How Are Decisions Actually Made In Orga
How Are Decisions Actually Made in Organizations?
1. Bounded Rationality - Individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity.
a. Satisfice - seeking solutions that are satisfactory and sufficient. The first alternative that meets the good enough criteria ends the search.
2. Intuitive Decision Making (Intuition) - an unconscious process created out of distilled experience. The ability to have a grasp on a situation or information without the need for conscious reasoning.
Problem Identification:
1. Visibility over importance of problem – Problems that are visible tend to have a higher probability of being selected than ones that are important.
2. Decision Maker’s Self Interest - Self-interest tends to win out than those problems that are important to the company.
Making Choices:
Heuristics – Judgmental shortcuts in decision making. Two Categories:
1. Representative Heuristics - assessing the likelihood of an occurrence by drawing analogies and seeing identical situations in which they don’t exist
2. Availability Heuristics – The tendency of people to base their judgments on information that is readily available to them
3. Escalation of Commitment - An increased commitment to a previous decision in spite of negative information
Individual Differences: People differ along two dimensions: Thinking and Tolerance for Ambiguity
1. Directive Style – Low tolerance of ambiguity and seek rationality. Make decisions fast and they focus on the short run.
2. Analytic Type – Much greater tolerance for ambiguity than directive decision makers. Careful decision makers with the ability to adapt to or cope with novel and unexpected situations.
3. Conceptual Style – Focus is long range, and they are very good at finding creative solution problems.
4. Behavioral Style – Have strong concern for people in the organization and their development.
Organizational Constraints:
1.
1. Bounded Rationality - Individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity.
a. Satisfice - seeking solutions that are satisfactory and sufficient. The first alternative that meets the good enough criteria ends the search.
2. Intuitive Decision Making (Intuition) - an unconscious process created out of distilled experience. The ability to have a grasp on a situation or information without the need for conscious reasoning.
Problem Identification:
1. Visibility over importance of problem – Problems that are visible tend to have a higher probability of being selected than ones that are important.
2. Decision Maker’s Self Interest - Self-interest tends to win out than those problems that are important to the company.
Making Choices:
Heuristics – Judgmental shortcuts in decision making. Two Categories:
1. Representative Heuristics - assessing the likelihood of an occurrence by drawing analogies and seeing identical situations in which they don’t exist
2. Availability Heuristics – The tendency of people to base their judgments on information that is readily available to them
3. Escalation of Commitment - An increased commitment to a previous decision in spite of negative information
Individual Differences: People differ along two dimensions: Thinking and Tolerance for Ambiguity
1. Directive Style – Low tolerance of ambiguity and seek rationality. Make decisions fast and they focus on the short run.
2. Analytic Type – Much greater tolerance for ambiguity than directive decision makers. Careful decision makers with the ability to adapt to or cope with novel and unexpected situations.
3. Conceptual Style – Focus is long range, and they are very good at finding creative solution problems.
4. Behavioral Style – Have strong concern for people in the organization and their development.
Organizational Constraints:
1.