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MAKING DECISIONS IN ORGANIZATIONS

ORGANIZATIONAL
DECISION MAKING
 THE BASIC DEFINITION

Decision-making
describes the process by which a course of action is
selected as the way to deal with a specific problem
 THE BASIC DEFINITION

Herbert Simon
Decision-making is
synonymous with
managing
ORGANIZATIONAL DECISION MAKING

THE
EIGHT-
STEP
DECISION
MAKING
PROCESS
 ORGANIZATIONAL DECISION MAKING

FOLLOW UP IDENTIFY
THE
0 0 PROBLEM
8 1
IMPLEMENT DEFINE

0
CHOICE OBJECTIVE

2
0
7
S

3
0
MAKE A

6
MAKE A CHOICE c

0 5 4 PREDECISIO
0 0 N

EVALUATE GENERATE
ALTERNATIVES ALTERNATIVES
 ORGANIZATIONAL DECISION MAKING

01 IDENTIFY THE
PROBLEM
Before solving the problem, we must recognize
and identify it.

E.g: Bad hotel reviews

Customers are rating their experience at your property online,
and they’re not happy.
 ORGANIZATIONAL DECISION MAKING

DEFINE
02
OBJECTIVES
After a problem is identified, we define
the objectives to be met in solving it.

Example:
 You want to start getting better ratings from customers.
 You don’t want to see customers complaining about anything online.
 Your objective is 100% happiness, 100% five-star ratings.
 ORGANIZATIONAL DECISION MAKING

03 MAKING A
PREDICISION
ALONE
TYPE OF Example:
PROBLEM Manager creates a decision-making group.
Then, he divides work for employees and
DELEGATE TO
decides that all customer-facing staff
ANOTHER
report daily on quality issues

ASPECTS OF
GROUP-MAKING
SITUATION
DECISION
 ORGANIZATIONAL DECISION MAKING

04 GENERATE
ALTERNATIVES
List the possible solutions to the problem

Example: : Collect all the data to create a lengthy list of alternatives and not decide
on one too quickly.
 Give 5% voucher for reservation
 Hire additional members for the housekeeping staff
 Provide a complimentary breakfast for customers
 ORGANIZATIONAL DECISION MAKING

05 EVALUATE
ALTERNATIVES
Which solution is the best?
Some may be more effective than others.

Example: : Once you have all your alternatives on the table, you
consider every employee suggestion and recommendations
carefully.
 ORGANIZATIONAL DECISION MAKING

06 MAKE A
CHOICE

Decide the considered

acceptable solution

Example: : The chosen: Hire

additional members for the
housekeeping staff
ORGANIZATIONAL DECISION MAKING

07 IMPLEMENT
CHOICE
Carry out the chosen
alternative
Example: : Decide to hire the two
additional members for the housekeeping
staff, understanding that your customers
view quality in clean rooms and common
spaces
 ORGANIZATIONAL DECISION MAKING

FOLLOW
08 UP
Observe the effectiveness
of the decisions put into
action

Example: : Check in at the thirty day

mark to see if customers’ ratings have
improved.
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MAKING DECISIONS IN ORGANIZATIONS

GROUP DECISIONS:
DO TOO MANY COOKS
SPOIL THE BROTH
 GROUP DECISIONS

Decision-making groups are a well-

established fact of modem organizational
life. Groups such as committees, study
teams, task forces, or review panels are
often charged with the responsibility for
making important business decisions.

It is important to consider the strengths

and weaknesses of using groups to make
organizational decisions.
 GROUP DECISIONS

PROS CONS
Increase the amount of knowledge
and information Being likely to waste time

Enjoy greater acceptance than Potential disagreement over

individual decisions important matters

There can be a specialization of Being ineffective sometimes

labor because of members' intimidation
by group leaders
 COMPARING GROUP AND INDIVIDUAL DECISIONS

WHEN ARE TWO (OR MORE) HEADS BETTER THAN

ONE?with both group and individual
Since there are advantages associated
decision makers, a question arises as to when each should be used. That is,
under what conditions might individuals or groups be expected to make
superior decisions?
 WHEN ARE GROUPS SUPERIOR TO INDIVIDUALS?

It is not enough simply to have skills. For a group to be successful, its

members also must be able to communicate their ideas to each other
freely in an open, nonhostile manner.

For groups to be superior to individuals, they must be composed of a

heterogeneous collection of experts with complementary skills who can
contribute to their group's product freely and openly

The pooling of ignorance does not help. In other words, the question "Are two
heads better than one?" can be answered this way: On simple tasks, two heads
may be better than one if at least one of those heads has enough of what it
takes to succeed.
 COMPARING GROUP AND INDIVIDUAL DECISIONS

As summarized here, group decisions are superior to those made by individuals under
specific conditions.

Complex Simple
Problems Problems

- Group is composed
of heterogeneous - Does anyone in the
members with group have the Group
complementary Groups are correct answer? performs as
skills superior to even
- Will the members YES well as the best
- Ideas may be the best accept the correct individual
communicated individuals answer
freely
- Good ideas are
accepted

NO
 WHEN ARE INDIVIDUALS SUPERIOR TO
GROUPS?

In summary, individuals are superior to Groups when working on creative

tasks.

A great part of the problem is that some individuals feel inhibited by the
presence of others even though one rule of brainstorming is that even far-out
ideas may be shared. To the extent that people wish to avoid feeling foolish
as a result of saying silly things, their creativity may be inhibited when in
groups. Similarly, groups may inhibit creativity by slowing down the process
of bringing ideas to fruition.
 GROUPTHINK: TOO MUCH COHESIVENESS
CAN BE A DANGEROUS THING

Develop a very Reluctant to

Become so concerned about
strong group spirit challenge the
not disrupting the like-
—high levels of group's
mindedness of the group
cohesiveness decisions

In summary, individuals are superior to Groups when working on creative

tasks.
 GROUPTHINK: TOO MUCH COHESIVENESS
CAN BE A DANGEROUS THING

When this happens, group members tend to isolate themselves from outside
information, and the process of critical thinking deteriorates. This
phenomenon is referred to as groupthink.

When group members become fiercely loyal to each other, they may ignore
potentially useful information from other sources that challenges the group's
decisions. The result of this process is that the group's decisions may be
completely uninformed, irrational, or even immoral
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MAKING DECISIONS IN ORGANIZATIONS

THE
CHALLENGE OF
MAKING
INTRODUCTION SECTION
 ANSWER TWO
QUESTIONS
1. WHY DO PEOPLE MAKE UNETHICAL DECISIONS IN
ORGANIZATIONS?

2. WHAT CAN BE DONE TO PROMOTE ETHICAL DECISION

MAKING?
 WHY DO PEOPLE MAKE UNETHICAL DECISIONS IN ORGANIZATIONS?

Behaviors that violate ethical standards are encouraged

WHY DO PEOPLE MAKE UNETHICAL DECISIONS IN ORGANIZATIONS?

Some managerial values

undermine integrity

Some mangers have developed ways of

thinking that leads them to making
unethical decisions.
 WHY DO PEOPLE MAKE UNETHICAL DECISIONS IN ORGANIZATIONS?
SEVERAL FORMS OF UNETHICAL THINKING
Forms What is it
Support for the only value
Bottom line mentality
which is financial success
Promotion of stereotypes and
Exploitative mentality contempt for empathy and
compassion
Anything is right if the public
Madison Avenue mentality
can be made to see it as right
Consequences
Short-term decisions -> long
term problems
Selfish perspective >< benefits
to one’s own immediate
interests
Some companies hide their
unethical behavior
WHAT CAN BE DONE TO PROMOTE ETHICAL DECISION MAKING?

Several useful suggestions may be offered

 WHAT CAN BE DONE TO PROMOTE ETHICAL DECISION MAKING?

1. A TEST FOR THE ETHICS OF ANY DECISION

YOU ARE UNDERMINING

You should ask yourself four main questions

 WHAT CAN BE DONE TO PROMOTE ETHICAL DECISION MAKING?

IS IT IS IT FAIR?
RIGHT?

HOW WOULD
YOU FEEL
IS IT PURELY IF OTHERS
SELFISH? FOUND OUT?
WHAT CAN BE DONE TO PROMOTE ETHICAL DECISION MAKING?

2. A CODE OF
ETHICS
Codes of ethics are especially
effective in training programs.
Without such training, “window
dressing” occurs.
WHAT CAN BE DONE TO PROMOTE ETHICAL DECISION MAKING?

3. CHALLENGE YOUR
RATIONALIZATIONS ABOUT
ETHICAL BEHAVIOR
 WHAT CAN BE DONE TO PROMOTE ETHICAL DECISION MAKING?

It is legally
acceptable

Morally
acceptable

CONVINCING
It benefits the
company
Right YOURSELF Right It benefits yourself
THAT SOMETHING

Right

You will never get

caught