decision about how to make a decision.

This may sound like doubletalk, but it

Decision Making isn’t.
- The process of making choices from
among several alternatives

Analytical Model of the Decision-Making Process

- A conceptualization of the eight steps

through which individuals and groups
make decisions: identify the problem,
define objectives, make a predecision,
generate alternatives, evaluate
alternatives, make a choice, implement
the choice, and follow up to determine
whether the problem still exists

This approach highlights three important phases

of the general decision-making process:

- Formulation: The process of coming to Decision Support Systems (DSS)

understand the nature of the problem
that is being confronted - Computer programs in which
- Consideration: The process of information about organizational
determining and selecting a possible behavior is presented to decision makers
decision to solve that problem in a manner that helps them structure
- Implementation: The process of carrying their responses to decisions.
out the decision that has been made so
Decision Consideration
as to solve the problem
1. Generating alternatives. The fourth step
Decision Formulation
in the process calls for generating
1. Identifying the problem. The first step in alternatives, the stage in which possible
the decision-making involves identifying solutions to the problem are identified.
the problem. To decide how to solve a In attempting to come up with solutions,
problem, one first must acknowledge its people often rely on previously used
existence. approaches that might provide ready-
2. Defining objectives. After a problem is made answers for them
identified, the next step is to define the 2. Evaluating alternative solutions.
objectives to be met in solving the Because all these possibilities may not
problem. It is important to conceive of be equally feasible, the fifth step calls for
problems in such a way that possible evaluating alternative solutions
solutions can be identified 3. Making a choice. Next, in the sixth step,
3. Making a predecision. The third step in a choice is made.After several
the decision-making process calls for alternatives are evaluated, one is
making a predecision. A predecision is a chosen. As we will describe shortly,
different approaches to decision making
 offer different views of how thoroughly Empowered Decision Making
people consider alternatives and how
- The practice of vesting power for making
optimal their chosen alternatives are.
decisions in the hands of employees
Decision Implementation themselves

1. Implementing the decision. The seventh

step calls for implementing the chosen
alternative— that is, carrying out the
decision that was made in step 6
2. Following up. The eighth and final step
involves following up.

The Broad Spectrum of Organizational Decisions

Programmed Decisions

- Highly routine decisions made according

to preestablished organizational
routines and procedures.

Nonprogrammed Decisions

- Decisions made about a highly novel

problem for which there is no
prespecified course of action

Factors Affecting Decisions in Organizations

Decision Style
Strategic Decisions - Differences between people with
- Nonprogrammed decisions typically respect to their orientations toward
made by high-level executives regarding decisions.
the direction their organization should Decision Style Model
take to achieve its mission
- The conceptualization according to
Top-down Decision Making which people use one of four
- The practice of vesting decision-making predominant decision styles: directive,
power in the hands of superiors as analytical, conceptual, or behavioral.
opposed to lower-level employees.
The decision style model classifies four major Indecisiveness
decision styles
- An individual difference variable
- Directive style—Characterized by people reflecting the degree to which people
who prefer simple, clear solutions to approach decisions eagerly as opposed
problems. Individuals with this style tend to wanting to put them off
to make decisions rapidly because they
Groupthink
use little information and do not
consider many alternatives. They tend to - The tendency for members of highly
rely on existing rules to make their cohesive groups to so strongly conform
decisions and aggressively use their to group pressures regarding a certain
status to achieve results. decision that they fail to think critically,
- Analytical style—Individuals who are rejecting the potentially correcting
willing to consider complex solutions influences of outsiders.
based on ambiguous information.
People with this style carefully analyze
their decisions using as much data as
possible. Such individuals tend to enjoy
solving problems. They want the best
possible answers and are willing to use
innovative methods to achieve them.
- Conceptual style—People who are
socially oriented in their approach to
problems. Their approach is humanistic
and artistic. Such individuals tend to Rational Decisions
consider many broad alternatives when
- Decisions that maximize the chance of
dealing with problems and to solve them
attaining an individual’s, group’s, or
creatively. They have a strong future
organization’s goals.
orientation and enjoy initiating new
ideas. Rational-economic Model
- Behavioral style—People who are
concerned deeply about the - The model of decision making according
organizations in which they work and to which decision makers consider all
about the personal development of their possible alternatives to problems before
coworkers. They are highly supportive of selecting the optimal solution.
others and very concerned about others’ Administrative Model
achievements, frequently helping them
meet their goals. Such individuals tend - A model of decision making that
to be open to suggestions from others, recognizes that people have imperfect
and therefore tend to rely on meetings views of problems, which limits the
for making decisions. making of optimally rational-economic
decisions
Satisfying Decisions Risky Choice Framing Effect

- Decisions made by selecting the first - The tendency for people to avoid risks
minimally acceptable alternative as it when situations are presented in a way
becomes available that emphasizes positive gains, and to
take risks when situations are presented
Bounded Rationality
in a way that emphasizes potential
- The major assumption of the losses that may be suffered.
administrative model— that
organizational, social, and human
limitations lead to the making of
satisficing, rather than optimal
decisions.

Bounded Discretion

- The tendency to restrict decision

alternatives to those that fall within Attribute Framing Effect
prevailing ethical standards.
- The tendency for people to evaluate a
Image Theory characteristic more positively when it is
presented in positive terms than when it
- A theory of decision making that
is presented in negative terms.
recognizes that decisions are made in an
automatic, intuitive fashion. According Goal Framing Effect
to the theory, people will adopt a course
of action that best fits their individual - The tendency for people to be more
principles, current goals, and plans for strongly persuaded by information that
the future. is framed in negative terms than
information that is framed in positive
terms

Heuristics

- Simple decision rules (rules of thumb)

used to make quick decisions about
complex problems. (See availability
heuristic and representativeness
heuristic.)

Availability Heuristic

- The tendency for people to base their

Framing
judgments on information that is readily
- The tendency for people to make available to them although it may be
different decisions based on how the potentially inaccurate, thereby
problem is presented to them. adversely affecting decision quality.
Representativeness Heuristic Hindsight Bias

- The tendency to perceive others in - The tendency for people to perceive

stereotypical ways if they appear to be outcomes as more inevitable after they
typical representatives of the category have occurred (i.e., in hindsight) than
to which they belong. before they occurred (i.e., in foresight).

Person Sensitivity Bias

- The tendency for people to give too little

credit to others when things are going
poorly and too much credit when things
are going well

Implicit Favorite Escalation of Commitment Phenomenon

- One’s preferred decision alternative, - The tendency for individuals to continue

selected even before all options have to support previously unsuccessful
been considered. courses of action.

Confirmation Candidate

- A decision alternative considered for

purposes of convincing oneself of the
wisdom of selecting the implicit favorite.

Brainstorming

- A technique designed to foster group

productivity by encouraging interacting
group members to express their ideas in
a noncritical fashion.
 Unconflicted Change

- The tendency for people to quickly

change their minds and to adopt the first
new idea to come along.

Defensive Avoidance

- The tendency for decision makers to fail

to solve problems because they go out of
their way to avoid working on the
problem at hand.

Techniques for Enhancing Group Decisions

Delphi Technique

- A method of improving group decisions

using the opinions of experts, which are
solicited by mail and then compiled. The
expert consensus of opinions is used to
make a decision.

Hypervigilance

- The state in which an individual

frantically searches for quick solutions to Nominal Group Technique (NGT)
problems, and goes from one idea to
another out of a sense of desperation - A technique for improving group
that one idea isn’t working and that decisions in which small groups of
another needs to be considered before individuals systematically present and
time runs out. discuss their ideas before privately
voting on their preferred solution. The
Unconflicted Adherence most preferred solution is accepted as
- The tendency for decision makers to the group’s decision.
stick to the first idea that comes to their
minds without more deeply evaluating
the consequences.
Stepladder Technique

- A technique for improving the quality of

group decisions that minimizes the
tendency for group members to be
unwilling to present their ideas by
adding new members to a group one at
a time and requiring each to present his
or her ideas independently to a group
that already has discussed the problem
at hand.

Group Decision Support Systems (GDSS)

- Interactive computer-based systems

that combine communication,
computer, and decision technologies to
improve the effectiveness of group
problem-solving meetings.