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5.3 DECISION-MAKING MODELS (MANAGERIAL DECISION MAKING) - Coggle Diagram
5.3 DECISION-MAKING MODELS (MANAGERIAL DECISION MAKING)
THE CLASSICAL MODEL (IDEAL & RATIONAL)
Concept:
Ideal, rational economic assumption of how managers should make decisions.
Key Assumptions
Clear Target:
Goals are entirely known and agreed upon.
Total Certainty:
Strives for conditions of absolute certainty.
Maximum Efficiency:
Uses pure logic to maximize organizational goals.
Perfect Math:
All alternatives, outcomes, and criteria are fully calculated.
THE ADMINISTRATIVE MODEL (DESCRIPTIVE & REALISTIC)
Concept:
Descriptive approach recognizing human and environmental limitations that make perfect rationality impossible.
Key Characteristics
Vague Goals:
Decision goals are vague and lack consensus.
Limited Search:
Search for alternatives is limited by time, resources, and human capability.
Non-Rational Procedures:
Rational procedures are not always used.
Satisficing Focus:
Managers settle for satisficing rather than maximizing.
HOW THE ADMINISTRATIVE BRAIN WORKS
Bounded Rationality:
People have limits and boundaries on rationality in complex systems.
Intuition:
Quick decision-making based on past experience without conscious thought.
Satisficing:
Choosing the first alternative that satisfies minimal decision criteria ("
Good Enough Solution
")
THE POLITICAL MODEL
Pluralism:
Organizations are made of diverse, competing interests
Ambiguity:
Information is ambiguous and incomplete
Constraint:
Managers lack resources to identify all dimensions of a problem
.
The Solution (Coalition Building):
Managers engage in the push and pull of debate to decide goals and alternatives
THE 6-STEP DECISION MAKING CYCLE
1.Recognition of Decision Requirement
Diagnosis and Analysis of Causes
Development of Alternatives
Selection of Desired Alternative
Implementation of Chosen Alternative
Evaluation and Feedback
PHASE 1: RECOGNIZE & DIAGNOSE
Recognition of Decision Requirement
When a problem or opportunity is presented, decisions must be made
Problem – occurs when organizational accomplishment is less than established goals
Opportunity – when managers see potential accomplishment that exceeds specified current goals
Diagnosis and Analysis of Causes
Managers ask a series of questions
What is the state of disequilibrium affecting us?
When did it occur?
Where did it occur?
How did it occur?
To whom did it occur?
What is the urgency of the problem?
What is the interconnectedness of events?
What result came from which activity?
Managers must understand the situation—diagnosis
PHASE 2: DEVELOP & ALTERNATIVES
Development of Alternatives
Goal:
Generate feasible solutions.
Programmed Decisions
Readily available alternatives.
Easy to define standard procedures.
Nonprogrammed Decisions
Require novel courses of action.
Demand creative problem-solving.
Selection of the Desired Alternative
Goal:
Choose the most promising option.
Selection Criteria
Alignment with organizational goals & objectives.
Minimization of risk & uncertainty.
Feasibility & resource availability.
PHASE 3: IMPLEMENTATION & FEEDBACK
Implementation of the Chosen Alternative
Core Competencies Required
Managerial Capabilities:
Operational planning and execution.
Administrative Skills:
Resource allocation and structure.
Persuasive Skills:
Gaining stakeholder buy-in.
Key Execution Enablers
Communication:
Clear alignment of tasks and goals.
Motivation:
Driving engagement and team effort.
Leadership
: Guiding and supporting implementation.
Evaluation & Feedback
Performance Assessment
Evaluate execution quality.
Measure outcomes against success criteria.
Nature of Feedback
Continuous and iterative process.
Triggers adjustments or sequential alternatives for complex problems.