Week 2

An Introduction to Organisational Behaviour – Decision Making


 Decision Making
 Decision = choice made from available alternatives
 Decision Making = process of identifying problems and
opportunities and resolving them
 Programmed Decisions
- Situations occurred often enough to enable decision rules to be
developed and applied in the future
- Made in response to recurring organizational problems
 Non-programmed Decisions
- in response to unique, poorly defined and largely unstructured, and
have important consequences to the organization
Conditions that Affect the Possibility of Decision Failure




Three Decision-Making Models
 Classical Model
- Assumptions
 Accomplish goals that are known and agreed upon
 Strives for condition of certainty – gathers complete information
 Criteria for evaluating alternatives are known
 Decision maker is rational and uses logic
Normative = describes how a manager should make decisions and provides
guidelines reaching an ideal decision
 Administrative Model
- Two concepts are instrumental in shaping the administrative model
 Bounded rationality: people have limits or boundaries on how
rational they can be
 Satisficing: means that decision makers choose the first solution
alternative that satisfies minimal decision criteria
- Bounded Rationality
 Managers try to take a rational approach to decision-making.
 Constrained by:
 limited resources
 attention problems
 memory problems
 expertise problems
 Individuals are incapable of considering ALL of the variables!
- Intuitive decision making
 Based on “gut feeling”

, An Introduction to Organisational Behaviour – Decision Making


 subconscious process of making decisions on the basis of
experience, values, and emotions
 does not rely on a systematic or thorough analysis of the
problem
 generally, complements a rational analysis
 Political Model
- Closely resembles the real environment in which most managers and
decision makers operate
- Useful in making non-programmed decisions
- Decisions are complex
- Disagreement and conflict over problems and solutions are normal
- Coalition = informal alliance among manages who support a
specific goal
Characteristics of Classical, Political, and Administrative Decision Making
Models




Six Steps in the Managerial Decision-Making Process
 There are 6 steps that is associated with effective decision-making
process
1. Recognition of decision requirement – this is where the manager is
confronted with a decision requirement in the form of either a problem
or an opportunity
- Problem occurs when an organisation accomplishment is less then
the established or predetermined goals
- Opportunity occurs when the managers see a potential
accomplishment that exceeds specified current goal
2. Diagnosis and analysis of causes – this is the understanding of the
situation; this is done by analyse fundamental factors that is linked
with the decision situation.
3. The development of alternatives – this is the stage where it’s possible
to generate alternative solution that will respond the need of the
situation
- Programme decision – these are the alternatives that are easy to
identify and are available within the organisation
- Non- programme – require developing new courses of action that
will meet the companies need for decision made under high
uncertainty
4. Selection of decision alternative –one alternative must be selected,
this is the choice of the most promising of several alternative courses
of action, the best alternative is the one in which the solution best fits
the overall goals and values of the organisation