Decision Making Process

1.0 INTRODUCTION:

Globalism is the term that being mentioned everywhere in the field of business at present. Thus, due to lots of new developments and emerging techniques are introduced in the organizations very rapidly, creates a number of problems in the field of management. The problem solving and decision-making process begins when recognizing the problem, experiencing pressure to act on it, and the resources to resolve the problem. This can be done only by a manager, whose key roles are solving problems and making decisions. He must recognize problems, make a decision, initiate an action, and evaluate the results. It is difficult to make good decisions without good planning. Generally, a problem can be solved by thinking about the issue and making logical decisions. These are mostly assumptions that can predict the decisions that are being formulated as a result of the problems. This can also be given as rational thinking of the organizational problem solving strategy can be benefited by a positive result.

2.0 WHAT IS RATIONALITY?

Rationality is related to the idea of reason, referring to thinking that gives an account or an explanation. Rationality and reason are the key methods used to analyze the data gathered through systematically gathered observations. It also gives the success of goal attainment. Rationality is equated with behavior that is self-interested to the point of being selfish.

Whereas, irrationality refers to talking or acting without regard to rationality. People’s actual interests differ from what they believe to be their interests. Mechanisms that have evolved to give optimal behavior in normal conditions lead to irrational behavior in abnormal conditions.

Thus, rational behavior in an organization is nothing but having sound judgment and practical implementation. There are 2 types of rationality that are existed. They are:

• Mathematical Rationality

• Functional Rationality

2.1 Mathematical rationality:

Mathematics can be used to formulate objective knowledge. The mathematical formulation enables us to express the knowledge of reality with a maximum degree of objectivity. There are number of possible conceptions of mathematics, it is open to the risk of choosing different hypotheses, a risk which is technically called undesirability.

2.2 Functional rationality:

Functional rationality prevails in an organization of human activities in which the thought, knowledge, and reflection of the participants are virtually unnecessary; men become part of a mechanical process in which each is assigned a functional position and role. What they forfeit in creativity and initiative is gained by the organization as a whole and contributes, presumably, to its greater “efficiency.” Bureaucratic organizations strive for maximum functional rationality.

2.3 SCIENTIFIC RATIONALITY:

The history of science constitutes the evident for the concept of rationality. A good theory of rationality must fit the history of science. A methodology for scientific rationality is a theory of rationality, it tells us what is rational and what is not in specific cases. Always accept the theory with the greatest degree of confirmation.

3.0 ADVANTAGES OF RATIONALITY:

• Thinking rationally means thinking logically.

• Rational thoughts will be always right and true.

• It’s a sole source of knowledge.

• Rational thinking gives confidence.

• It helps to make decisions.

• Rational decision making is good for incremental, linear causality.

• Can solve problems incase of critical situations.

• Gives independent thinking and meaningful orientation.

• There is a traditional ingrained habituation.

• It avoids a value-laden assessment.

• It ultimately leads to self-awareness.

4.0 LIMITATIONS TO RATIONALITY:

• The incompleteness of formal logical systems can be an incontrovertible truth.

• An arithmetical statement is true but not provable in the theory.

• Any theory capable of expressing elementary arithmetic cannot be both consistent and complete.

• Rationality is arbitrary, subjective and incapable of describing something completely.

• Rational approach will always fail eventually.

• It evaluates uncertainty.

5.0 APPLICATIONS OF RATIONALITY:

There are different applications of rationality. They can be classified into normative and positive forms of applications. They are:

• The firm acts rationally and this is to predict behavior. For example the firm makes decisions according to options that can predict the behavior of the firm.

• The firm will be a better off if it makes its decision following a rule derived from rational analysis. For example using an options formula will improve a firm’s capital allocation.

• The user must verify that the environment fits the assumptions of the model. For example, the assumptions made in mathematics model derivations should be true of the strategic context.

Instead of presenting a mathematical model, the general implications of a theory can be taken and applied without working out mathematics. These applications run the real risk that the assumptions of the model are not checked for their fit with the real world.

6.0 PROBLEM SOLVING:

Problem solving forms part of thinking, the most complex of all intellectual functions. Problem Solving has been defined as higher-order cognitive process that requires the modulation and control of more routine or fundamental skills. It occurs if an artificial intelligence system does not know how to proceed from a given state to a desired goal state. It is part of the larger problem process that includes problem finding and problem shaping.

The problem-solving process operates under awareness versus outside of awareness, and typically employs mathematically well-defined computerized systems. Problem-solving often involves decision-making, and decision-making is especially important for management and leadership.

There are many approaches to problem solving, depending on the nature of the problem and the people involved in the problem. The more traditional, rational approach is typically used and involves. There are many techniques for problem-solving. They are:

• Challenge your assumptions

• Lateral thinking

• Divide and conquer

• Hill-climbing strategy

• Trail and error

• Brainstorming

• Morphological analysis

• Hypothesis testing

• Root-cause analysis

• Break big problems down

• Ask three people

• Write down the problem

• Change your perspective

• Generalization and specialization

• Working backwards

These techniques can be applied to an organization by using certain tools. They are:

• Extracting maximum information from facts – Appreciation

• Understanding problems in detail – Drill-Down

• Identifying possible causes of problems – Cause & Effect Diagrams

• Understanding how a process works – Flow Charts

• Understanding the way factors affect one-another – Systems Diagrams

• Analyzing Strengths, Weaknesses, Opportunities and Threats – SWOT Analysis

• Making Cash Flow Forecasts with Spreadsheets

• Methods of Risk Analysis

• Understanding where the power lies – Porter’s Five Forces

• Understanding the big picture – PEST Analysis

• Identifying what really matters to customers – Value Chains

• Find your competitive edge with USP Analysis

For example, taking my own organizational experience (I-Tech Ppl Staffing Solution, Chennai, India) we had certain issues relating to location change in our organization where we used some techniques like morphological analysis, etc. we also used certain tools in relation to the problem solving technique i.e. SWOT Analysis and PEST Analysis for solving our organizational problems.

7.0 DECISION-MAKING:

Decision making can be regarded as an outcome of mental processes (cognitive process) leading to the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion. Human performance in decision making terms has been subject of active research from several perspectives. From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, references an individual has and values he/she seeks. From a cognitive perspective, the decision making process must be regarded as a continuous process integrated in the interaction with the environment. From a normative perspective, the analysis of individual decisions is concerned with the logic of decision making and rationality. The decision-making process can be explained by two different models. They are:

• Garbage Can Model

• Carnegie Model

• GARBAGE CAN MODEL:

The Garbage Can Model of organizational choice was formulated by Cohen, March and Oslen. The Garbage Can Model deals with the pattern or flow of multiple decisions within organization. It was developed to explain the pattern of decision-making in organizations that experience extremely high uncertainty. It was developed in reference to “ambiguous behaviors”, i.e. explanations/interpretations of behaviors which at least appear to contradict classical theory. The Garbage Can Model was greatly influenced by the realization that extreme cases of aggregate uncertainty in decision environments would trigger behavioral responses which, at least from a distance, appear “irrational” or at least not in compliance with the total/global rationality of “economic man”. An organized Anarchy can be caused by three characteristics:

• Problematic Preferences

• Unclear, poorly understood technology

• Turnover

The theoretical breakthrough of the Garbage Can Model is that it disconnects problems, solutions and decision makers from each other, unlike traditional decision theory. Specific decisions do not follow an orderly process from problem to solution, but are outcomes of several relatively independent streams of events within the organization.

THE STREAMS OF EVENTS:

PROBLEMS

Problems require attention, they are the result of performance gaps or the inability to predict the future. Thus, problems may originate inside or outside the organization. Traditionally, it has been assumed that problems trigger decision processes; if they are sufficiently grave, this may happen. Usually, however, organization man goes through the “garbage” and looks for a suitable fix, called a “solution”.

SOLUTIONS

They have a life of their own. They are distinct from problems which they might be called on to solve. Solutions are answers looking for a question. Participants may have ideas for solutions; they may be attracted to specific solutions and volunteer to play the advocate. Only trivial solutions do not require advocacy and preparations. Significant solutions have to be prepared without knowledge of the problems they might have to solve.

CHOICE OPPORTUNITIES

There are occasions when organizations are expected to produce behavior that can be called a decision. Just like politicians cherish “photo opportunities”, organization man needs occasional “decision opportunities” for reasons unrelated to the decision itself.

PARTICIPANTS

They come and go; participation varies between problems and solutions. Participation may vary depending on the other time demands of participants. Participants may have favorite problems or favorite solutions which they carry around with them.

The organizational decision making generally takes on a random quality. When a problem arises a solution can be proposed by the participants. Equal opportunities should be given to all the staffs in an organization.

For example, considering my own organizational experience, our organization was suffering from poor training process. Our Manager was welcoming some volunteers to give some good suggestions to improve the process of training process. Thus, I and my colleagues worked on this by gathering information from many sources. We conducted a survey in many big organizations about the training methods that are being followed by them. Then, finally we ended up by giving certain logical ideas as well which formed to be the good solution for the training methods. Thus, rational thinking is important for solving any kind of problem in an organization. Equal opportunities were given to all the employees in our organization. Thus, the problem was solved using the kind of Garbage Can Model.

PROBLEMS

CHOICE OF OPPORTUNITIES

MANAGEMENT

PARTICIPANT

SOLUTION

Fig. 1.0 represents the Garbage Can Model of decision-making.

Source: Self

• CARNEGIE MODEL:

The Carnegie model was formulated by Richard Cyert, James March and Herbert Simon. This helped to formulate the bounded rational approach to individual decision making that can provide new insights about organizational decisions. An organizational decision-making involves coalition choice made by the mangers. It means the relationship among the managers who take decisions about organizational goals and problems. The organizational goals are mostly unstructured and contradictory. The mangers can be rational but function with human cognitive limitations.

The coalition process has several steps starting with satisfactory decision that can be suggested for the performance to achieve goals. Continued by an immediate environment for resolving a problem can be suggested by some managers. Finally, for identifying the exact problem identification stage of decision making can be done by discussion and bargaining. Coalition forms to be the major part of organizational decision making process. Thus, the solution should be quick, simple and cost-effective.

For example, we can consider fire security measures, which help to solve the problem initially by creating an environment suitable for solving the problem. They also get prepared with the pre-requisites needed to solve the problem satisfactorily. This method does not need a discussion or bargaining as the steps are taken immediately once the problem is been observed or indentified.

These two models can be used to solve the problem of decision-making in an organization. But certain methodology has to be followed for making a decision successfully. The best method is Systems Intervention Strategy.

8.0 SYSTEMS INTERVENTION STRATEGY [SIS]:

It’s a family of ‘systems approaches’ based on systems ideas. To move from a completely unstructured problem situation to a situation in which viable options can be modeled and comprehensively evaluated before successful implementation, which can be done by SIS. We can integrate SIS into

• Systems thinking

• Personal mastery

• Knowledge of mental models

• Building shared vision

• Team leading

There are three overlapping phases of SIS. They are:

8.1 DIAGNOSIS:

Initially, the problem should be identified and analyzed. This can help to change problems, develop a perspective and spell out the purposes of change. The diagnosis process initially starts with ‘entry’ by recognizing the change. This is followed by description process that gives the structure and other views on the change. The objectives and the constraints are identified that helps to formulate measures for the objectives.

8.2 DESIGN:

Different methods are suggested to solve the problems and new methods are explored. A range of options can be generated and the models can be selected accordingly.

8.3 IMPLEMENTATION:

The change can be carried out by developing the tactics for bringing out the desired change. These options are evaluated against the measures by designing the implementation strategy by carrying through the planned changes.

DIAGNOSIS

IMPLEMENTATION

DESIGN

Fig. 2.0 represents the three overlapping phases of SIS.

Source:

For example, taking my organizational experience where we had the problem of completing the projects on time. Thus, our manager first recognized the root-cause for delayed project completion. Then the reason was analyzed by getting other employees point of view by arranging for some special meetings to resolve the issue. He also conducted some surveys to find proper measure for the problem. Logical thinking and rationalistic view can give a right solution for the problem solving in the organization which was done by our manager. Then, the proper measures like giving incentives, improved employee facilitation will be given to the employees who finish their job on-time, were been formulated by him. He also had different options like improving the pantry facilities, parking facilities and other dress-code were been suggested to us. Where we were allowed to choose the best option that can be exhibited completely. Then finally, the results were evaluated and they are implemented. This was then carried out successfully in our organization.

9.0 CONCLUSION:

Any kind of organizational problems can be solved by rational thinking and strategical planning. This can also be supplemented with certain types of model or theory implementation. Analyzing and identifying the root-cause of the problem helps in clear decision-making. Thus, proper detection of the problem paves way for proper solution for that problem in an organization.