Apr 4, 2020

Decision Making In Organizational Behaviour

Decision Making In OB


Decision-making refers to choosing between alternative courses of action, which may also include passivity. management work is to making decisions, half of the decisions made by managers is fail in any organizations. Why decisions fail Surprising but true, Half of the decisions in organizations fail. These decisions can affect the lives of others and change the course of an organization.

Types Of Decisions

Decision can be classified into three categories based on the type of at which they occur. Number one is Strategic decision which Set the course of an organization. Number two is a strategic decision which is made about how things will happen. Finally, third number is operational decisions, which refer to the decisions that employees make each day to run the organization. There are different decision-making models designed for understand and evaluate the effectiveness of the decisions. there are four decision-making models, which are,
Rational Decision-Making Model,
Bounded Decision-Making Model,
Intuitive Decision-Making Model,
Creative Decision-Making Model.

Rational Decision-Making Model

In the rational decision-making model a series of steps taken by decision makers to maximize the decisions outcomes results.  when making a rational decision-making model decision make sure that, you can establish your decision criteria before exploring options. This will prevent you from liking an option more and setting your criteria accordingly. advantage of the rational model is that it urges decision makers to generate all alternatives rather than just a few. By generating a large number of choices covering a wide range of possibilities, Despite all its benefits, there are many unrealistic assumptions involved in rational decision-model. that people fully understand their available options, they have no perceptual biases, and they want to make optimal decisions. Herbert Simon, a Nobel Prize-winning economist, observed that the rational decision-making model can be a helpful supporting tool for decision-makers it demonstrates how often decisions within organizations Are done. In fact, Simon argued that it might even come close.

Bounded Decision-Making Model

The bounded decision-making model limit the option for decision makers. In this decision-making processes the individuals have limit their choices to accept option without conducting an exhaustive search for alternatives. the first option that meets your minimum criteria. In bounded decision-making model, the decision maker saves cognitive time and effort by accepting the first option that meets the minimum threshold.

Intuitive Decision-Making Model

In intuitive decision-making model processes a decision is without conscious reasoning. A total of 89% of managers use intuition for decision-making due to, time pressures constraints, a great deal of uncertainty, changing situations, highly visible and high-stakes outcomes. Because they do not have time to use rational decision-making models. they rarely attribute luck to success. To the outside observer, they are guessing during the course of action to make an estimate, They do not decide between two or three options and choose the best one.

Creative Decision-Making Model

In creative decisions model an effective decision maker creat new imaginative ideas, flattening of intense competition among organizations and companies, individuals are motivated by creative in decisions ranging from cost cutting to creating new ways of doing business. In innovation process creativity is the first step, creativity and innovation are not the same thing. Innovation starts with creative ideas, but also includes realistic planning and follow. which may or may not work to solve real-world problems.

Faulty Decision Making Factors

To avoid faulty decision-making Nobel Prize winner Daniel Kahnemann and Amos Tversky spent decades for studying, how people make decisions and They found faulty decisions making factors. which are influenced by following factors, Overconfidence Bias,
Hindsight Bias,
Anchoring Bias,
Framing Bias,
Escalation Of Commitment,

Overconfidence Bias

Overconfidence bias occurs when individuals reduce their ability to predict future events. Many people display signs of overconfidence. To avoid the effects of misleading and overconfident  bias, take time to stop and ask yourself if you are being realistic in your decisions.

Hindsight Bias

Hindsight bias is the opposite of overconfidence bias, when times seem backward and mistakes are apparent because they have already occurred. In other words, when surprising event has occurred, many people are likely to think that they already knew that this event was going to happen. This bias may occur because they are selectively reconstructing events. Hinds bias becomes a problem when looking at another's decisions. so depending on the information available at the time, it may be a reasonable option to continue with a regular routine. Therefore, it is important for decision makers to remember this bias before passing judgment on other people's actions.

Anchoring Bias

Anchoring Bias refers to the tendency of individuals to rely too heavily on one information. Job seekers often fall into this trap by focusing on a desired salary, ignoring other aspects of the job offer, such as fit with the job, and the work environment.

Framing Bias

Framing bias affects the tendency of decision makers to change the way a situation or problem is presented. Framing bias is important because depending on, how a problem is presented to us, we can choose an option that is harmful because of the way it is made.

Escalation Of Commitment

Escalation of commitment happens when
increase in commitment occurs, individuals continue on an unsuccessful course of action after the information can be a poor route to find out. This is sometimes called "sunk cost impurity", because continuity is often based on the idea that someone has already invested in the course of the action. Effective decision-makers avoid escalation of commitment.