Decision making
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The document provides an overview of decision making. It discusses the basic decision making process which involves identifying the problem and alternatives, selecting an alternative, taking action, and evaluating results. It also covers different decision making models like rational, bounded rationality, intuitive, and creative decision making. Problems that can occur in decision making are explored such as overanalysis, inadequate communication, and groupthink. Styles of decision making like autocratic, democratic, and consensus-based are also summarized.
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Decision making
- 2. Yes 15mi No 13mi Agenda • Decision Making Overview • Basic Process • Considerations • Models – Rational – Bounded Rationality – Intuitive – Creative • Methods • Styles • Types of Decision Makers – Wilkins – McKinsey • Problems in decision making • Final thoughts
- 3. Yes 15mi No 13mi Decision Making • What is it? – A process conducted when: • There is a “discrepancy between the target situation and the current situation” • “Where at least two options for action exist to deal with it.” (Grunig & Kuhn, 2013) • Why is it important? – We make decisions everyday. • Programmed Decisions – have rules/guidelines to follow. • Non-Programmed Decisions – unusual situations that needs careful consideration
- 4. Yes 15mi No 13mi Basic Decision Making Process • Identify the problem • Identify alternatives • Select alternative • Action based off of the selected alternative • Evaluation of results • “The process of decision making can be decomposed into four steps. First, one recognizes the present situation (or state). Second, one evaluates action candidates (or options) in terms of how much reward or punishment each potential choice would bring. Third, one selects an action in reference to one’s needs. Fourth, one may reevaluate the action based on the outcome.” (Doya, 2008, p. 410).
- 5. Yes 15mi No 13mi Decision Making Considerations • Importance of the outcome – Maximize – Get the best possible result – Satisficing - Good enough; Get to the end • Impact of the outcome – Who – Where – What • Complexity • Resources available • Second and third order effects • Information available • Conditions - Risk and certainty
- 6. Yes 15mi No 13mi Models of Decision Making • Rational • Bounded Rationality • Intuitive • Creative
- 7. Yes 15mi No 13mi Rational Decision Making • Rational decisions are made after a deliberate evaluation of information balanced versus criteria • Looks for the Optimal solution • Requires time and info Retrieved from Bauer, T.N. & Erdogan, B. (2014). Human Relations in the Organization. Asheville, N.C.: Soomo Publishing
- 8. Yes 15mi No 13mi Bounded Rationality Decision Making • Will follow a similar process as the Rational Decision model • Looks for the “good enough” answer - Satisficing • Done when time, resources, or personnel are limited
- 9. Yes 15mi No 13mi Intuitive Decision Making • Intuitive decisions are made with a process but many of the steps take short cuts because of the decision maker’s experience, training, or knowledge. • Allows for much faster decisions • “Gut” feeling • May miss relevant information because of the fast response.
- 10. Yes 15mi No 13mi Creative Decision Making • Done when solutions are unclear • Must have time to fully contemplate the problem (immersion) and then have time to set the problem aside (incubation). • Counts on the brain subconsciously working on the problem to develop solutions Retrieved from Bauer, T.N. & Erdogan, B. (2014). Human Relations in the Organization. Asheville, N.C.: Soomo Publishing
- 11. Yes 15mi No 13mi Model Comparison Retrieved from Bauer, T.N. & Erdogan, B. (2014). Human Relations in the Organization. Asheville, N.C.: Soomo Publishing
- 12. Yes 15mi No 13mi Decision Making Methods • Trial and error • Comparison • Pattern Recognition • Pro/Con • Sequential • Wait and see • Cost/benefit analysis • Simulation analysis
- 13. Yes 15mi No 13mi Decision Making Styles • Autocratic – Decision maker makes decision based off of own information and retains control and responsibility for the decision. • Democratic – Decision maker allows the group to decide through a vote; majority wins. • Collective/Participative – Leader has control of the decision but allows others to provide information and other input. • Consensus - The organization as a whole makes the decision through input and analysis and everyone has bought in to the decision.
- 14. Yes 15mi No 13mi Wilkins’ Types of Decision Makers • Visionary – Looks at the big picture; considers feelings and facts • Pragmatic – Focused on the end result; looks at facts over feelings • Analytical – Must understand every aspect before making a decision; need to be able to justify why they are doing something • Consensus Seeking – Very detail focused; wants everyone impacted to be happy with the outcome
- 15. Yes 15mi No 13mi McKinsey Types of Decision Makers • Visionary – Natural leader that can facilitate bold change; often will rush into things….in the wrong direction • Guardian – Careful planner that looks to maintain values, health, and balance of an organization; can become blind to needed change • Motivator – Strong change leader that can build consensus; known to focus on the vision over the realities of the situation • Flexible – Comfortable with uncertainty and willing to involve a lot of people in the process; can become paralyzed because of over analysis of all possible outcomes. • Catalyst – Proponent of group decision making and balanced approaches; middle of the road outlook typically gets average results.
- 16. Yes 15mi No 13mi Problems in Decision Making • Hindsight • Overconfidence • Inadequate Communication • Over analysis • Focus on the process rather than the outcome • Relying on too limited information • Failure to understand context • Refusal to cut losses • Groupthink • Personal vs. Organizational Ethics • Cultural issues
- 17. Yes 15mi No 13mi A Way to View Decision Making Retrieved from http://slideplayer.com/slide/1505173/
- 18. Yes 15mi No 13mi Final Thoughts • When you do not make a decision you have made a decision. • Most good decisions are made by considering rationale, intuition, and emotions. • Decision making and problem solving go hand in hand. • In order to get better at decision making you have to be proficient in making decisions; especially for complex issues. There is no substitute for experience and like any skill one must constantly practice to stay sharp.
- 19. Yes 15mi No 13mi Works Cited Grunig, R. & Kuhn, R. (2013). Successful Decision Making: A Systematic Approach to Complex Problems, Third Edition. [Books 24x7 Version]available from http://common.books24x7.com.ezproxy.snhu.edu/toc.aspx?bookid=76659. Doya, K. (2008). Modulators of Decision Making. Nature Neuroscience,11(4), pp.410-416. Klein, G. (2008). Naturalistic Decision Making. Human Factors,50(30), pp. 456-460.
Editor's Notes
- Decision making is something that we do everyday. You choose to go to work or call in sick. You choose to have coffee or tea. You choose what to have for lunch and if you should go to the gym. Regardless of what you choose there is a process that you go through to make those decisions. Some decisions are easier than others and you may have built in rules that you follow (programmed decisions). Programmed decisions are those responses that occur habitually and have been found to satisfy the needs to the situation. For example, look at companies that receive customer complaints; many of them respond by providing a coupon for a discounted future good or service to appease a customer in hopes of making things right. You can also see a programmed decision when your low fuel light comes on in your car; when the light comes on you stop and get gas before you run out. Other decisions, though, are more complex and need to have a more thorough evaluation of the information and desired outcome to make a choice. These include buying a new car versus fixing an old one, buying a house versus renting, identifying what stock to invest in, or figuring out what school to attend for college.
- Each decision we make goes through a similar process, even situations that we have experience with. When we have experience, knowledge, or understanding of certain cues we are able to more quickly identify a situation/problem, develop alternatives more efficiently, and make appropriate choices faster. This is why organizations have training for their members, support continuing education programs, and provide case studies from other units or organizations. The military and police are in a constant state of executing, learning, and training because their members have to make split-second, life and death choices so they want the individual soldier (marine/sailor/airman) or policeman to be able to recognize situations quickly. In other cases you may want to make more of a deliberate, informed decision and so will take a longer time to consider available information and possible outcomes. The process in this instance is no different from the discussion above; however, decision makers will take a more measured view.
- Part of decision making is evaluating the situation and choices available. Looking at the slide above you can see that there are a multitude of considerations that you are faced with as you look at a problem. Do you want to get the best solution to a problem or do you just want to get the problem solved (maximizing or satisficing)? Who will be impacted by the choices made? What will the overall impact be? Which geographical locations will be impacted? How hard is the problem to solve so what do you need to commit to solve the problem? Do you have the right tools, people, knowledge, or funds to do the job? What can happen after the decision is made? All of these questions, and more, will impact your choices and if you are not prepared or comfortable with them could lead to decision paralysis (the inability to make a choice). Getting to the decisions here are not just an exercise in academics; physiology also plays a role. In a study conducted by Doya (2008) research demonstrated that “Expectation of a high reward motivates subjects to choose an action despite a large cost, for which dopamine in the anterior cingulate cortex is important. Uncertainty of action outcomes can promote risk taking and exploratory choices, in which norepinephrine and the orbitofrontal cortex seem to be involved. Predictable environments promote consideration of longer-delayed rewards, for which serotonin and the dorsal part of the striatum as well as the dorsal prefrontal cortex are key”(p. 414). What does this mean? Well, that the body/brain reacts differently to possible outcomes and this can influence how the decision maker deals with a situation.
- The decision making process typically goes through a model that the decision maker(s) is comfortable with. There are a lot of different models out there: the military has the Military Decision Making Process (MDMP), Rick Roberts developed the 7 Step Decision Making Model to help students choose a career path, Vroom (remember him from our Motivation module?) worked with Yetton and Jago on a model for leaders to figure out when to get involved in a situation, and there are many others. Every one of these, though, can be categorized into one of the four above areas that we will discuss in the next few slides.
- The Rational Decision Models are looking to find the best answer to the problem and they carefully consider all information, options, and outcomes before making the choice. Rational models are what are used, more often than not, by organizations because they feel they are protecting their interests in doing so.
- Intuitive decision making may be viewed by some people as taking the easy way out; however, Klein (2008) found in studies of various careers (including firefighters, military, housewives, and CEOs) that the vast majority of decisions, even to complex problems, are made through intuition and that the majority of first choices (gut instincts) were correct in a variety of situations.
- There are a variety of methods used to weigh options when making a decision. Have you ever made a list with “Pro” on one side and “Con” on the other? Maybe you looked at different choices and thought “if I do _____, then ____ will happen so I will have to then do ____”. Maybe you decide to do nothing and wait to see if you get better options or hope that the problem will go away. All of these are ways to weigh your options and make your choices.
- In the previous slides we have looked at what decisions are and the possible ways to make decisions. Here we are looking at how the decision maker views their decision. Some decision makers are comfortable allowing their team members to provide input or even make the decision as a group. Others, though, want control of the process and trust their own ideas and decisions to be correct. There is no right or wrong style, this is what the person is comfortable doing or even what an organization allows for in its structure. What type of decision maker are you? Does this change based off of the situation? Why do you think that is?
- Along with the styles of decision making there are different types of decision makers. It is possible to have an autocratic style while being a visionary decision maker; you could argue that many people want to make decisions based off of their own ideas and information but still understand the bigger picture as well as the impact of what the choice will have on others. Alternatively, you could have a collective/participative style but be a pragmatic decision maker that gets input from a variety of sources but makes the choice without concern for emotions and feelings. Leslie Wilkins formulated these styles after observing corrections’ officers in England.
- McKinsey & Company, in cooperation with Harvard Business Review, developed their own set of types of decision makers. Looking at the above slide you will see some of the positives and negatives associated with those types. Again, a person’s decision making style is not a predictor of the type they are here. A decision maker can be a consensus builder that gets a lot people involved and bought into a decision and still wind up being a catalyst that only gets middle of the road results. Of course they could also be a consensus builder that inspires people to succeed as a visionary for needed change.
- All of these elements play a part in either issues coming to a decision or making a bad decision. There are many others out there, as well, but I would be willing to bet that a majority of you have seen some of these issues at work in your own lives. Maybe you personally have done some of these things that led to a less than desired result. How did you deal with these situations afterwards? What do you do differently now?
- The above diagram is just “a way” to show how the decision making progress occurs.