Models of decision making and problem solving - Essay Example

Models of Decision Making and Problem solving Discuss and synthesize the different models of decision making and problem solving, including rational, creative, intuitive, and collaborative approaches. Discuss the leadership/management functions of these approaches and how these approaches facilitate making decisions and arriving at problem resolutions more efficiently. Introduction Decision making is about choosing from several options or ideas and taking action to generate a particular result. It is usually considered to be a rational and logical thinking process. It is defined as a process of choosing a course of action for dealing with a problem or opportunity (Schmerhorn, 2003, p 174). Problem solving is one of the steps involved in decision making. Decision making is a part of everyday life for all of us. However this essay is confined to analysis of the process of decision making in an organizational context. In an organization, decision making is one of the key managerial activities. Decisions taken in a timely manner, making optimum use of information and a sound implementation are the hallmarks of organizations which perform effectively. This essay covers aspects of decision making processes in an organization and the models which can be used to describe them. The roles of creativity in individual as well as organization decision making, intuition, group and collaborative decision making and leadership that makes the decision making and problem solving in organizations efficient is also discussed. The organizational context It is important to understand the context under which decisions are made in the organization. Decision making within organization can be broadly classified as happening at four levels. The first is the long-term strategic decision making process. This is a set of decisions that are usually made by the top management and is related to the broad strategy that the organization will adopt to achieve its goals. However, the process of decision making may here be one involving many people from top to bottom. The second own is related to choices of products, innovations, unit level strategies where the middle and senior management is mostly involved. The third is one related to the day to day operations of the organization. The operations level managers will be involved. Speed and implementation of decisions will be very important here. Very often problems to be solved will be routine in nature. The last is the corrective decisions that an organization will have to make based on the monitoring it does of its decisions and the feedback that it receives through such monitoring. Another type of classification on the decisions within an organization are those that can be differentiated as programmed decisions , those which are routine and can be solved by standard methods and the other un-programmed, those which cannot be solved by routine responses, but which require tailor made solutions. Decisions are usually made by managers as individuals, but in organizations, the particular decisions or policies chosen by decision-makers can often be explained through organizational culture and practices. These practices may be decision making by committees and groups, or by adopting fixed or standard operating procedures. Culture of the organization will decide whether decisions are taken autocratically, creatively or through participation. Decisions are often not made by an individual alone in an organization alone. Decisions are made through a complex set of interaction between different people at different parts (functions) and levels of organizations, since the stakeholders of the outcome of decisions will be many. In real life in organizations it is rare to find decision making and other processes where social and political activity does not play a significant part (Teale et al, 2003, p 289). Decision making depends upon the environment under which decisions are made. Schermerhorn, (2003, ch. 17) describes these as certain, risky and uncertain environment. "Certain" environment would be ones where existing information is sufficient to predict what would happen for each decision alternative. This would be the most ideal situation for decision making. "Risky" environment there would be one where outcomes to alternatives cannot be predicted, but probability of outcome for each alternative can be assigned. In the last, "uncertain" environment, the situation would be such that there is no information on what the outcomes will be and no probabilities can be assigned to outcomes. The first one would a routine kind of a situation in an organization which is solved at operational level. The other two situations would be those where intuition and creative decision making be best suited. These are also situations where participative or collaborative approach will be useful. In organisations, the situation under which managers take decisions would be far from ideal. Managers face complex choice processes. Managers are often constrained by time. Taking a decision in time is very often much more important than taking a correct information. Managers work at an unrelenting pace and cannot afford the luxury of long involved decision making. They spend more time taking decisions than planning for decisions (Tossi 2003, p 205). Decisions are often made with inadequate or insufficient information. Managers working in unstable environment will find it very difficult to work on a rational approach to decision making. In a stable environment data tend to be reliable, easily available, there is no time constraint and cost of acquiring data would be low. The situation would be the exact opposite in an unstable changing environment which is typical of current scenario. ( Khatri, 97) Models of Decision making a) Rational and normative model: In this model individuals behave in a manner that will maximize the outcome. "The optimizing decision maker is rational. That is he or she makes consistent value maximizing choices within specified constraint". (Tossi, 2003, p 132). The model usually follows a 6 step process of taking decisions, namely defining problem, selecting decision criteria, allocating weights to criteria, developing alternatives, evaluating and selecting. The model assumes that the decision maker Has full problem clarity without any ambiguity. Understands and knows all possible outcomes arising out of each alternative. Chooses the optimum alternative that maximizes the benefit that is sought from the decision. This model may work in the lower levels of organization where operational, routine decision s are being made but may not work at strategic decision making level where things are not straight forward. The models discussed below better describe the process of problem solving and decision making that happens in reality in organizations. b) Bounded Rationality: Managers and decision makers are often limited by their ability to recognize only a limited number of solutions and problem solving methods because of their own limited knowledge or the organizations knowledge in solving these problems. Moreover cost of acquiring additional knowledge as well as the time constraint imposed on decision making, renders the decision maker to limit seeking solutions to within a boundary of his knowledge. Individuals then seek to find rational decisions within this boundary. It is sometimes called as limited rationality or subjective rationality (Teale et al 2003, p 18). In bounded reality model the final selection of the process is done through "satisficing," that is choosing an alternative that is "good enough," rather than the best (that maximizes the desired outcome)". (Parker et al 2007) This method often means that the decision maker ignores the potential of creativity in problem solving. c) Garbage Can model of decision making This is a political view of decision making. This model is characteristic of an organization where goals are ambiguous, strategy to achieve the goals not well defined and organizational units, departments meet to solve problems on differing perceptions and have own needs and priorities that they seek to achieve in the process. Political power, influence of individuals groups play a role in decision making. Result is often a far from rational optimum decision. This is typical in bureaucratic organizations. d) Incrementalism Here the decision maker when confronted with a decision making situation will try to solve the problem through a course of action that is closest to known past ways the problems were solved; perhaps with marginal changes. This is referred to as "muddling through" where the implicit criterion in decision making is to remain as close to current practices and existing courses of action (Teale et al, 2003, p 19). Role of intuition and creativity better decision making Many experienced and successful managers while evaluating alternatives in decision making make choices which are not exactly what is indicated as the right choice by rational decision making methods. They rely on an unconscious process "created out of distilled experience" (Robbins, 2001, p 137) which is known as intuition. Intuition is now no longer considered as paranormal or irrational. Khatri, (1997) says that recent research in cognitive science and artificial intelligence suggest they or not so. From their study he says that intuition has positive correlation with organizations in unstable environment and negative correlation with stable environment. Many experienced and seasoned managers rely on their intuition in times of having to make difficult decisions when information is scant, when outcome is unpredictable, and decisions have to be taken quickly. However, the responsibility that they have to bear for the consequences of the decisions will be high and therefore this decision making is justified only when taken by those who are competent to do so. Intuitive decision making is hardly the right way to do when solving routine operational level work and when decisions are programmable. Creativity is about generating new ideas, new perspectives to problems and opportunities. It is the ability to produce novel and useful ideas. Creativity is closely linked to the innovative behavior of organizations. In today's volatile and unstable business environment, innovation is seen as the key to creating competitive advantage. Adding the dimension of creativity to all models described above will substantially increase the quality of problem solving and decision making. For this purpose, many organizations try to institutionalize creative and innovative behavior. Collaborative decision making: Collaborative decision making is a group decision making process, where various persons affected by the outcome of the decision will do the problem solving and decision making through a group process. A collaborative process is often seen as the hallmark of organization where the employees are empowered to do the decision making and implementation process. A collaborative process also can be linked to creative problem solving. Again the utility of this will primarily be in dynamic and constantly changing environment. In a collaborative approach, the amount of information and knowledge brought in will be much more. Creative problem solving can be used and the outcome could be innovative solutions. However this will be more time consuming. Effectiveness of group problem solving also depends upon the composition of the group. Vroom and Yetton developed a useful model in 1973 to decide on when to adopt a collaborative approach. Their model on whether decision making should be taken between extremes of autocratically and through total participative management at the other end, depends upon the type of decision making situation. The criteria by which it would be decided would be the quality of decision required, availability of time, the amount of information with individual vs. group, whether the problem is structured or unstructured and the importance of acceptance of decision by all for successful implementation. The above model also gives rise to an important aspect of leadership role in decision making. The above frame work gives the guidelines to the leader/decision maker on what sort of role he should play in decision making, when he should decide on his own. Vroom (2003) has further expanded his model and describes the 5 approaches to decision making a leader has. They are to consult (individually), consult (group), facilitate group and delegate to group. He also lists 11 situational factors based on which the decision making process is to be selected. Leadership role in assessing the situation correctly and choosing the right approach will be crucial for effective decision making. Vroom (2003) also believes that involvement of key stakeholders in the decision making process is a key reason for successful implementation of the decision. He says that "Decisions that used participation to foster implementation succeeded more than 80 per cent of the time. Apart from quality of decision made they will ensure that the decision will have the necessary support and commitment for its effective implementation." Conclusion The topic of decision making is huge as it is pervasive in every aspect of our life. In organizations effective decision making is crucial for firm's success. Contrary to the belief that decision making in organizations is a rational process, various models explain how decision making is actually made and why they are made that way. Intuition is seen to be a valid tool in decision making as it takes into account the vast knowledge and wisdom gained by successful managers through their experience. Conscious practice of creativity, appropriate leadership plays a crucial role in effective and efficient decision making. 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