Organizational

Decision making
Models

U.KALPANADEVI
MBA
 Organizational decision making:
the process of responding to a problem by
searching for and selecting a solution or
course of action that will create value for
organizational stakeholders

Types:
 Programmed Decision
 Non-Programmed Decision
Decision Making - Types

Programmed Decision
– Routine, virtually automatic decision making that
follows established rules or guidelines.
Non-Programmed Decision
– Nonroutine decision made in response to unusual or
novel opportunities and threats.
– The are no rules to follow since the decision is new.
 Individual Decision Making
 Rational approach – ideal method for
how managers should make decisions

 Bounded rationality perspective – how

decisions are made under severe time and
resource constraints
Steps in the Rational Approach
Limitations for the Rational
Decision Making Model
 requires a great deal of time
 requires great deal of information
 assumes rational, measurable criteria are available and
agreed upon
 assumes accurate, stable and complete knowledge of all
the alternatives, preferences, goals and consequences
 assumes a rational, reasonable, non – political world
 Bounded Rationality Perspective

 There is a limit to how rational managers

can be—time and resource constraints
– Nonprogrammed decisions

 Constraints and Tradeoffs

– Constraints impinge the decision maker

 The Role of Intuition

– Experience and judgment rather than logic
 Constraints and Tradeoffs
During Nonprogrammed Decision Making
Organizational Decision Making

 Management Science Approach

 Carnegie Model

 Incremental Decision Model

 Garbage Can Model

 Unstructured model
Management Science Approach
 Similar to rational individual approach
– Structured

 Based on technology
 Management Science Approach

 Use of statistics to identify relevant

variables
 Remove human element
 Very successful for military problems
 Good tool for decisions where variables
can be indentified and measured
 A drawback of management science is that
quantitative data are not rich and lack tacit
knowledge
 The Carnegie Model
 Introduces a set of more realistic assumptions
about the decision-making process
– Satisficing: limited information searches to identify
problems and alternative solutions

– Bounded rationality: a limited capacity to process

information

– Organizational coalitions: solution chosen is a result

of compromise, bargaining, and accommodation
between coalitions
Carnegie Model
 Differences Between the Rational
and Carnegie Models
Rational model Carnegie model
Information is available Limited information is available

Decision making is costless Decision making is costly

Possible alternatives are Limited range of alternatives are
generated generated

Solution is chosen by unanimous Solution is chosen by bargaining

agreement and compromise

Soln chosen is best for the orgn Soln chosen is satisficing for the
orgn
 Incremental Decision Process
Model
 Focuses on sequence of events from
problem discovery to solution
 Garbage Can Model
Solutions

Garbage Can Problems Choice

opportunities
Model - Participants
a theory that
contends
that decisions in
organizations are
random and
unsystematic
 Garbage Can Model

 Pattern or flow of multiple decisions

 Think of the whole organization
 Explain decision making in high
uncertainty - organized anarchy:
– Problematic preferences
– Unclear, poorly understood technology
– Turnover
 Streams of events instead of defined
problems and solutions
 Consequences of the
Garbage Can Model
1. Solutions may be proposed even when
problems do not exist
2. Choices are made without solving
problems
3. Problems may persist without being
solved
4. A few problems are solved
Garbage Can Model
 Unstructured Decision Making
Model
 Takes place when uncertainty is high
 Unprogrammed decisions
 Not a sequential process
 Involves unpredictable decisions
 Contingency Decision-Making
 Two dimensions
– Problem consensus
– Technical knowledge about solutions
 Design Essentials
 Most decisions are not made in a logical manner
 Individuals make decisions, but organizational
decisions are not made by a single individual
 Conflict exists when problems are not agreed on
 The garbage can model has become a description of
decision-making
 Organizations operate in high-velocity environments
 Allowing biases to cloud decision making can have
negative consequences
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