MGMT 3103 - Ch. 9

Herbert A. Simon

Who proposed two concepts instrumental in shaping the administrative model: bounded rationality and satisficing

escalating commitment

(blank) means that organizations often continue to invest time and money in a solution despite strong evidence that it is not appropriate to do so. Managers might block or distort negative information because they don't want to be responsible for a bad decision, or might not accept that their decision is wrong.

coalition building

an informal alliance among managers who support a specific goal. (blank) is the process of forming alliances among managers. The inability of managers to build these often makes it difficult or impossible for them to get their decisions implemented

intuition

another aspect of administrative decision making. This represents a quick apprehension of a decision situation based on past experience but without conscious thought. This type of decision making is not arbitrary or irrational because it is based on years of practice and hands‑on experience. Begins with recognition; when people build a depth of experience and knowledge in a particular area, the right decision often comes quickly and effortlessly. Research on the validity of this in decision making is inconclusive, suggesting that managers should take a cautious approach to it, applying this only under the right circumstances and in the right way.

decision-making steps

1. Recognition of Decisions Requirement 2. Diagnosis and Analysis of Causes 3. Development of Alternatives 4. Selection of Desired Alternative 5. Implementation of Chosen Alternative 6. Evaluation and Feedback

innovative group decision making

1. Start with Brainstorming 2. Engage in Rigorous Debate 3. Avoid Groupthink 4. Know when to Bail 5. Act with Speed 6. Don't ignore a Crisis

nonprogrammed decisions

1. made in response to situations that are unique, poorly defined, largely unstructured, and likely to have important consequences for the organization. These decisions often involve strategic planning because uncertainty is great and decisions are complex.

electronic brainstorming

Also called brainwriting, brings people together in an interactive group over a computer network. Recent studies show this generates about 40 percent more ideas than individual brainstorming alone and 25 to 200 percent more than groups.

being influenced by problem framing

One of the six biases that help managers make more enlightened choices. The decision response of a manager can be influenced by the mere wording of a problem. A single problem can be framed in vastly different ways that can directly affect the decision choice.

being influenced by initial impressions

One of the six biases that help managers make more enlightened choices. The mind often gives disproportionate weight to the first information it receives when considering decisions. These act as an anchor to subsequent thoughts and judgments, leading to misguided decisions

problem

Managers confront a decision requirement in the form of either a (blank) or an opportunity. This occurs when organizational accomplishment is less than established goals. Some aspect of performance is unsatisfactory

overconfidence

One of the six biases that help managers make more enlightened choices. Before making a decision, managers have unrealistic expectations of their ability to understand the risk and make the right choice. This is greatest when answering questions of moderate to extreme difficulty.

perpetuating the status quo

One of the six biases that help managers make more enlightened choices. Managers may base decisions on what has worked in the past and fail to explore new options, dig for additional information, or investigate new technologies.

justifying past decisions

One of the six biases that help managers make more enlightened choices. People don't like to make mistakes, so they continue to support a flawed decision in an effort to justify or correct the past.

seeing what you want to see

One of the six biases that help managers make more enlightened choices. People frequently look for information that supports their existing instinct or point of view and avoid information that contradicts it, affecting where they look for information as well as how they interpret the information they find.

decision

a choice made from available alternatives

devil's advocate

Some groups assign someone, who has the role of challenging the assumptions and assertions made by the group.

implementation

The (blank) of a chosen alternative involves the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out. The success of the chosen alternative depends on whether or not it is translated into action. Sometimes an alternative never becomes reality because managers lack resources or energy needed to make things happen. Communication and leadership skills must be used to see that the decision is carried out.

diagnosis

The step in which managers analyze the underlying causal factors associated with the decision situation. Managers make a big mistake if they jump right into generating alternatives without first exploring the cause of the problem more deeply. Studies recommend that a series of questions be asked.

classical model

What model of decision making is based on assumptions that managers should make logical decisions that will be in the organization's best economic interests. This model is normative, defining how a decision maker should make decisions, and providing guidelines for reaching an ideal outcome for the organization. The value of the classical model has been to help decision makers be more rational. This model represents an "ideal" model of decision making that is often unattainable by real people in real organizations. It works best when applied to programmed decisions and to decisions characterized by uncertainty or risk because relevant information is available and probabilities can be calculated.

brainstorming

This is one of the best known techniques for rapidly generating creative alternatives. This uses a face-to-face group to spontaneously suggest a broad range of alternatives for decision making. The keys to this effective technique are that people can build on one another's ideas, all ideas are acceptable no matter how crazy they seem, and criticism and evaluation are not allowed. The goal is to generate as many ideas as possible.

political model

This model is for nonprogrammed decisions when conditions are uncertain, information is limited, and there is disagreement about the goals to pursue or the action to take. Managers often engage in coalition building for making complex organizational decisions. This model closely resembles the real environment in which most managers and decision makers operate. This model begins with four basic assumptions.

six biases

What can help managers make more enlightened choices?

risk

What means a decision has clear‑cut objectives and good information available. The future outcomes associated with each alternative are subject to chance; however, enough information is available to allow the probability of a successful outcome for each alternative to be estimated.

uncertainty

What means managers know which goals they wish to achieve, but information about alternatives and future outcomes is incomplete. Factors that may affect a decision, such as price, production costs, volume, or future interest rates, are difficult to analyze and predict. Managers may have to come up with creative approaches to alternatives and use personal judgment to determine which alternative is best. Many decisions made under uncertainty do not produce the desired results, but managers face uncertainty every day.

certainty

What means that all the information the decision maker needs is fully available. Few decisions are certain in the real world. Most contain risk or uncertainty.

ambiguity

What means that the goal to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and information about outcomes is unavailable. This has been called a wicked decision problem, with conflicts over goals and decision alternatives, changing circumstances, fuzzy information, and unclear linkages among decision elements. Some managers come up with a "solution" only to realize that they hadn't clearly defined the real problem. This is by far the most difficult decision situation.

behavioral style

a personal decision style that is characterized by having a deep concern for others as individuals.

directive style

a personal decision style used by people who prefer simple, clear-cut solutions to problems.

analytical style

a personal decision style where managers like to consider complex solutions based on as much data as they can gather.

conceptual style

a personal decision style where people who tend toward this style also like to consider a broad amount of information.

point-counterpoint

a technique in which two subgroups assigned competing points of view. The two groups then develop and exchange proposals and discuss the various options until they arrive at a common set of understandings.

administrative model

considered to be descriptive, meaning that it describes how managers actually make decisions rather than how they should make them.

opportunity

exists when managers see potential accomplishments that exceed current goals

programmed decisions

involve situations that have occurred often enough to enable decision rules to be developed and applied in the future. Once managers formulate decision rules, subordinates and others can make decisions freeing managers for other tasks.

bounded rationally

means people have limits, or boundaries, on the amount of information they can process in making a decision. Because managers do not have the time or ability to process complete information about complex decisions, they must satisfice.

satisficing

means that decision makers choose the first solution alternative that satisfies minimal decision criteria. Rather than pursue all alternatives, managers will opt for the first solution that appears to solve the problem. The decision maker cannot justify the time and expense of obtaining complete information.

personal decision styles

refers to differences between people with respect to how they perceive problems and make decisions. Research has identified four major decision styles (directive, analytical, conceptual, behavioral)

groupthink

refers to the tendency of people in groups to suppress contrary opinions. When people slip into this, the desire for harmony outweighs concerns over decision quality

decision making

the process of identifying problems and opportunities and then resolving them; involves effort both before and after the actual choice

risk propensity

the willingness to undertake risk with the opportunity of gaining an increased payoff.