Developing Skills for Business Leadership
HRMG5052
Decision-Making
Dr Henry Mumbi
Learning Outcomes
By the end of the lecture students should be able to:
1. Define organizational decision making
2. Distinguish between programmed and nonprogrammed decision making.
3. Compare and contrast the rational model of
decision making, Simon’s normative model, the
garbage can model and political.
4. Discuss the pros and cons of involving groups in
the decision-making process.
5. Describe the benefits of employee involvement in
decision making
Activity
1. What is your understanding of decision making?
2. Think of personal or organisational decisions you
had to make recently. How did you go about
making these decisions?
Organizational Decision Making
• A conscious process for making choices
with an intention of moving towards a
desired course of action (March, 1997;
Mintzberg, 1979)
• .. the process of making choices from a
number of alternatives (Huczynski and
Buchanan, 2013).
• the process of responding to a problem by
searching for and selecting a solution or
course of action that will create value for
organizational stakeholders.
Types of Decisions - H. A. Simon
Programmed Decision
A decision that recurs
often enough for a
decision rule to be
developed
• a simple, routine matter for
which a manager has an
established decision rule
• Repetitive, routine, known
rules or procedures, often
automated, can be
delegated to low levels in
the organisation
• Examples - Inventory
control decisions, machine
loading decisions,
scheduling.
Non-programmed
Decision
A decision that recurs
infrequently and for which
there is no previously
established decision rule
• a new, complex, nonroutine, decision that
requires a creative solution
• rules not known, high
degree of uncertainty,
cannot be delegated to low
levels, more likely to involve
people.
• Examples - Acquisitions,
mergers, launching new
products, HR appointments.
The Rhetoric of Decision Making
 Rational decision
making model rooted
in neoclassical
economics
 Normative model
suggesting seven key
steps for the
achievement of
decision making
Bratton, 2015
Approaches to decision making
• Rational
• Administrative
• Political
Rational DM
• …a systematic, step-by-step process for making decisions
with a thorough analysis of alternatives and their
consequences by which the optimal solution can be
reached.
• Based on neo-classical economics: ‘economic man’ act
rationally to maximise their rewards and minimise costs.
• Based on Weber’s (1947) ‘rational legal authority’ that
empowers managers to use unemotional, impersonal,
objective logic in making decisions
• Unitarist: agreement about the organisation’s goals and the
best means to achieve them
• Mechanistic approach to decision making
• Assumes perfect knowledge of all factors surrounding the
decision
Rational
Decision
Making
process
Strengths:
– Provides a structured, systematic process
– Encourages a disciplined and consistent approach
– Logical and comprehensive
– Can be seen in popular ‘evidence-based management’
approach
Weaknesses:
– Normative: prescribes how all decisions should be made
rather than describing or explaining what actually happens in
the workplace.
– “The assumptions of perfect rationality are contrary to fact. It
is not a question of approximation; they do not even
remotely describe the process that human beings use for
making decisions in complex situations.” (Simon, 1945)
– Claims to be universal: but research findings suggest that it
is only suited to simple decision making situations, e.g.
(Dean & Shortman, 1992)
Administrative of Decision Making
• Explains why decision making is inherently
uncertain and risky
• Questions whether managers are capable of
making fully rational decisions
• Quality of decision making is constrained by:
– the complexity/uncertainty of modern organisations
– our limited cognitive capacity…we are usually less than
rational
• Decision makers operate with bounded rationality
rather than with perfect rationality
• Difficult for managers to make optimal decisions
• As a result we ‘satisfice’ rather than ‘optimise’
Impediments to DM: Individual Level
• Information processing failure
• Perceptual bias
• selective filtering of information and also the ‘blinkered’
nature of mental models which facilitate the identification
of problems.
• Intuition and emotion
• non-rational features of decision making as it relates to
non-quantifiable information which is tacit.
• effect of emotion in decision making. E.g. gender.
• Escalation of commitment
• a risk whenever a decision maker commits resources to a
course of action (thereby making an “investment”) in the hope
of achieving a positive outcome and experiences
disappointing results. E.g. time, money, and labour to mental
and emotional energy.
Ambiguous information
Young Woman
or Old Woman
Group Decision Making
• People in organizations work in variety of
groups: formal or informal, permanent or
temporary.
• Groups make decisions that affect the
welfare of the organization and its people.
Q: What are the problems of group decision
making and how can these be managed?
Realities: The Group Level
 Impediments to decision making at the group level
include:
 Conformity – decision can be blighted by excessive conformity
(e.g. Asch and Milgram’s experiment)
 Groupthink – highly cohesive groups can over-conform to a
given understanding (e.g. the NASA case)
Brainstorming
Self-Managed
Teams
Dialectical
Inquiry
Quality Circles
& Quality Teams
Nominal
Group
Technique
Group
Decision
Techniques
Delphi
Technique
Devil’s Advocacy
The political approach
• .. a process intended to achieve personal or short
term objectives
• Organisations are coalitions of competing
interests.
• Decision making is an arena in which dominant
coalitions deploy of a range of political tactics in
pursuit of their interests.
• Opportunity to engage in coalitions not open to all
– powerful and powerless.
• Unwelcome topics suppressed, hidden,
marginalised
• Non-programmed decisions
Ethics and Decision Making
Ethics
An individual’s personal beliefs about what is right
and wrong behaviour
In general, ethical dilemmas for managers may
centre on direct personal gain, indirect personal gain,
or simple personal preferences.
Managers should carefully and deliberately consider
the ethical context of every one of their decisions.
Edward de Bono’s Six Thinking Hats
• A lateral thinking strategy which aids decision
making and problem solving.
• A technique which allows you to take different
perspectives on an issue or idea and think about
alternative ideas to move forward
• Each ‘hat’ represents a perspective or way of
thinking
• They are metaphorical hats that a thinker can put on
or take off to indicate the type of thinking they are
using
• Members to ‘put on’ different hats in a sequence to
aid the problem solving process
The Six Thinking Hats
 Simplify thinking by allowing a thinker to deal
with one thing at a time.
 Allows a switch in thinking (if a person is
persistently negative, he/she can be asked to
take off “the black thinking hat” and switch to
another colour).
 Permits control on people who insist of sticking
to one perspective – as they assume a different
hat
Six Thinking Hats (De Bono)
Information
Feelings,
emotions,
intuition
Positive
thinking,
benefits
Creativity and
exploration
21
Caution and
critical
judgment
Process
control
How to use the Six Thinking Hats
Focus on the information and data available, explores the knowledge
gap. What do we have?, What information do we need?, How are we
going to get the information we need?
How do you feel?: The red hat gives full permission
for the expression of feeling, emotions and,
intuition, No need to give the reasons or
justifications behind the feelings
A hat of pessimism: Why it may not work, cautious,
spots dangers, problems, faults, weaknesses,
What might go wrong and why something does
not fit, Logical reasons. Devil’s advocate.
How to use the Six Thinking Hats
Why it may work: optimistic and bright ideas and focuses on
positive thinking: Focus on values, benefits and how
something can be done. Encourages forward thinking and
not giving up, even when encountering challenges.
The creative hat!: Advocates creativity, creation of new
ideas and perceptions. Offers every idea consideration
without initial criticism or possible elimination. Overcome
black hat problems, Reinforce why it might work (yellow hat
thinking)
Managing the thinking process towards a consensus:
Setting the focus, facilitation of decision making, directs
compliance to other thinking hats. E.g. Emphasizes green
hat to lead on creativity. Making summaries, Overviews,
Conclusions, Action plans
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The Six Thinking Hats
Managing the Thinking
Setting the focus
Making summaries
Overviews & conclusions
Action Plans
Information & Data
Why it may not work
Neutral and objective
Checked and believed facts
Missing information &
Where to source it
Cautions * Dangers
Problems * Faults
Logical reasons
must be given
FOCUS
Why it may work
Feelings and Intuition
Values * Benefits
(both known and potential)
Logical reasons
must be given
Emotions and hunches
No reasons or justifications
“At this point”
Keep it short
Creative Thinking
Possibilities * Alternatives
New Ideas * New Thinking
Overcome black hat issues
Reinforce yellow hat issues
Benefits
• Helps looking at important decisions from a
number of different perspectives.
• Helps making better decisions by pushing
people to move outside of their habitual ways
of thinking.
• Helps understanding the full complexity of a
decision and spot issues and opportunities.
• Better and more creative solutions are thought
through
• Wearing each hat helps us adopt different
thinking styles
Summary
How to make better decisions?
BBC Horizon documentary
http://www.youtube.com/watch?v=ul-FqOfX-t8
Or http://www.youtube.com/watch?v=u54KOlONjgs