Decision Making: Types and Processes

Decision Making

• Decision: A choice between two or more alternatives.
• Decision making: The process of selecting the best alternative to achieve a goal.

Types of Decisions

• Instinctive: Based on gut feeling (e.g., "fight or flight").
• Rational: Based on logical reasoning and analysis of available choices.
• Aesthetic: Based on subjective judgment (e.g., "Which painting is better?").
• Emotional: Based on feelings (e.g., "Who to vote for?").
• Objective: Based on measurable facts.
• Subjective: Based on personal opinions, thoughts, or feelings.
• Formal: Made by a committee or group, often recorded.
• Informal: Made without formal structure or documentation.
• Immediate: Decisions made quickly, with possible negative consequences if delayed.
• Time delayed: Decisions requiring thorough evaluation of potential opportunities.
• Strategic Decisions: Made by senior managers, impacting company direction in the medium to long term.
• Operational Decisions: Made by junior managers, concerning day-to-day operations.
• Routine Decisions: Related to repetitive, well-understood problems.
• Adaptive Decisions: Based on past decisions, addressing somewhat unusual or partially understood problems.
• Innovative Decisions: Addressing new and unfamiliar problems.
• Programmed Decisions: Made under clear conditions, having been made many times before.
• Non-programmed Decisions: Made under unclear conditions.

Decision Making Situation

• Decision making can address:
  • Problems (actual actions failing to meet objectives).
  • Opportunities (the chance to exceed current objectives).

Decision Influences

• Experience.
• Values.
• Role and position in the company.
• Peers, family, and colleagues.
• People in authority.
• Knowledge and education.
• Reputation.

Decision Making Models

• NASA Model: A structured model:
  • Assess the situation.
  • Gather facts and assess unknowns.
  • Identify alternatives.
  • Establish decision criteria.
  • Weigh alternatives.
  • Select the best alternative.
  • Review the decision.
• Rational Model: A logical, step-by-step approach:
  • Identify a problem or opportunity.
  • Gather information.
  • Analyze the situation.
  • Develop options.
  • Evaluate options.
  • Select a preferred alternative.
  • Act on the decision.
• Bounded Rationality Model: Recognizes limitations in time, information, and capacity
  • Decision makers operate with limited rationality.
  • Managers might select the first satisfactory alternative rather than the optimal one.
• Political Model: Acknowledges differing preferences and potential conflicts during group decision-making
  • People have differing views and use information in various ways
  • Decisions may be driven by self-interests
  • Disagreement over problem definition and solutions is natural
• Group Decision Making Model:
  • Leverages shared knowledge, skills and experience
  • Less pressure on individual manager to decide
  • Solutions likely widely accepted
  • Potential for delays and conflicts
• Vroom Jago Model: Categorizes the appropriate level of involvement for decision-making that leaders should have with staff.