Models of Decision Making: An Overview

Decision making is one of the most important dimensions of organizations.

How decisions are made, by what standards, at what cost, and for whose benefit are questions of continuing interest.

It is important that those who hold public offices are very careful in making a decision since their decisions can cost thousands of dollars to the public or may cost thousands of lives of citizens.

There are two major types of decisions involving organizations - organizational decisions, which are reflected in the output of policies that are generated, and internal decisions that affect day-to-day operations within the organization.

Administrators can tighten or loosen their oversight of organizations because of political or economic reasons.

Some of these factors that affect decisions are; rulings by the courts, societal values, economic conditions, and the values of the people involved in decision-making processes.

Internal decisions are those that managers and administrators make on a regular basis in the daily course of their work.

These decisions may not affect major policy matters that go beyond the organization.

Those kinds of decisions are guided by internal organizational policies, which may be asking an employee to change the vacation time because it is not convenient for the organization, or how FAA inspections should proceed.

Most organizations have established procedures for handling these types of day-to-day work, but someone still must make a decision and say ‘yes’ or ‘no’.

Internal decisions of public agencies may not be noticed by public, but external decisions may grab attentions very rapidly.

For instance, permitting a chemical company that pollutes environment, or allowing building a highway that will run through a wilderness section of the country are the types of decisions that capture the attention of the public and interest groups.

There are two major decision-making models; rational and the incremental models.

The rational model is based on economic models of decision making.

Being rational in this context refers primarily to goal-directed behavior.

Rational models are concerned with such things as efficiency and assume that by behaving rationally, a decision maker will try to get the most output from the least amount of input of resources.

Cost-benefit criteria are used to evaluate whether the benefits that will be gained in the alternatives being considered will justify the cost.

One assumes that if the costs are greater than the benefits, the decision is not rational and should not be pursued.

To accomplish this end, decision makers are supposed to define the goals that are to be achieved, select ways to achieve the goals, evaluate each alternative solution thoroughly by assessing the cost and benefits of each alternative, and then select the best alternative.

Since the rational model comes from economics, several concepts are included, such as self-interest of the decision makers and utility.

The term utility refers to a measurement of satisfaction.

In rational model, decision making is broken down into several phases:

Establish a complete set of operational goals with relative weights allocated in different degrees to which each may be achieved.

Establish a complete inventory of other values and resources with other weights.

Prepare a complete set of the alternative decisions that will resolve the problem.

Prepare a complete set of valid predictions of the cost and benefits of each alternative, including the extent to which each alternative will achieve the various operational goals, consume resources, and realize or impair other values.

Calculate the net expectations for each alternative by multiplying the probability of each benefit and cost for each alternative by the utility of each, and calculate the net benefit or cost in utility units.

Compare the net expectations and identify the alternatives with the highest net expectations.

To state all these in simple words, the rational model merely means defining one’s goals, analyzing the available alternatives, and selecting the alternative that best meets the goals.

The problem solving model is similar to the rational-comprehensive model except that one begins by defining the problem that must be resolved, rather than the goals that one is trying to achieve.

This means that one thoroughly examines the dynamics of the problem before proceeding.

In making decisions by using the problem-solving model, one simply defines the problem, examines and assesses the advantages and disadvantages of alternatives, and then selects the alternative that seems to be the best solution.

Gathering all the reasonable alternatives and fully evaluate the effects of each one, since there are always unintended consequences that are overlooked or simply cannot be known at the time, are not always that easy.

That is why economists have added uncertainty to the rational model.

The inadequacies of the rational-comprehensive model led Herbert Simon to develop his idea of “bounded rationality”.

Simon compared “economic man” to “administrative man” and determined that the idea of a maximizing decision maker was simply unrealistic.

He argues that because of time constraints and incomplete data, decision makers only seek to “satisfice” when selecting alternatives for their decisions.

That is to say that rather than evaluating all the possibilities, they simply search until they find a solution that satisfices their needs.

They will stop searching for potential solutions once they reach this point.

This does not mean that decision makers do not make rational decisions; it means that their rationality is limited because of environmental restrictions and their own ability to process and handle information.

So, decisions are rational, but they are limited rather than a comprehensive form of rationality.

Incrementalism holds that decisions are produced by a series of limited successive comparisons with a relatively narrow range of alternatives.

It uses the status quo rather than abstract goals as its reference point for making decisions.

For instance, the political and organizational realities make rational decision making nearly impossible in the real world.

In developing public budgets, decision makers tend to use the budget from the previous year as the basis for the next year’s budget.

The same is typically true for decisions on most public policies.

Quick and revolutionary changes may fail too rapidly in public administration (like Bill Clinton’s health care overhaul); it rather be done incrementally.

Political rationality based on economic-based models of decision making led to some interesting new conceptualizations like groupthink and the garbage can model of organizational choice.

Groupthink is a condition that can inflict a group decision-making process by affecting the dynamics of the group to agree with and support flawed decisions.

It can affect groups such as committees or the president’s closest advisory group.

Groupthink occurs when some members of a group seek unanimity in lieu of realistically appraising alternative courses of action that would produce a better decision.

There are some pitfalls in the groupthink process and the leaders or directors of organizations should be aware of those, particularly when there is domination of some individuals or the leader-director in the group, like the case of Vietnam War that President Johnson’s in-group of advisors tried to silence all members who expressed doubts about the war.

The garbage can theory suggests an alternative perspective about the nature of decision making that centers on ambiguity.

The garbage can model holds that decision process in organizations is filled with ambiguity.

Ambiguity refers to organizations having goals that are unclear or vague, technologies that are not well understood, histories that are difficult to interpret and participants who wander in and out of the decision-making processes.

This is usually the case in large organizations where no one really understands how the organization operates department by department.

In this concept, four separate decision-making streams are used; problems, solutions, participants, and choice opportunities.

From time to time, the streams do connect, and when they connect, the result can be a major decision and this is what gives the model its name the garbage can model.

Decisions, therefore, are the function of a mixture of problems, solutions, participants, and resources with changing participants.

Because of organizations’ size, it is easy for organizations to become more like the garbage can design.

In large organizations power is not concentrated but dispersed throughout the organization.

Over time, various units become relatively less clear because of the multitude of functions the organization performs.

Moreover, the mission and goals may become mutually contradictory.

After all, in the world of public administration, the idea of incrementalism remains the most accepted description, since it appears to best fit the real world of politics and public management.

Nature of Managerial Work

Management in the public sector is more constrained and complicated than in the private sector.

This is because public managers must deal with many restrictions that are less prevalent or absent in the world of private management.

Public sector managers must deal with public laws that specify what they can and cannot do, civil service restrictions, and public employee unions.

Complex political dynamics play an important restrain in public managers’ decision making; wishes of parliament, the prime minister, other ministers, governor, mayor and so on have serious influence.

All managers perform the same basic tasks and activities; planning, organizing, staffing, directing, coordinating, reporting, and budgeting.

Alongside these tasks, managers also must motivate, train, build employee morale, build teams, monitor performance, mentor employees, and communicate, to name only a few of other activities.

What types of activities do managers engage while they are at work?

Personal activities: These are truly personal matters that are generally not job-related, such as calling your banker or broker, or buying a car while you are at work.

The balance between personal life and professional life is important and a manager should not burnout and if needed should take time off from the work.

Interactional activities: Research suggests that most of a manager’s time (80 percent) is spent interacting with people (with peers, superiors, or subordinates, on the telephone or attending meetings).

This helps to explain why communication skills are critical for a manager to be effective.

Administrative activities: Research suggests that a small amount of a manager’s total time is spent processing paperwork, budgeting, monitoring policies, and on other non-interactional work.

Technical activities: This refers to truly “technical” work.

As managers move up the career ladder, less of their time is spent on technical work.

First-line supervisors spend a lot of time with technical matters and hands-on activities, middle managers spend less time on technical matters, while executives spend very little, if any, of their time working on technical matters.

The typical manager is a very busy person.

One study found that in a typical day, a first line manager was engaged in 583 activities.

Another study of executives found that executives engaged in 50 distinct activities each day.

Most studies have found that managing is largely a verbal activity.

Managers rely heavily on oral communication and prefer oral to written communication.

Research shows that managers usually do not like planning, partly because it requires time, and managers often feel they do not have enough time.

Research showed that there are some traits that an effective manager needs to have; interactional skills, conceptual skills, administrative and technical.

Generally, the higher one goes into executive management, less emphasis is placed on technical skills and greater emphasis on administrative skills.

The one skill that generally applies to all levels of management is communication.

Managerial Style

All managers have managerial styles.

Many factors contribute to a management style, including personality, values, and organizational culture.

Typically there are two types of managerial styles; the hard-nosed approach and the soft-nosed approach.

Alongside with these, the research indicates that there are country club manager, the sweatshop manager, the impoverished manager, the administrative manager and the team manager.

The ideal type, according to management scholars, is the team manager.

This type of manager has a high concern for both the work and the employees.

Leadership

In organizational settings, leadership is typically defined as the process of influencing other people toward accomplishing group or organizational tasks.

Leadership is considered to be a tool of management, which suggests that it can be learned, but all managers are not leaders and all leaders are not managers.

A member of a work group may have no authority whatsoever but may in fact be an influential leader in the group.

Leadership is often thought of as something intangible, a special quality that some people seem to possess.

It is the ability to lead, influence, and inspire others.

Leaders provide direction and vision for an entire company, institution, nation and in some cases the world.

Leadership is the ability to create and maintain the process of influencing other people for the purpose of achieving goals.

Effective leadership usually emerges during the time of crisis.

Think of Winston Churchill and Franklin Roosevelt.

There are some traits of leaders; they have followers.

People might be managers but they may not be leaders.

Some leaders may have followers but may not have the formal authority to manage.

This might be happening in a work group; a member of group might have a strong influence on the group but may have not the formal authority to lead.

Leaders have emotional appeals.

Managers are expected to use their analytical minds in the process of establishing and achieving organizational goals.

A leader is expected to inspire those who work for him or her.

Trait Theory

Researchers searched for the psychological, emotional intellectual and motivational characteristics that were associated with successful people.

The traits that typically have appeared in lists include a strong desire for task accomplishment, persistent pursuit of goals, creativity and intelligence used to solve problems, a self-assured personality, and the ability to influence other people.

In the research, it appears that great leaders have skills of creativity, diplomatic and tactful, good speakers, knowledgeable about group tasks, organized, persuasive, socially skilled, and decisive.

Trait theorists usually focused on success rather than failure.

There are some attitudes that harm the leader, such as being overly concerned with morale, lacking of a sense of proportion, and over-managing.

One thing is certain that leadership is not a universal quality.

A person might be a good leader at one position, but a bad leader or manager in another position.

The idea of matching people with positions in which their personalities and leadership style might be most effective was one area that caught the attention of behaviorists.