cincinnati, Ohio Participants Daft, Organizational Theory and Design, 7/e

Contingency Framework for Using Decision Models
Certain
1 Problem Consensus 2

Uncertain

Certain

Individual: Rational Approach Computation Organization: Management Science

Individual: Bargaining, Coalition Formation Organization: Carnegie Model

Solution Knowledge

3 Individual: Judgment Trial-and-error Organization: Incremental Decision Process Model

Uncertain

4 Individual: Bargaining and Judgment Inspiration and Imitation Organization: Carnegie and Incremental Decision Process Models, evolving to Garbage Can
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©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

Special Decision Circumstances
• High-Velocity Environments • Decision Mistakes and Learning

• Escalating Commitment
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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Workbook Activity

Decision Styles
Your decisions
Approach used

Advantages and disadvantages

Your recommende d decision style

1.

2.
Decisions by others 1.

2.
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

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