Daft OTAD 13e PPT Ch13

Chapter 13
Decision-Making Processes
Chapter
13
Organization Theory and Design
Thirteenth Edition
Richard L. Daft
Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or part.
Learning Objectives (slide 1 of 2)
1. Explain the differences between programmed and
nonprogrammed decisions.
2. Describe the ideal, rational approach to decision making
comparing it with the bounded rationality approach to
decision making.
3. Describe how cognitive biases can cause decision errors.
4. Explain the management science approach to decision
making.
5. Describe the Carnegie and incremental decision models.
6. Identify the components of the garbage can model of
decision making.
Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 2
Learning Objectives (slide 2 of 2)
7. Explain how to determine the best decision-making
approach by using the contingency decision-making
framework.
8. Describe how high-velocity environments and decision
mistakes influence decision making for today’s managers.
Types of Decisions
• Organizational decision making is the process
of identifying and solving problems and has
two stages:
– Problem identification
– Problem solution
• Programmed decisions are repetitive and well
defined
• Nonprogrammed decisions are novel and
poorly defined
Decision Making in Today’s Environment
Rational Approach
• The rational approach suggests an “ideal” method
for how managers should make decisions:
1. Monitor the decision environment
2. Define the decision problem
3. Specify decision objectives
4. Diagnose the problem
5. Develop alternative solutions
6. Evaluate alternatives
7. Choose the best alternative
8. Implement the chosen alternative
Steps in the Rational Approach to Decision
Making
Bounded Rationality Perspective
• Many decisions must be made quickly, and managers
cannot evaluate every goal, problem, and alternative
• The bounded rationality perspective is how decisions
are made under severe time and resource constraints
• Constraints from both organizational and personal
circumstances can impinge the decision maker
• The bounded rationality perspective is often associated
with intuitive decision making, which is the use of
experience and judgment, rather than sequential logic
or explicit reasoning, to make decisions
Constraints and Tradeoffs
During Nonprogrammed Decision Making
Cognitive Biases
• Managers must be aware of their cognitive biases, or severe errors
in judgment that all humans are prone to and that typically lead to
bad choices, including:
– Being influenced by initial impressions
– Seeing what you want to see
– Being influenced by emotions
– Being overconfident
– Escalating commitment
– Fearing failure or loss
– Being influenced by the group or groupthink
• Managers can avoid cognitive bias through evidence-based
management and the encouragement of dissent and diversity,
including the assignment of a devil’s advocate
Organizational Decision Making
• Managers can use one of four primary types of
organizational decision-making processes:
– Management science approach
– Carnegie model
– Incremental decision model
– Garbage can model
Management Science Approach
• Management science involves the use of mathematics
and statistics to:
– Identify and quantify relevant variables
– Develop a quantitative representation of alternative
solutions and the probability of each one solving the
problem
• Management science can accurately and quickly solve
problems that have too many explicit variables for
adequate human processing
• A drawback of management science is that quantitative
data are not rich and lack tacit knowledge
Carnegie Model
• The Carnegie model is based on research that indicated that
organization-level decisions involved many managers and that a final
choice was based on a coalition among those managers
• Management coalitions are needed because:
– Goals are often ambiguous and inconsistent, with disagreement
about priorities among managers
– Individual managers intend to be rational, but they function with
constraints
• Coalition building implications for organizational decision behavior
include:
– Satisficing
– Problemistic search
– The importance of discussion and bargaining
Choice Processes in the Carnegie Model
Incremental Decision Model
• The incremental decision model emphasizes the structured
sequence of activities undertaken from problem discovery to
problem solution
• Organizational choices are usually a series of small choices that
combine to produce a major decision
• Decision interrupts are barriers to decision making
• Organizations move through three decision phases:
– Identification Phase
– Development Phase
– Selection Phase
• Dynamic factors may force a decision making loop or cycle back
to an earlier stage
The Incremental Decision Model
Combining the Incremental and Carnegie
Models
• The Carnegie model of coalition building is
especially relevant for the problem identification
stage
• The incremental model tends to emphasize the
steps used to reach a solution
• When both parts of the decision process are
simultaneously highly uncertain, decision
processes in that situation may be a combination
of the Carnegie and incremental models
Decision Process When Problem Identification
and Problem Solution Are Uncertain
Garbage Can Model
• The garbage can model deals with the pattern or flow of
multiple decisions within whole organizations
• It was developed to explain the decision making in
organized anarchy, the highly uncertain conditions that
some organizations experience as a result of:
– Problematic preferences
– Unclear, poorly understood technology
– Turnover
• Decisions are made from streams of events—problems,
potential solutions, participants, or choice opportunities—
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
Illustration of Independent Streams of Events in
the Garbage Can Model of Decision-Making
Contingency Decision-Making Framework
• The use of a decision making approach is contingent on
the organization setting
• Problem consensus refers to the agreement among
managers about the nature of a problem or opportunity
and about which goals and outcomes to pursue
• Technical knowledge refers to understanding and
agreement about how to solve problems and reach
organizational goals
• The contingency decision-making framework brings
together these two dimensions
Contingency Framework for
Using Decision Models
Special Decision Circumstances
• Managers have to make high-stakes decisions more often
and more quickly than ever in increasingly less predictable
environments
• To improve the chances of a good decision in high-
velocity environments, some organizations stimulate
constructive conflict through a technique called point-
counterpoint
• Managers and organizations go through the process of
decision learning by making mistakes and by acquiring
sufficient experience and knowledge to perform more
effectively
Organizational Design Essentials (slide 1 of 2)
• Decision making involves the stages of problem
identification and problem solution.
• Decisions vary in complexity.
• Most organizational decisions are not made in a logical,
rational manner, nor do they begin with the careful
analysis of a problem, followed by systematic analysis of
alternatives, and finally implementation of a solution.
• Allowing cognitive biases to cloud decision making can
have serious negative consequences for an organization.
Organizational Design Essentials (slide 2 of 2)
• Individual managers make decisions, but most
organizational decisions are not made by a single
individual.
• Many problems are not clear, so widespread discussion
and coalition building take place.
• Managers can follow the prescriptions of the contingency
decision-making framework to use the correct decision-
making approach and increase the likelihood of a
successful decision.

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Chapter 13

1. Solutions may be proposed even when

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