Criteria of Decision Effectiveness

1
Criteria of Decision Effectiveness

• A quality decision
• Not necessarily optimal
• Timeliness
• Acceptance
• Ethical appropriateness

2
Types of Decisions

• Programmed - situations are structured and can
  apply heuristics or standard operating procedures
• Nonprogrammed - require creativity and analysis
  nonroutine, unique, or new problem areas
• Strategic (LT direction) vs. Operational (day to
  day)
• Top-down vs. worker empowered

3
Influences on Decision-Making

• Characteristics of decision maker
• Skills Task, interpersonal, decision skills
  style
• Styles Analytic vs. Conceptual, directive vs.
  Behavioral
• Cognitive biases in decision making
• Availability Misestimate based on whats most
  in memory, i.e. disasters vs. accidents.
• Representative Misestimate based on small
  sample.
• Anchoring adjustments form initial value, which
  may have been way off.
• Framing the problem - positive or negative gains
• Organizational barriers - Hierarchy, culture,
  reward system, available tools.

4
A Managers Decision-Making Styles Will Influence
the Way She Attacks Problems
technical/task oriented
people/social oriented
ANALYTIC A problem solver who analyzes alternative
s and innovates
CONCEPTUAL A socially oriented person who sees
the big picture
Tolerates High Cognitive Complexity
BEHAVIORAL A person who needs affiliation and
wants to help others
Tolerate only Low Cognitive Complexity
DIRECTIVE A rapid decision maker who expects
results and relies on rules
Fig. 5-2
5
Rational Decision-Making Process

• 1. ANALYZE THE SITUATION
• What are the key elements, constraints,
  resources?
• 2. SET OBJECTIVES
• Is the problem stated clearly?
• 3. SEARCH FOR ALTERNATIVES
• 4. EVALUATE THE ALTERNATIVES
• 5. MAKE THE DECISION
• 6. EVALUATE THE DECISION

Fig. 5-3a
6
Limits on rationality

• Bounded Rationality
• Limited informational
• Time
• Equals Satisficing
• Intuition
• Herbert Simon "Analyses frozen into habit
• Henry Mintzberg "experience plus creative
  insight
• Compatibility testing compare to standards
  (Images)

7
Intuition vs. Rational model
Thirty years of experience, or one year of
experience, repeated thirty times"
8
Problems Randomly Attach to Solutions in the
Garbage Can
Solutions
Problems
Problem A

Solution X
Problem A
Problem B
Problem C
Solution X
Solution Z
Solution Y
Fig. 5-4
9
Incremental decision model

• Most organizational decisions (meaning high
  level) are a series on small choices that combine
  to produce major decisions.
• The process can be interrupted by internal or
  external forces, leading to halting, diverting or
  relooping (trail and error)
• Selection can involve
• Judgment
• Analysis
• Bargaining

10
Organizational Contingency Decision-Making Model
11
Techniques for Improving Decision-Making

• Brainstorming - avoid early evaluation good for
  lots of ideas, not particular for high quality
• Affinity diagrams - Look for clusters and
  interdependencies
• Nominal group technique - Individual brainstorm,
  group clarification, group ranking
• Delphi technique - Polling, compiling and
  refining cycles