11

Organizational Theory

Programmed decisions—repetitive and routine

Rules, routines, and standard operating procedures can be developed in advance.

Nonprogrammed decisions—novel and unstructured

Solutions must be worked out as problems arise.

22

Organizational Theory

Models of organizational decision making

Rational model—decision making is a straightforward, three-stage process.

This model ignores the uncertainty thattypically plagues decision making.

33

Organizational Theory

Models of organizational decision making

Carnegie Model—a model that addresses the realities of decision making:

Satisficing

Bounded rationality

Organizational coalitions

44

Organizational Theory

Models of organizational decision making

Incrementalist Model—managers select alternative courses of action that are onlyslightly, or incrementally, different fromthose used in the past.

Often referred to as the “science of muddling through.”

55

Organizational Theory

Models of organizational decision making

Unstructured Model—describes how decisionmaking takes place in environments ofhigh uncertainty.

Consists of three stages similar to the rational model, but understands thatproblems may require rethinking alternativesand going back to the drawing board.

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Organizational Theory

Models of organizational decision making

Garbage Can Model—a view of decisionmaking that takes the unstructured processto the extreme

The decision-making process is turned around, with organizations as likely to start making decisions from the solution side as from the problem side.

77

Organizational Theory

Learning organization—an organization thatpurposefully designs and constructs its structure, culture, and strategy to enhance and maximize the potential for organizational learning to take place

Managers need to encourage learning atfour levels: individual, group, organizational, and interorganizational

88

Organizational Theory

Knowledge managementKnowledge management: a type of IT-: a type of IT-enabled organizational relationship that enabled organizational relationship that has important implications for both has important implications for both organizational learning and decision organizational learning and decision makingmaking

Involves sharing and integrating of expertise Involves sharing and integrating of expertise within and between functions and divisions within and between functions and divisions through real-time, interconnected ITthrough real-time, interconnected IT

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Organizational Theory

Knowledge managementKnowledge management::

Codification approachCodification approach - knowledge is carefully - knowledge is carefully collected, analyzed, and stored in databases collected, analyzed, and stored in databases where it can be retrieved easily by users who where it can be retrieved easily by users who input organization-specific commands and input organization-specific commands and keywordskeywords

Personalization approachPersonalization approach –pursued when an –pursued when an organization is facing uncertainty/new problemsorganization is facing uncertainty/new problemsMore reliance on know-how, insight and judgmentMore reliance on know-how, insight and judgmentIdentifies resource persons within organization for Identifies resource persons within organization for

consultationconsultation

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Organizational Theory

Cognitive BiasesCognitive Biases

Cognitive dissonanceCognitive dissonance: the state of discomfort or : the state of discomfort or anxiety that a person feels when there is an anxiety that a person feels when there is an inconsistency between his or her beliefs and inconsistency between his or her beliefs and actionsactionsDecision makers make decisions consistent with their Decision makers make decisions consistent with their

attitudes, images or decisions.attitudes, images or decisions.

Illusion of controlIllusion of control: a cognitive bias that causes : a cognitive bias that causes managers to overestimate extent to which managers to overestimate extent to which outcomes of an action are under their personal outcomes of an action are under their personal controlcontrol

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Organizational Theory

Cognitive BiasesCognitive Biases

ProjectionProjection: cognitive bias that allows managers to justify : cognitive bias that allows managers to justify and reinforce their own preferences and values by and reinforce their own preferences and values by attributing them to othersattributing them to others

Ego-defensivenessEgo-defensiveness: cognitive bias that leads managers to : cognitive bias that leads managers to interpret events in such a way that their actions appear interpret events in such a way that their actions appear in most favorable lightin most favorable light

Escalation of commitmentEscalation of commitment: cognitive bias that leads : cognitive bias that leads managers to remain committed to losing course of action managers to remain committed to losing course of action and refuse to admit that they have made a mistakeand refuse to admit that they have made a mistake