Decision Making

Process

Adam Lawrence
BA- English Language Studies III
 Learning Objectives

● Appreciate how rational decision making is often hampered by

individual and organizational limits and know alternative ways to
understand individual and group decision making.

● Be able to describe phase models of group decision making and know

alternatives to these models.

● Be familiar with the concept of “groupthink” and with models of

effective decision making that could help organizations deal with
groupthink and similar challenges.
 Decision Making

● One of the most critical activities in any organization

● Decisions could involve the strategic direction of the organization or
might simply deal with the daily activities of employees
● Decisions could be made after months of information gathering and
deliberation or in an instant with little or no consideration.
● Decisions could be made by individuals alone (with consultation) with or
in participative groups.
● Decisions will vary in their levels of effectiveness.
● DECISION MAKING is an entirely rational and
logical process

● The DECISION-MAKING process concludes

when an optimal decision is identified and
decision implementation can begin.
 Models of the
Decision-Making Process
 Rational Models

● Nutt (1984) discusses this rational and logical model of

decision making as the normative model recommended for
executives

● The normative model includes five stages: formulation,

concept development, detailing, evaluation, and
implementation
1. FORMULATION - surveying organizational members to determine needs
and desires.

2. CONCEPT DEVELOPMENT - management team create ways to deal with

the problem(s).

3. DETAILING - subgroups get more details on the pros and cons of various
options while at the same time testing their workability.

4. EVALUATION - gathered information would be place under intense scrutiny

to quantify the costs and benefits.

5. IMPLEMENTATION - the decision that has passed evaluation will now be

implemented or put in place by the management group
 Alternatives to Rational Models

● March and Simon were the first theorists to suggest an alternative to

this model (March & Simon, 1958; Simon, 1960), who characterize the
traditional approach to decision making as an optimizing model in which
decision makers are attempting to find the single best solution to an
organizational problem.

● It is more realistic to look at organizational decision making as a

satisficing process in which the search is not for a single optimal solution
but for a solution that will work well enough for dealing with the
situation.
Pugh and Hickson (1989) explain:

Most decisions are concerned not with searching for the sharpest
needle in the haystack, but with searching for a needle sharp
enough to sew with. Thus, administrators who “satisfice” [sic] can
make decisions without a search for all the possible alternatives
and can use relatively simple rules of thumb. In business terms,
they do not look for “maximum profit” but “adequate profit”; not
“optimum price” but “fair price.” This makes their world much
simpler.
● March and Simon (1958) propose that organizational decision makers
use satisficing [sic] strategies because it is not possible to make the ideal
rational solution.

● Rather, organizational decision makers are characterized by bounded

rationality.

● That is, decision makers attempt to make logical decisions, but they are
limited cognitively (e.g., humans are not always perfectly logical) and by
the practical aspects of organizational life (e.g., limits in time and
resources).
● March and Simon proposed ideas about decision making that are far
removed from optimizing models than is satisficing [sic].

● Simon (1987) has proposed that a great deal of organizational

decision making can be attributed to the intuitive processes of
managers.

● Barnard (1938) argues that decision makers most of the time force
to create quick decisions without searching for information or
debating it.
● Managers in this situation often make decisions without conscious
knowledge of how such decided decisions are made

● Barnard (1938) notes that:

[t]he sources of these non-logical processes lie in physiological conditions

or factors, or in the physical and social environment, mostly impressed
upon us unconsciously or without conscious effort on our part. They also
consist of the mass of facts, patterns, concepts, techniques, abstractions,
and generally what we call formal knowledge or beliefs, which are
impressed upon our minds more or less by conscious effort and study. This
second source of non-logical mental processes greatly increases with
direct experience, study and education.
● Simon (1987) points out that though intuitive decision making is not “logical,”
neither is it “illogical.” Rather, this kind of decision making is based on past
experience in similar contexts.

● One could say that this kind of decision-making is analogical. That is, a manager
faced with making a decision will consider what has worked in similar situations in
the past. By analogy, a similar solution should work again.

● Intuitive decision making depends on the decision-maker accessing the relevant

“chunk” of information and putting it to use.
● Garbage can model of decision making (Cohen, March & Olson, 1972) -
decision making is a process wherein problems, solutions, participants,
and choices are all dumped together in a relatively independent fashion.
A decision is made when “a suitable collection of problems, solutions,
participants, and choices coincide”
Small-Group Decision
Making
● According to an old adage, a camel is a horse designed by committee.
This saying points to the pitfalls that can arise in group decision making.
However fraught with problems the process might be, the fact remains
that a vast majority of organizational decisions are made in the context
of a small group, whether that group is a standing committee, a
self-managing work team, an ad hoc task force, or a group of colleagues
standing around the coffeemaker.

● In the following slides , we first explore models that describe the group
decision-making process. We then consider factors that contribute to
effective or ineffective decisions in small groups.
 Descriptive Models of Small-Group
Decision Making

● Phase model of decision making - B. A. Fisher (1970). four phases:

orientation, conflict, emergence, and reinforcement.
○ Orientation - group members become reacquainted with each other
and with the problem at hand.
○ Conflict - possible solutions to the problem are presented and
debated.
○ Emergence - the group will arrive at some level of consensus.
○ Reinforcement - the decision will then be supported during the final
group phase.
● Poole and Roth (1989)proposed a model called multiple sequence model,
wherein a typology of small-group decision path types is developed , that
represents the variety of decision paths taken by groups.

● It indicates , less than a quarter of the groups studied exhibited the

rational sequence prescribed by most stage models.

● Groups were more likely to engage in complicated sequences of cycles

(i.e., breaking the problem down into subproblems and processing these
one at a time) or to focus on the solution with little regard to problem
definition or discussion.

● It appears that regardless of the context, decision making is rarely a

linear and rational process in which organizational members carefully
search for and evaluate decision options.
 Effective Small-Group Decision Making

These questions have been the focus of a number of group theorists.

1. Is a group be ter off following the rational model?

2. Is Should a group concentrate on solutions?
3. How should a group distribute its energy among the wide range of
tasks that must be accomplished?
4. What interaction patterns lead to bad decisions?
● Janis’s (1982) study on a number of historically noteworthy
decision disaster is a best-known analysis of dysfunctional
decisions which concluded that interaction between two groups is
characterized by the property of groupthink. Other more recent
high-level decisions—such as the space shuttle disasters involving
both Challenger and Columbia—have also been attributed to
groupthink.

● The major symptoms of groupthink identified by Janis (1982) are

presented in the table on the next slide
● Perhaps the most complete explication of the role communication plays
in enhancing decision quality comes from Randy Hirokawa and Dennis
Gouran in their functional theory of group decision making.

● Functional theory argues that effective decision making depends on

groups attending to critical functions through group communication. It
includes five functions

● Functional theory works through the same phases identified as necessary

for effective individual decision making (i.e., understanding the problem,
identifying alternatives, and determining criteria for evaluating those
alternatives) and identifies how group communication can enhance the
likelihood of success.
● The group should have a correct understanding of the issues to be
resolved.

● The group should determine the minimal characteristics required in

order for any alternative to be acceptable.

● The group should identify a relevant and realistic set of alternatives.

● The group should carefully examine the alternatives in relation to

each previously agreed-upon required characteristic.

● The group should select the alternative that is most likely to have
the desired characteristics.
● Technological solutions can also enhance the likelihood that groups will make good
decisions.

● Communication and computer technology can also assist humans in the

decision-making process through group decision support systems (GDSSs). With
these systems, group members are linked via computer technology that allows for
parallel input of comments (reducing the chance that a few people “take over” the
meeting), allows for anonymous input and voting, and provides tools for helping to
sort out various decision options.

● Rains (2005) found that groups using these systems experience greater participation
and equality and generated more ideas than groups meeting face-to-face.
 Beyond Rational Group Process

● There have also been critiques leveled against the structured and rational
approaches to group decision making.

● Symbolic convergence theory - this theory considers the role of communication

such as stories and jokes in creating a feeling of group identity.

● Bona fide groups perspective - deals with this critique by proposing that group
research considers factors such as shifting membership, permeable group
boundaries, and interdependence within an organizational context.
PARTICIPATION IN
DECISION MAKING
● Thus far, we have examined the process of making decisions—how
decisions are made by individuals and small groups. We will now
consider the question of who makes the decision, with a look at the
voluminous theory and research on participation in decision-making
(PDM) and a look at the important concept of workplace democracy.
Effects of Participation in Decision-Making

● Participation in organizational decisions would make employees less resistant to change

(Coch & French, 1948).

● Since this early study, researchers have considered a wide range of attitudinal, cognitive,
and behavioral effects of participation (see Miller & Monge, 1987; Seibold & Shea, 2001,
for reviews).

● The most widely studied attitudinal effect of participation is job satisfaction. Other
attitudinal effects thought to be the result of PDM include job involvement and
organizational commitment.
● The cognitive effects proposed for PDM include the enhanced use of
information from a wide range of organizational members and a greater
employee understanding of decisions and the organization as a whole.

● Finally, proposed behavioral impacts of participation include improved

productivity and an increase in the effectiveness of decisions.
Models of the Participation
Process
 Affective Model

● This model is based on the work of human relations theorists. This model
proposes that PDM is an organizational practice that should satisfy
employees’ higher-order needs (e.g., esteem needs and self-actualization
needs). When these needs are met, job satisfaction should result.

● Ritchie and Miles (1970) state that proponents of this model “believe simply
in involvement for the sake of involvement, arguing that as long as
subordinates feel they are participating and are being consulted, their ego
needs will be satisfied and they will be more cooperative
● To illustrate this model, consider Frank, an assembly-line supervisor who
needs to make a decision about how to improve product rejection rates
at the factory. Frank decides to involve his subordinates in this decision.
He reasons that including them in the decision will make them feel
needed and important and hence en- gender satisfaction with the job.
Believing that “happy workers are effective workers,” Frank figures that
improved productivity is sure to follow.
 Cognitive Model
● Based on principles of the human resources approach. This model proposes that PDM
improves the upward and downward flow of information in the organization.

● The improvement of upward information flow rests on the notion that individuals close
to the work know the most about how to accomplish the work. Thus, when these
individuals participate in the decision-making process, a decision is made with
higher-quality information.

● The improvement of downward information flow rests on the idea that individuals who
participate in decisions will be better able to implement the decisions down the road.

● When decisions are made with a better pool of information and are better implemented,
productivity should improve.
To illustrate this model, let’s look at Rosie, another assembly-line supervisor at
Frank’s factory. Rosie also decides to involve her subordinates in decisions about
improving rejection rates, but she does so for reasons different from Frank’s. Rosie
realizes that her workers spend all their work hours on the line and probably know
more about why quality control is slipping than anyone else. She wants their input.
She also realizes that changing inspection procedures will be far easier if her work-
ers have had a hand in the change process. Thus, she reasons, productivity will
improve through participation. Because her philosophy is “busy hands are happy
hands,” she assumes her subordinates will also be satisfied.
 Evidence for Models of Participation

● The strongest evidence for the affective model comes from the ample research finding
a link between general perceptions of participation in decision- making and employee
satisfaction (see Miller & Monge, 1986, for a review).

● Working in a “participative climate” can meet workers’ needs and increase satisfaction.

● Evidence for the cognitive model links participation in organizational decisions with
productivity increases (Miller & Monge, 1986) as well as participation with
organizational knowledge (Marshall & Stohl, 1993).

● Information flows and mindfulness developed through participation are particularly

important when considering ways to reduce risk and avert crisis in organizations
(Novak and Sellnow, 2009).
Participative Applications
in Organizations and
Workplace Democracy
● Participation in decision making can be instituted in the workplace in a
wide variety of ways, ranging from casual conversations to formal
representative systems and employee ownership.

● Workplace democracy—the participative ideal for organizations. More

than just participation, workplace democracy involves realizing the
standards for a democratic society in the workplace.

● Collins (1997) argued that from an economic and political standpoint,

participatory management is both inevitable and ethically superior to
authoritarian alternatives.
Cheney (1995) defines workplace democracy as:

A system of governance which truly values individuals’ goals and

feelings ... as well as typically organizational objectives ... which actively
fosters the connection between those two sets of concerns by
encouraging individual contributions to important organizational
choices, and which allows for the ongoing modification of the
organization’s activities and policies by the group.
● Participation within a democratic workplace is based on more than mere
expediency—it is based on humanistic ideals.

● Participation in such an organization will typically include an actual influence

on a large range of organizational processes and issues as well as democracy
at all levels of the organization.

● Workplace democracy involves collaboration among “multiple stakeholders in

and outside of the organization.

● Shared decision-making among all these stakeholders is crucial in today’s

complicated organizational world.
 Beyond Decisions:
Knowledge Management Systems

● Knowledge management involves “identifying and harnessing intellectual

assets” to allow organizations to “build on past experiences and create new
mechanisms for exchanging and creating knowledge” (Heaton, 2008).

● Knowledge management involves the use of explicit knowledge that is saved

in documents, systems, and programs and tacit knowledge that is held by
individuals in an organization.
● A successful system of knowledge management will allow individuals in an
organization to convert their tacit knowledge into explicit knowledge
that can be shared and used in organizational decision making and
operations and will allow organizational members to find ways to make
the codified knowledge meaningful once it has been retrieved from
organizational system (Nonaka and Takeuchi, 1995).
Summary
END