Decision-Making_Models

There are three types which managers use to make decision: classical model, administrative model, and political model. The classical model, which is considered to be normative is based on economic assumptions, it defines how a decision maker should make decisions. The value of classical model is its ability to help decision makers be more rational. It's most valuable when applied to programmed decisions and to decisions characterized by certainty or risk, because in classical model, relevant information is available and probabilities can be calculated. As the growth of quantitative decision techniques, more and more companies use computer system to reduce costs, increase processing time, and improve cash flow, which has expanded the use of classical approach. To understand this concept better, NBC television network and Southwest airlines are good examples, they use a computer-based system to find a more efficient way to making decisions, and of course, maximum their profit. Administrative model describes how managers actually make decisions in difficult Situations. It's the quest for a more realistic description of organization decision making produced a variation. This model sees decision makers as people with varying degrees of motivation who are besieged by demands but have little time to make decisions and thus seek shortcuts to find acceptable solutions. Under the administrative model, a decision maker does not try to optimize but instead satisfices－treats objectives as loose constraints that can tighten if there are many acceptable alternatives that fulfill those constraints. While optimization would require choosing the alternative with the highest value, satisficing requires finding the first alternative with an acceptable value, that is, an alternative with a value above a minimally acceptable level on a given constraint. Herbert A. Simon proposed two concepts that were instrumental in shaping the administrative model: bounded rationality and satisficing. Bounded rationality and satisficing could occurs together. According to the administrative model, decision goals often are not clear, rational procedures are not always used, managers' searches for alternatives are limited, and most managers settle for a satisficing rather than a maximizing solution. The administrative model is considered to be descriptive, and it recognizes the human and environmental limitations that affect the degree to which managers can pursue a rational decision making process. A new manager use the classical model when problems are clear, goals are agreed upon, and clear information is available, they use bounded rationality, satisficing, and intuition on the contrary. Another aspect of administrative decision making is intuition. Intuition represents a quick apprehension of a decision situation based on past experience but without conscious thought. In today's fast-paced, nearly half of executives say they rely more on intuition than on rational analysis to run their companies. Intuition begins with recognition, studies of intuition indicate that the unconscious mind has cognitive abilities that sometimes surpass those of the conscious mind. However, intuition decisions can be fail sometime. A good manager need to take a balanced approach by considering both rationality and intuition as important components of effective decision making. Political model is useful for making nonprogrammed decisions when conditions are uncertain, information is limited, and managers may disagree about what goals to pursue or what course of action to take. A coalition is an informal alliance among managers who support a specific goal, and coalition building is the process of forming alliances among managers. In contrast to the rational model, players in the political model do not focus on a single issue but on many intraorganizational problems that reflect their personal goals. In contrast to the administrative model, the political model does not assume that decisions result from applying existing standard operating procedures, programs, and routines. Decisions result from bargaining among coalitions. Unlike in the previous models, power is decentralized. This concept of decision making as a political process emphasizes the natural multiplicity of goals, values, and interests in a complex environment. The political model views decision making as a process of conflict resolution and consensus building and decisions as products of compromise. That's all for three types which managers use to make decision, when we consider the issue of organizational decision making, it is important to recognize that the structure of the organization has a strong influence on how and when information is communicated and who gets involved in what decisions.