OTB Chapter 12
Decision-making is the process of identifying a problem or opportunity and choosing among alternative courses of action.
Routine problems arise regularly and can be addressed through standard responses called programmed decisions- that implement specific solutions determined by past experiences as appropriate for the problems at hand.
Non-routine problems are unique and new problems that call for creative problem solving. The crafted decisions are specially tailored to a situation.
Certain environments exist when
information is sufficient to
predict the results of each
alternative in advance
of implementation.
Risk environments involve a lack of complete certainty regarding the outcomes of various courses of action, but some awareness of the probabilities associated with their occurrences. A weighing of the likelihood of an event versus the consequences of the event is done and assessed to be high, medium or low.
Uncertain environments exist when managers are unable to assign probabilities to the outcomes of various problem-solving alternatives. It requires unique, novel and often totally innovative alternatives to existing patterns of behaviour.
Decision-making
process
1) Recognise that a problem or opportunity exists and something must be done about it.
2) Identity and analyse alternative courses of action to remedy the situation.
3) Choose a preferred course of action- assess the consequences of choosing one option over another.
4) Implement the decision.
classical theory
views the manager as acting in a world of complete certainty. The manager faces a clearly defined problem, knows all possible action alternatives and their consequences, then chooses the alternative that offers the best, or optimum, resolution of the problem.
Information deficiencies and overload compromise the ability of managers to make decisions according to the classical model.
Behavioural theory
that people act only in terms of what they perceive about a given situation, acting under uncertainty and with limited information.
garbage can
decision model
problems, solutions, participants and situations as all mixed together in a dynamic field of organisational forces. Many solutions get implemented without being tied to a specific problem, they are just done for the sake of doing something. Decision makers cannot agree to match chronic problems with solutions, make choices and implement them in a timely and consistent manner.
Intuition is the ability to know or recognise quickly and readily the possibilities of a given situation. It adds an element of spontaneity and offers the potential for greater creativity and innovation.
Judgement is the use of the intellect in making decisions. Analysing alternative courses of action and choosing one course involve making judgements. Heuristics (simplifying strategies or rules of thumb) are often used to make decisions and for managers to deal with uncertainty and limited information. However, they can lead to systematic errors that affect the quality of any decisions made.
Creativity is the development of unique and novel responses to problems and opportunities.