EDRD 3140 Chapter Notes - Chapter 8: Decision Support System, Satisficing, Bounded Rationality
12 Jan 2017
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Chapter 8
MODELS OF THE DECISION-MAKING PROCESS
Rational Models of Decision Making
• In classical theories of organizational behavior, decision making is an entirely rational and
logical process
o Organizational members notice a problem that necessitates a decision
o After carefully defining the problem, the decision makers then search for all the
relevant information that might bear upon it
o The decision makers develop a set of decision options and evaluate them according
to carefully developed criteria for decision effectiveness
o The decision-making process concludes when an optimal decision is identified and
decision implementation can begin
Normative Model (Nutt, 1983)
This normative model includes five stages:
1. Formulation
2. Concept development
3. Detailing
4. Evaluation
5. Implementation
Normative Model Example:
Consider, for instance, a team of managers trying to make a decision about adopting a new server for
the company’s network of computers.
1. Formulation stage (Stage 1), the team might do a survey of organizational members to
determine computing needs and desires.
2. Concept development stage (Stage 2), the management team would generate alternative
ways for dealing with the problem. At this point, they might look at the various types of
servers and ways individual computers could be configured in local area networks.
3. Detailing process (Stage 3), subgroups might be assigned to get more detail on the pros
and cons of various options, and their workability might be tested.
4. Evaluation stage (Stage 4), the information gathered during detailing would be placed un-
der intense scrutiny by the group in order to quantify the costs and benefits of each type of
computer system.
5. Implementation stage (Stage 5), the server system that came out ahead during evaluation
would be put in place by the management group.
Alternatives to Rational Models
Optimizing Model
• The first theorists to suggest an alternative to this model were March and Simon (March &
Simon, 1958; Simon, 1960), who characterize the traditional approach to decision making
as an optimizing model in which decision makers are attempting to find the single best
solution to an organizational problem.
• They believe that it is more realistic to look at organizational decision making as a
satisficing process in which the search is not for a single optimal solution but for a solution
that will work well enough for dealing with the situation.
• March and Simon (1958) propose that organizational decision makers use satisficing
strategies because it is not possible to make the ideal rational solution.
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• Rather, organizational decision makers are characterized by bounded rationality.
• That is, decision makers attempt to make logical decisions, but they are limited cognitively
(e.g., humans are not always perfectly logical) and by the practical aspects of organizational
life (e.g., limits in time and resources).
Intuitive Processes
• Simon (1987) has proposed that a great deal of organizational decision making can be
attributed to the intuitive processes of managers.
• Simon harkens back to early work by Barnard (1938), who suggests a distinction between
logical and non-logical management processes.
• Barnard argues that decision makers are often forced to make quick decisions without the
opportunity for information search and debate.
• Managers in these situations often make decisions without conscious knowledge of how
these decisions are made.
• Intuitive decision making depends on the decision-maker accessing the relevant chunk
of information and putting it to use.
Garbage Can Model of Decision Making (Cohen, March & Olson, 1972)
• These theorists venture far from the rational norm, proposing that decision-making is a
process wherein problems, solutions, participants, and choices are all dumped together in a
relatively independent fashion.
• A decision is made when a suitable collection of problems, solutions, participants, and
choices coincide.
• March and colleagues believe that organizational behavior often occurs in just such an
irrational manner, and it is only after the fact that the decision-making process is
constructed.
• This belief is similar to Weick’s notion of sensemaking, discussed in Chapter 4.
SMALL-GROUP DECISION MAKING
Descriptive Models of Small-Group Decision Making
• Most models of group decision-making propose that groups go through a series of phases as
they systematically attempt to reach decisions.
Phase Model of Decision Making (B. A. Fisher, 1970)
• He identifies four phases:
o Orientation - group members become acquainted with each other and with the
problem at hand
o Conflict - possible solutions to the problem are presented and debated
o Emergence - the group will arrive at some level of consensus
o Reinforcement - the decision will be supported
Stage Models (Pool and Roth, 1989)
• Stage models explain decision behavior as the result of the group following a systematic
logic.
• Stage models also assume a rigid and unitary sequence of group activities.
• That is, decision making always begins with orientation to the problem and ends with the
emergence and reinforcement of a solution.
• A number of theorists have objected to this type of model. [EG Cissna (1984) argues that
phases do not exist; Morley and Stephenson (1977) argue that phasic development will vary
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depending on the type of decision being made by the group; Gersick (1991) has developed a
punctuated equilibrium model that highlights both the underlying deep structure and the
revolutionary shifts that occur in groups]
Multiple Sequence Model
• Poole has advanced a multiple sequence model that represents the variety of decision paths
taken by groups.
• By coding the continuous interaction of decision-making groups, Poole and Roth (1989a)
developed a typology of decision paths typically adopted.
• The three major types of group decision paths are presented in Table 8.1.
• It appears that regardless of the context, decision making is rarely a linear and rational
process in which organizational members carefully search for and evaluate decision
options.
Effective Small-Group Decision Making
• Poole’s multiple sequence model is useful in highlighting the varying communicative
patterns small groups use when making decisions, but it says little about what types of
communication lead to effective decisions.
Groupthink (Janis, 1982)
• Janis studied a number of historically noteworthy decision disasters and concluded that
interaction in these groups was characterized by the property of groupthink.
• Groupthink refers to: a mode of thinking that people engage in when they are deeply
involved in a cohesive in-group, when the members’ striving for unanimity overrides their
motivation to realistically appraise alternative courses of action.
• Thus, in a group characterized by groupthink, there is more concern with appearing
cohesive and maintaining group relations than there is with making a high-quality decision.
• The major symptoms of groupthink identified by Janis are presented in Table 8.2.
Groupthink: Can a group improve its chances of making an effective decision?
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Document Summary
This normative model includes five stages: formulation, concept development, detailing, evaluation, implementation. Optimizing model: the first theorists to suggest an alternative to this model were march and simon (march & Descriptive models of small-group decision making: most models of group decision-making propose that groups go through a series of phases as they systematically attempt to reach decisions. It appears that regardless of the context, decision making is rarely a linear and rational process in which organizational members carefully search for and evaluate decision options. The affective model arguing that as long as subordinates feel they are participating and are being consulted, higher-order needs (e. g. , esteem needs and self-actualization needs). effectiveness of decisions. hence more productive. )ncreased employee satisfaction is then seen (cid:498)as a by-product of their participation in important organizational decisions(cid:499). participate in decisions will be better able to implement the decisions down the road. with higher-quality information. productivity should improve.
