t205 b block 04 week 04 managing within organizations concept file 04 section v decision making

T205 BBlock 04 Week 04

Managing within Organizations

Concept File 04Section V Decision Making

Reading 27 The Elusive Multifaceted Nature of Decision

Making It is useful to distinguish three broad styles of decision

making: the analytical, the negotiated, and the incremental/emergent

27.1 Analytical approaches

According to this approach decision making can be handled by research like activities such as gathering

data, developing models, forming interpretations, devising options, etc. There are different versions of

this approach:

The stereotypical version sees decision-making as a rational process of clarifying goals, gathering facts,

identifying options, comparing the costs and benefits of each, and in light of all of this making the best choice.

Another view sees decision making as a matter of developing a model where the best options becomes

obvious, and comparisons between alternatives becomes unnecessary.

The analytic work might be handed over to a consultant, etc. who would do the research & report back with suggestions


Making

Analytical viewsA rational process of clarifying goals,

gathering facts, identifying options, comparing the costs & benefits of each and then picking either the best, or at least one that is good enough to do what is required

A matter of developing a shared model of a situation to the point where the best option is obvious (detailed evaluative comparison between options isn’t really needed)

Reading 27 The Elusive Multifaceted Nature of

Decision Making

A third view focuses on the identification and tracking of different kinds of uncertainties in order to manage

uncertainties related to:

1. Values (what are we really trying to do?)

2. The working environment (What practical information we need about how things work?)

3. Other decisions (How will what we are trying to do or decide interact with what everyone else is doing and deciding about?)

Reading 27 The Elusive Multifaceted Nature of

Decision Making


Making

27.2 Negotiated approaches

As opposed to the idea of decision making as a rational calculation of some sort, there are

circumstances where decisions are considered an expression of an agreement, reached as the outcome

of some kind of negotiation between various stakeholders.

Decisions made as a result of genuinely open and free discussion amongst a genuinely diverse group of stakeholders are often quite good and form the basis

of democratic politics.


Making

Negotiated agreement can be seen as “an expression of the personalities &

attitudes of the decision makers as well as of their

judgmentsabout the facts”

This might lead to the dark side of decision making


Making

27.3 Incremental and emergent decisions:

As opposed to explicit decision-making, research into what managers do suggest that they spend most of

their time engaging in a continual round of brief conversations, with many interruptions, relating to

various concerns that they have.

These concerns are advanced through numerous, small, spontaneous decisions in order to resolve

difficulties or to identify and benefit from opportunities.


Making


Big decisions are in reality the end-point of a messy incremental process.

Mintzberg considers that the very high-level decisions that control the long term strategic shaping of an

organization do in fact emerge from a repertoire, and a vision instead of being deliberate.


Making


The process of decision making evolved over the years in ways that are never explicitly stated or planned and

is affected by many sorts of random events.

Decision-making is affected by a mixture of factors such as history, context, genuine choice, positive

feedback systems, calculation, negotiation and emergent change. It is a step-by-step mode with small

decisions rather than one final one.


Making

What is multi-criteria mapping? This technique is a systematic and transparent way of

comparing policy options. It taps into a range of perspectives and expertise, and

produce an overview that “maps” the debate. It does not attempt to foreclose deliberations by coming up with a single solution, but seeks rather to

foster the exploration of alternative outcomes. It carves a middle way between technical , purely

quantitative analysis and qualitative approaches.

Reading 32 Rethinking Risk

Reading 32 Rethinking Risk

Reading 29Strategic Information: Uses And Abuses

Organizations need information about the future because they cannot respond instantly to change.

An organization that could see how the world had changed and immediately adjust itself accordingly, wouldn’t have to bother about the future.

Modern attempts to manage the future have tended to place less emphasis on predictions and more on ensuring that the organization can respond quickly and flexibly to change, which made long-term predictions less necessary.

Looking ahead , even over the short term ,requires both:Internal information (like costs, human resource requirements, scope for innovation etc. ), and

External information (economic, market and/or political and social trends etc.)

Both of these raise considerable difficulties. The reasons for this include the following:

1- You only have historical data ( what used to happen and not what will happen ).


Both of these raise considerable difficulties. The reasons for this include the following:1.You only have historical data (what used to happen and not what will happen).2.Many of the pieces of information that you would need for future events (e.g. estimates of future inflation rates , interest rates etc.) can never be more than informed guesses3.The categories of activity you become interested in may well be different from those you currently collect information about .This activity could also be interacting with other things.


Reading 31: Perspectives on decision making

If you look at how decisions are actually made , it turns out to be rather different from the way that decision making theory ought to be made. This reading looks at eight very different ways of thinking about decision making .

These are :1. The rational choice model.2. Rational choice when you can only guess the outcomes3. Rational choice when you aren’t sure about your preferences.4. Decision making as the resolution of conflict.5. Decision making by rule.6. Opportunistic decision making7. Decision making as a symbolic event8. Information gathering and decision making.

1- The rational choice model.

It takes the view that people are free to choose what they do and they normally exercise that choice in a sensible way, looking for the best means to achieve their ends. This theory is one of the standard ways to explain people’s behavior. More specifically, it implies that:

A. We know what we want – what we are trying to achieve.

B. We know the alternatives for actions.


C. We know the likely consequences of each of these actions.

D. We can compare the possible means in terms of their consequences and decide which best meets what we are trying to achieve.

This model can work very well in simple cases and simple choices. However, it is problematic when applied to big and serious decisions, and when complicated issues are in place where uncertainty about outcome and about preferences increases.


2- Rational choice when you can only guess the outcomes

If you have a goal you can not achieve and you don’t know what your options are, you have to start searching for possibilities (talking to people, market research, brainstorming etc..) and you will probably focus the search quite close to where you are already.


2- Rational choice when you can only guess the outcomes:

When do you stop the search?

In the rational model there were supposed to be a definite no. of options, but in an open-ended search the range of possibilities is effectively unlimited. But this cannot go on forever because of bounded rationality and of limitation of money and time


3- Rational choice when you aren’t sure about your preferences.

The classic rational choice model assumes that the value you place on some aspects of a potential action is known and fixed, and its quality is similar to the size, weight or color of a physical object. In fact personal preferences are very far from having this kind of neat and tidy quality.1.Often we don’t know what we want and make decisions on grounds other than preference .I.E we just get on with the assigned jobs.2.Personal preferences are often relative to circumstances rather than absolute.


1. Personal preferences change over time2. Preferences for different kinds of things are often

hard to compare.3. Choosing creates needs as well as satisfying them.

That is seeing the outcome of a choice may affect what you like or dislike.

4. Group preferences are often vague and inconsistent (because they are a compromise amongst the different individual views of different group members)


4- Decision making as the resolution of conflict

So far we assumed that the problems with the rational choice are all to do with having the right information. But decision making usually involves more than one person. This probably has relatively little effect on the list of options for actions-indeed having more than one person involved increases your ability to search out a wide range of possibilities and thus getting more differences in preferences.



Conflict is mainly an expression of difference in preferences. So to get a group to an agreement about a decision, people are either going to have to: - Change their preferences, do deals or to Knuckle under (subdue to power).



March talks about the political aspects of decision making where deep conflicts tend to color everything:information gathering can be manipulated

Decisions can be interpreted to produce effects very different from those the decision maker had in mind,

Even for the decision maker, observation of the results of the decision may change the values on which the decision was based.


5- Decision Making by Rule.The idea that we make choices by weighing up the pros and cons of our options may seem attractive, but in reality many decisions are made by finding and applying rules.In this kind of decision making people are not normally trying to maximize their own benefits – it makes no personal difference to them. Most organizations acquire a large evolving body of rules and procedures of this sort.As March puts it, the issue is not what the costs and benefits are of a new idea, but what someone in your role does in a situation like this. Any organizational role has many rules of behavior that have evolved thru a history of experience and imitation.


6-Opportunistic Decision Making

Here we have a radically different view of decision making. Rather than having a rational ordered ,tidy and logical approach to decision making ,managers normally deal with portfolios of simultaneously interacting problems rather than deal with them one by one.

Cohen et al introduced that Garbage Can theory. To him instead of a problem or need finding a solution, the reverse may occur, with a particular solution raising a new need. For instance the reorganizing of a production process might free up space, leading people to begin to see how useful a recreation room might be.


This theory views a random flow of needs, opportunities, enthusiasms, resources, problems, solutions and so on in which managers are continually looking for and creating opportunities and needs and then marrying them together in constructive combinations .

The manager becomes an orchestrator - marriage-broker for issues and opportunities


7-Decision making as a symbolic eventAll models of decision making so far consider that the reason for decision making is to make a decision. For instance, if you are choosing a car, what matters is choosing the best car, not impressing your friends when they see you driving it.

However, there are many occasions when matters is what the event stands for rather than its functional outcome.


8- Information gathering and decision making.The rational model implies that it is uneconomic to collect more information than is needed for a particular decision. However as March indicated this will lead to rules of thumb such as: 1- Do not pay for information that cannot affect choices you are making. 2- Do not pay for information if the same information will be freely available anyway before you have to make the decision for which it is relevant. 3-Do not pay for information that confirms something you already know.


However in reality the opposite happens for many reasons :

1. Managers normally operate in general surveillance mode rather than specific problem- solving mode. They look for any thing that could help.

2. If information were collected only in relation to known decisions, it would rarely be innocent information and there will be bias.

3. Gathering, analyzing and presenting information is often seen as something good managers do, so it tends to happen whether needed or not.


34.3 Responding to resistance to change

Resistance to change can be attributed to psychological reasons particularly in societies, which contribute very

positive connotations to change and very negative connotations to stability and continuity.

Nonetheless not all change is good, nor all resistance is bad.

Reading 34

Change Agents & Reactions to Change

34.3 Responding to resistance to change

Resistance can be a useful pointer to serious flaws and inadequacies in what is being

proposed, or to differences in perspectives and understanding that must be resolved for any

progress to occur.

Reading 34


There are ethical issues that determine the extent of our ability to reduce resistance:

At organizational level, structural and cultural factors can result in widespread resistance, (an aggressive marketing strategy may be seen as

inappropriate to the culture of a caring organization).

Reading 34


At group level, the issues are related to the need to feel ownership of the change (support and

adopt) and to participate in the implementation of the proposed change.

Communication and consultation can identify areas of concern and reduce resistance.

Reading 34


At the individual level, peer (equal ) pressure influences people’s reaction to proposed change, and they may have concerns about its effects on

their own working practices, career aspirations or promotion prospects.

Reading 34


t205 b block 04 week 04 managing within organizations concept file 04 section v decision making

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