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AU / Business Management / MNGT 3100 / the model closely resembles the real environment in which most manager

the model closely resembles the real environment in which most manager

the model closely resembles the real environment in which most manager


What might the rule be?

Political Model (how did this decision get made with this project/organization?

o The availability of info (how much info do you have?

CH 6 – Decision Making Types of Decisions and Problems  ∙ Decision making is the process of identifying opportunities… a  decision is a choice make from available alternatives  Types of Decisions: ∙ Programmed decisions: situations that occur often enough to  enable decision rules to be developed (routWe also discuss several other topics like prp uwf
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ine and standardize  system) ∙ Non-programmed decisions: are made in response to situations  that are unique, are poorly defined and largely unstructured (not  much experience from the past; new and unique) Decision Making Conditions ∙ The conditions surrounding a decision can be organized  according to: o The availability of info (how much info do you have?) o The possibility of failure ∙ These conditions can be arranged on a scale moving from: o Programmed decisions:   Certainty   Risk Ex. 6.1 Conditions That Affect the Possibility o Non-programmed decisions:  Uncertainty   Ambiguity  of Decision Failure Condition That Affect the Possibility of Decision Failure  Organizational Problem Low Possibility ofFailure High Certainty Risk Uncertainty Ambiguity Programmed Decisions Problem Solution Nonprogrammed Decisions6­7 Three Decision Making Models 1. Classical/Ideal, Rational Model (how you should look at  something) o Earliest model of decision processes o Describe logical and rational decision processes o Decisions are made based on the organization’s best  economic interests o Defines how decisions should be made – not necessarily  how they’re made o Assumptions:  Accomplished goals that are known and agreed upon; problem is defined   Attempts to gather complete info so that all  alternatives are known   Decision makers agree on criteria to evaluate  alternatives and priorities   Decision maker is rational and uses logic 2. Administrative Model (how you actually/typically make a  decision) o Descriptive approach based on how managers actually  make decisions  o Doesn’t assume completely logical and rational decision  processes o More realistic model for non-programmed decisions of  uncertainty and ambiguity o Principal concepts:  Bounded rationality: means that people have limits  or boundaries on how rational they can be. We  identify the essential features of the problem  Heuristics: means that people use judgmental  shortcuts in searching for alternative solutions   Satisficing: means that decision makers choose the  first solution alternative that satisfies minimal  decision criteria  3. Political Model (how did this decision get made with this  project/organization?) o Closely resembles the real environment in which most  managers and decision makers operate o Decisions are complex (non-programmed) o Disagreement and conflict over problems and solutions are  normal o Principal concepts: Managers exchange viewpoints to gather info ∙ Managers from different areas of the  organization are pursuing different goals –  share info ∙ Also uses the bounded rationality approach  (may not have enough info…)  Managers build coalitions in deciding among  alternatives  ∙ Decisions are the results of bargaining among  coalitions  Making Effective Decisions  Cognitive Biases in Decision Making  ∙ Some common decision-making heuristics which can lead to poor decisions  o Availability Heuristic   Our perceptions of the frequency of events in  influenced by: ∙ Ease of recall∙ Vividness ∙ Recency ∙ Errors in estimating odds or base rates  To avoid this error, try not to be misled by easily  recalled events. Don’t assume that what you easily  recall represents actual rates of events outside of  your experience   EX: Here are three numbers… 2-4-6. What might the  rule be? (it is increasing in order) o The Confirmation Trap “confirmation biases” (come up with a quick  conclusion and go with)  Tend to see and use info that confirms what we think  is true; give too much weight to supporting info  Fail to search for and give too little weight to  contradictory or conflicting info (try not to ignore  this!)  We tend to pay too much attention to info that  confirms our initial ideas. It may be more important  to pay attention to contradictory info “devil’s  advocate role”  EX: draw four straight lines without lifting the pencil  o Bounded Awareness “think outside the box”  To avoid info overload we filter info. The filtering  process can prevent us from focusing on useful,  observable info  We create a boundary which framed the problem to  help us find a solution, but this can prevent the  discovery of the solution  Creative decisions are often prevented by the  assumptions we make in defining the problem.  Identify and question your assumptions (you aren’t  even aware that you’re making the decision) o Escalating Commitment  When there are indications that the project is failing,  even more resources are committed in an effort to  salvage the situation (after an investment, and it’s  not going well, you try to keep your hopes up and  keeping it going/trying)  “gotta know when to fold’em”  To help avoid this error consider the cost of dropping  the project before you eve begin it – what will be the  cost of withdrawal (bring in fresh eyes can help avoid this error)  Decide today if it’s worth the investment  independent of the prior commitment – If I started  the job toady, would I support this project?  Group Decision Making ∙ Decision in the business world are most often made by groups o Advantages of group decisions:  Diversity of experience and viewpoints  Generate more alternative   Increase acceptance to decision o Are better decisions made by groups? Research studies  indicate that…  Groups often have better performance that the  average of the individual’s solutions ∙ Main advantage may be that groups can pool  resources and correct each other’s errors   But group performance is often worse that that of the best single individual performance  o This will help:  Discover the goal(s) and work towards it to achieve it  Pay attention to the process of the group  o Problems with group decision making:   Takes time to bring group together and groups take  longer to research a decision   Groups can be dominated by a few members  There can be increased pressures to conform – one  form of this pressure is referred to as groupthink

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