UPDATED-DECISION-MAKING-MODELS.pptx

FUNDAMENTALS OF DECISION-MAKING & ITS MODELS INTRODUCTION What is the relevance of decision-making in public administration? INTRODUCTION Decision-making is considered an important process in any organization. The nature of an organization is determined by the kinds of decisions taken in it. I...

FUNDAMENTALS OF DECISION-MAKING & ITS MODELS INTRODUCTION What is the relevance of decision-making in public administration? INTRODUCTION Decision-making is considered an important process in any organization. The nature of an organization is determined by the kinds of decisions taken in it. INTRODUCTION According to Webster Dictionary, “decision is the act of determining in one’s own mind upon an opinion or course of action”. Decision-making is thus about the process of arriving at an optimal solution by exploring various alternative choices. DEFINITIONS  According to Chester Barnard: decision-making is an essential process of organizational action.  Felix A. Nigro: what really takes place in an organization cannot be understood if one does not know what kinds of decisions are made, who participates in making them and what their exact role is. It is a collective activity in which its objective is problem solving.  Robert Tannenbaum: decision-making involves a conscious choice or selection of one behavior alternative from among a group of two or more behavior alternatives. DEFINITIONS  Wasby: decision-making is defined as a process or sequence of activities involving stages of problem recognition, search for information, definition of alternatives and the selection by an actor(s) of one from two or more alternatives consistent with the ranked preferences.  Herbert Simon: in his book entitled, Administrative Behavior, he highlights that decision-making is the heart of administration DEFINITIONS Seckler-Hudson: decision-making in government is a plural activity and that it is a part of the political system. In arriving at a decision, Hudson states that certain factors should be considered such as: legal limitations, budgets, facts, history, internal morale, future as anticipated, pressure groups and subordinates.  When will the need for making decisions arises?  One has to choose only one alternative through the process of elimination. Rationality of human being lies in selecting such an alternative, which can produce maximum positive results and minimum negative results. TYPES OF DECISIONS TYPES OF DECISIONS  Programmed Decisions - repetitive and routine  Non-programmed Decisions - are made to deal with affairs that are novel and unstructured  TYPES OF DECISION MAKING DECISIONS TECHNIQUES TRADITIONAL MODERN Programmed  Implementing by  Operations (repetitive and habit research: routine character.  Adapting SOPs developing Standard routine to be mathematician procedure is carried out by models, developed to office people. computer implement these simulation, etc. decisions)  Electronic Data Processing (EDP) Non-programmed  Judgement,  Training decision- (non-routine, ill- intuition and makers in structured creativity. heuristic problem problems,  Rule of thumb solving operations techniques research and  Developing ORGANIZATIONAL & PERSONAL DECISIONS Chester Barnard (1966) has classifies the decisions into two types: organizational and personal decisions. Personal decisions cannot ordinarily be delegated to others, whereas organizational decisions can often, if not always, be delegated. GENERIC & UNIQUE DECISIONS Peter Drucker, in his article entitled, “The Effective Decision”’ published on 1967 enumerated the classifications of decision such as: generic and unique decisions.  Generic decisions – reflections are made on the past situations and the decision that was taken in the past get repeats.  Unique decisions – new decisions are taken to resolve individually because they are unprecedented.  ROUTINE &STRATEGIC DECISIONS  Routine Decisions – are generally taken for day-to-day operations of the organization and the routine decisions are made based on pre-established rules, procedures and policies of an organization. - the decision-making power is delegated to the middle and the lower level.  Strategic Decisions – such decisions mostly deal with the organizational objectives/goals and imperative policy matters. The nature of the decision is non-routine or non-repetitive and it can be made through an analysis of various alternatives. - since the decision can have a direct organizational impact, these are being made by the top level  DECISION-MAKING PROCESS There are various steps involved in the decision-making process which are logical and systematic, such as: defining the problem, finding alternatives, selecting the alternatives and getting feedback, and finalizing one alternative. Terry (1956) has formulated the key steps in decision-making process:  Determine the problem  Acquire general background information and viewpoints about the problem.  State what appears to be the best course of action.  Investigate the proposition and tentative decisions  Evaluate tentative solutions  Make the decision and put it to effect and;  Institute follow-up and if necessary, modify decision in the light of results obtained. Simon & March (1960) assert that there are 4 set of activities which are important for a decision- making process: 1. Intelligence Activity 2. Design Activity 3. Choice Activity 4. Evaluating Activity DECISION- MAKING MODELS  RATIONAL DECISION MODEL A rational decision model presupposes that there is one best outcome; it is sometimes referred to as an optimizing decision-making model. A decision making method/model that factors in objectivity and logic instead of subjectivity and intuition to achieve a goal. The goal of rational decision making is to identify a problem, pick a solution between multiple alternatives, and find an answer.  RATIONAL DECISION MODEL The model assumes that it is possible to consider every option, to know the future consequences of each decision and the utility (value) associated with each outcome. RATIONAL DECISION MODEL RATIONAL DECISION MODEL LIMITATIONS OF THE RATIONAL MODEL  Requires a great deal of time  Requires great deal of information  Assumes rational, measurable criteria are available and agreed upon  Assumes accurate, stable and complete knowledge of all the alternatives, preferences, goals and consequences  Personal factors (beliefs, values, education and intellectual capacity)  SIMON’S BOUNDED RATIONALITY MODEL  Herbert Simon’s work on “Administrative Behavior (1947) is the seminal work in the field of decision-making.  He believed that rationality model in decision making is non-realistic and its principles are non-attainable.  According to him, rationality is concerned with the selection of preferred behavior alternatives in terms of some system of values whereby the consequences of behavior can be evaluated.  VARIOUS TYPES OF RATIONALITY  Objectively rational – it is the correct behavior for maximizing given values in a given situation  Subjectively rational: the decision maximizes attainment relative to knowledge of the subject  Consciously rational: adjustment of means to ends is a conscious process  Deliberately rational: adjustment of means to ends has been deliberately brought about  VARIOUS TYPES OF RATIONALITY  Organizationally rational – oriented to the organizational goals  Personally rational: directed at the individual goals Simon rejected the concept of total rationality (economic man) as it is based on totally unrealistic assumptions. To put it in simpler terms, an individual cannot have complete knowledge on all aspects of an issue in order to know every alternative to arrive at a decision. BOUNDED-RATIONALITY Simon also developed the concept of “satisficing”. Such term is derived from the words satisfaction and sufficing. Satisficing decision allows a problem solver to achieve his or her main goals, but the process does not involve a comprehensive analysis of all possibilities and outcomes nor does it require perfect information The following factors are responsible for bounded rationality leading to satisficing decisions:  Dynamic nature of organizational objectives.  Imperfect information as well as limited capacity to process the available information.  Time and cost constraints.  Environmental forces or external factors  Decision-maker may not be aware of all the possible alternatives available and their consequences  Personal factors like preconceived notions, habits, etc.  Organizational factors like procedures, rules, channels of communications and so on. Based on the said factors, Simon proposed a new notion called administrative man which is against the earlier notion of economic man. Administrative man is concerned about taking satisficing decisions, while the economic man is concerned about maximizing decisions. LINDBOLM’S INCREMENTAL MODEL Charles E. Lindbolm in his article, The Science of Muddling Through (1959) had advocated the concept of incremental model of decision making. According to Lindbolm, incremental model of decision making process involves continuously building out from the current situation, step-by-step and by small degrees. In the context of public administration, incrementalism means continuing the existing programs and policies with little modification. Lindbolm observes that the past activities and experiences are used by the decision makers to make future decisions. This model is also known as branch technique, or model of successive limited comparisons or step-by- CHARACTERISTICS OF INCREMENTAL MODEL AS HIGHLIGHTED BY SAPRU  It proceeds through a succession of incremental changes. Policy-makers accept the legitimacy of existing policies because of the uncertainty about the consequences of new or different policies.  It involves mutual adjustment and negotiation. The test of a good decision is agreement rather than goal achievement.  It involves trial and error method.  Policy is not made once for all. As Jan-Erik-Lane puts it, “incrementalism is thus more satisfactory from a theoretical point of view as it scores high on criteria like coherence and simplicity”. Lindbolm has argued that the incremental model is better than rationality model in terms of simplifying alternatives, dealing with multiple and conflicting objectives and further the decisions under this model are reflective of the real world. But other scholars have criticized this model stating it as an over-simplified model as it can work only for continuous policies and programs and not war-like situations. ETZIONI’S MIXED SCANNING MODEL Amitai Etzioni in his paper Mixed Scanning: A Third Approach to Decision-Making (1967) had advocated the mixed scanning model. According to Etzioni, “mixed scanning” is a rationalistic approach to decision-making, which requires greater resources that decision-maker commands. The mixed scanning model recognizes that decision makers have to consider the costs of knowledge, because not everything can be scanned. Hence, while deciding on a policy, endeavor should be to scan key areas fully and rationalistically, and other areas can be looked at in a more truncated view.  DROR’S OPTIMAL MODEL  Dror in his book, Public Policy-making Re-examined (1989) advocated the optimum model of policy-making. He rejected the idea of incrementalist approach and suggested alternatives to the rational and incrementalist models.  Dror claims that optimal model is a superior model to all the other existing models, which is a combination of economically rational model and extra-rational models. The ff are the characteristics of optimal model:  It is qualitative not quantitative.  It contains both rational and extra- rational elements.  It is basic rational to economically rational.  It is concerned with meta-policy making.  It has much built-in feedback. The major objective of Dror (1989) was to increase the rational content of government and to build into his model, the extra-rational dimensions of decision making, which is called as normative optimalism. The optimal model has been classified into three phases: a) Meta policy-making b) Policy-making c) Post-policy making  META POLICY-MAKING STAGE is a stage that comes, even before a policy is formulated. This is a preparatory stage in which measures are taken to understand various aspects related to the policy which is to be formulated. The diff. stages are:  Processing values  Processing reality  Processing problems  Surveying, processing and developing resources  Designing, evaluating and redesigning the policy-making system  Allocating problems, values and resources  Determining policy-making strategy  POLICY-MAKING STAGE In the second phase, the policy is actually formulated. In this phase, the resources are sub-allocated for the various processes under policy in hand, and it further involves actual designing of the policy, right from setting the goals, analyzing the costs and benefits of various alternatives and thus finally arriving at the best alternatives.  POLICY-MAKING STAGE The different stages are as follows:  Sub-allocating resources  Establishing operational goals, with some order of priority  Establishing a set of their significant values, with some order of priority  Preparing a set of major alternative policies, including some “good ones”  POLICY-MAKING STAGE The different stages are as follows:  Preparing reliable predictions of the significant benefits and costs of the various alternatives  Comparing the predicted benefits and costs of the various alternatives and identifying the ‘best’ ones.  Evaluating the benefits and costs of the ‘best’ alternatives and deciding whether they are ‘good’ or not. POST-POLICY-MAKING STAGE This is the final phase, in which the policy which is formulated is floated around. The stages involve the ff:  Motivating the execution of policy  Executing the policy  Evaluating policy-making after executing the policy  Communication and feedback channels interconnecting all phases  COHEN, MARCH & OLSEN: GARBAGE CAN MODEL Michael Cohen, James March and Johan Olsen (1972) formulated the garbage can model of decision-making in which the focus was on organizational decision making. This approach described the behavior of institutions as ‘organized anarchies’. Further, it is considered realistic as it has the capability of producing reactive decisions instead of proactive decisions.  COHEN, MARCH & OLSEN: GARBAGE CAN MODEL According to this model, “an organization is a collection of choices looking for problems, issues and feelings, looking for decision situations, in which they might be aired, solutions looking for issues to which they might be the answer, and decision makers looking for work”. The problem, solutions, decision participants and choice opportunities are the major streams of this model, in which choice opportunities are considered as Garbage can.  COHEN, MARCH & OLSEN: GARBAGE CAN MODEL This model does not consider decision making as a sequence of activities that begins with a problem and ends with a solution. In this model, there are solutions searching for problems and participants floating about looking for a way to participate in putting together these problems and solutions.  COHEN, MARCH & OLSEN: GARBAGE CAN MODEL In this model, all the streams are mixed together. Instead of identifying the problems, these participants can decide which problems to address and which solutions to select. GARBAGE CAN MODEL OF DECISION MAKING THANK YOU!