Chapter 8 – Decision Making
Learning: A relatively permanent change in an employee’s knowledge or skill that results from
Learning has a significant impact on decision making
The more knowledge employees have prior to work, the more they bring to the table.
Decision Making: The process of generating and choosing from a set of alternatives to solve a problem.
The more knowledge and skills one possess, the more likely they are to make accurate and
Expertise: The knowledge and skills that distinguish experts from novices.
The different between the two is a function of learning.
True learning is when changes in behaviors become relatively permanent.
Types of Knowledge
Explicit Knowledge: Knowledge that is easily communicated and available to everyone.
Example: someone sitting down at a desk to learn.
Information that is relatively easily communicated and a large part of what companies teach
during training sessions.
Reading the manual.
Tacit Knowledge: Knowledge that employees can only learn through experience.
Not easily communicated but could very well be the most important aspect of what we learn in
“Know-how,” “know-what,” and “know who” acquired solely through experience.
Intuition, skills, insight, beliefs, mental models, and practical intelligence.
Explicit Knowledge Tacit Knowledge
Easily transferred through written or verbal Very difficult, if not impossible, to articulate to
Readily available to most Highly personal to nature
Can be learned through books Based on experience
Always conscious and accessible information Sometimes holders don’t even recognize that they
General Information Typically job- and/or situation-specific Methods of Decision Making
Programmed Decisions: Decisions that are somewhat automatic because the decision maker’s
knowledge allows him or her to recognize the situation and the course of action to be taken.
See the problems more easily and recognize and implement solutions more quickly.
o Does not say that the decisions are necessarily easy.
Comes across as intuition or a “gut feeling.”
o Intuition: An emotional judgment based on quick, unconscious, gut feelings.
Difficulty arises when to trust such gut feeling and when not to.
Rule of thumb, ask yourself how much experience you have in that on which
you are making a judgment.
Example: Don’t lay down your life savings on a spin of the roulette
wheel because your intuition tells you “red!”
Effective intuition results, when people have a certain amount of tacit
Non-Programmed Decisions: Decisions made by employees when a problem is new, complex, or not
Rational Decision-Making Model: A step-by-step approach to making decisions that is designed to
maximize outcomes by examining all available alternatives.
Assumes that people are perfectly rationale.
1) Identify the criteria that are important in making the decision, all involved parties.
2) List all alternatives that might be potential solutions to the problem.
a. Evaluating alternatives at this point is not necessary
b. Come up with as many solutions as possible
3) Evaluate alternatives against criteria laid out in step 1.
4) Select alternative with best outcome.
5) Implement the alternative. Decision-Making Problems
Factors affecting the rational decision-making model:
Bounded Rationality: The notion (belief) that people do not have the ability or resources to
process all available information and alternatives when making a decision.
To be rational decision makers, we should . . . Bounded rationality says we are likely to . . .
Identify the problem by thoroughly examining Boil the problem down to something that is
the situation and con