Decision-Making
Processes
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Organizational Decision Making
 Is
defined as the process of
identifying and solving problems
 Has two stages: problem
identification and problem solution
 Decisions vary in complexity
continuum and are categorized as
programmed (routine) or non
programmed (non-routine)
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Individual Decision Making
 Rational
model
 Bounded Rational Perspective
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Steps in the Rational Approach to
Decision-Making (1)
Implement
Chosen
Alternative
Choose
Best
Alternative
Evaluate
Alternatives
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6
8
5
Develop
Alternative
Solutions
Monitor
Decision
Environment
1
4
2
3
Define
Decision
Problem
Specify
Decision
Objectives
Diagnose
Problem
4
Case
Nilgiriside Department store has a
number of drivers who operate its fleet
of delivery trucks.
 At the end of the day the crew are
required to complete a delivery report
that takes 5-10 min. each
 Preparation of this report has been a
frequent source of conflict between the
management and the crew
 The crew often fail to complete the
report properly or delay completing it,
which causes the supervisor to criticize
or threaten them
 What should be done?????

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Individual Decision making: A
Comparative Analysis
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Rational Approach
Involves systemic analysis
of the problem, choices
made & its
implementation in a
logical step by step
manner.
Generally used in
programmed decisions
where decision maker has
sufficient time for an
orderly thoughtful process
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Bounded Rationality
Perspective
Used when decisions are
non-programmed & illdefined
Rely more on intuition &
experience rather than
sequential logic or explicit
reasoning
Takes short cut
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Constraints and Trade-offs
During Non-programmed DecisionMaking
Bounded Rationality:
Limited time, information,
resources to deal with complex,
multidimensional issues
Trade-off
Trade-off
Trade-off
Decision/
Choice:
Personal Constraints:
Desire for prestige, success;
personal decision style; and
the need to satisfy emotional
needs, cope with pressure,
maintain self-concept
Trade-off
Search for
a high-quality
decision
alternative
Organizational Constraints:
Need for agreement, shared
perspective, cooperation,
support, corporate culture and
structure, ethical values
Trade-off
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Organizational Decision Making
 Management
Science Approach
 Carnegie Model
 Incremental Decision Process Model
 Garbage Can Model
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Management Science Approach
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Is the analog to rational model of individual
decision making
Came in to being during WW II
Used mathematical and statistical techniques to
urgent and large scale military problems eg.
Missile trajectory, aiming battleship guns
Same approach diffused in to corporations and
big businesses
Used in quantitative data analysis, operations
research
Use in situations where variables are measurable
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Carnegie Model

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Based on bounded rationality approach to
individual and organizational decision making
Organizational level decisions involved many
managers and final choice was based on a
coalition (alliance) among managers
Reason being organizational goals are ambiguous
and operative goals are inconsistent
Managers tend to be rational but are constraint
by time, resources and mental capacities. So
they form coalition
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Carnegie Model contd..
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Decisions made under this model are satisficing
rather than optimising problem solutions
Means that organizations accept satisfying rather
than optimising solution
Managers are concerned with immediate
problems and short term solutions
So they engage in problemistic search (looking
around in the immediate environment for
solutions)
Discussion and bargaining are especially
important in problem identification stage of
decision making.
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Choice Processes in the
Carnegie Model
Uncertainty
Information is
limited
Managers have
many constraints
Conflict
Managers have
diverse goals,
opinions, values,
experience
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
Satisficing
Adopt the first
alternative
that is acceptable
to the coalition
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The Incremental Decision Process
Model
Places less emphasis on political and social
factors and more on structured sequence
of activities undertaken from the discovery
of the problem to its solution
 Major organization choices are usually a
series of small choices that combine to
produce the major decision.
 Organizations move through several
decision points and may hit barriers along
the way called ‘decision interrupts’ which
means organization has to look for
alternatives.
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The Incremental Decision
Process Model
·

Identification Phase: problem recognition
– Recognition (becoming aware of the problem & the
need to take the decision)
– Diagnosis (systematic & detailed if time permits or or
quick & immediate)
Development Phase: solution identification
– Search (look for alternatives within the organizations
repertoire of solutions)
– Screen (eliminate what does not apply)
– Design (if the above is not applicable design a custom
made solution)
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The Incremental Decision Process
Model contd..

Selection Phase: choosing the solution
– Judgment: (when final choice falls on a single decision
maker & judgment is based on experience)
– Analysis: (alternatives evaluated in a more systematic
manner like management science techniques)
– Bargaining: (happens when selection involves group of
decision makers, so conflict happens, solved through
coalition of carnegie model)
– Authorization: (when decision is finally accepted
authorization takes place)
Dynamic Factors: (refer to the feedback loops as a result
of decision interrupts
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Models for Learning Organization
 Combining
the Incremental process
and Carnegie models
 Garbage Can models
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Learning Organization Decision Process When
Problem Identification and Problem Solution Are
Uncertain
PROBLEM IDENTIFICATION
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
PROBLEM SOLUTION
When problem solution is
uncertain, Incremental process
model applies
Incremental, trial-and-error
process is needed
Solve big problems in little steps
Recycle and try again when
blocked
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Garbage Can Model of Decision-Making
 Deals
with the pattern or flow of multiple
decisions as opposed to how a single
decision is made (as in Incremental and
Carnegie models)
 Are applied to organic structures operating
in highly uncertain environment
 Termed as organized anarchies
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Garbage Can Model: Characterisrtics
Decision process is not seen as a
sequence of steps beginning with a
problem and ending with a solution
 A solution may be around when there is
no problem
 A problem may have no solution
 Garbage can is a mix of problems,
potential solutions, capabilities of
participants and choice opportunities
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Garbage Can Model: consequences
 Solutions
may be proposed even
when problems do not exist
 Choices are made even without
solving problems
 Problems may persist without being
solved
 A few problems are solved
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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
Choice Opportunities
Participants
Choice Opportunities
Department A
Solutions
Department B
Problems
Solutions
Choice
Opportunities
Participants
Choice
Opportunities
Problems
Solutions
Choice
Opportunities
Participants
Solutions
Problems
Participants
Problems
Participants
Problems
Solutions
Participants
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Contingency Framework for Using
Decision Models
Certain
Certain
Solution
Knowledge
1
Problem
Consensus
Individual:
Rational Approach
Computation
Organization:
Management Science
3 Individual:
Judgment
Trial-and-error
Uncertain
Organization:
Incremental Decision
Process Model
2
Uncertain
Individual:
Bargaining, Coalition
Formation
Organization:
Carnegie Model
4 Individual:
Bargaining and Judgment
Inspiration and Imitation
Learning Organization:
Carnegie and Incremental
Decision Process Models,
Evolving to Garbage Can
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