Organizational Decision Making Models: Rational to Carnegie

Organizational Decision Making Defined

Organizational decision making is 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

• Programmed Decisions: Decisions that are repetitive and routine.
• Nonprogrammed Decisions: Decisions that are novel and unstructured.

The Rational Decision-Making Process

The Rational Model outlines a sequential process for decision making:

1. Identify and define the problem.
2. Generate alternative solutions to the problem.
3. Select the solution and implement it.

Key Models of Organizational Decision Making

The Rational Model: Assumptions and Critique

The theoretical Rational Model serves as a baseline for understanding decision processes.

Underlying Assumptions

• Decision makers have all the necessary information.
• Decision makers can make the optimal decision.
• Decision makers agree about organizational goals and what needs to be done.

Criticisms of the Assumptions

• Information and Uncertainty: The assumption that managers are aware of all alternative courses of action and their consequences is often unrealistic.
• Managerial Abilities: Managers have only a limited ability (bounded rationality) to process the vast amount of information required for complex decisions.
• Preferences and Values: The model assumes managers agree about the most important goals for the organization, which is often not the case due to differing preferences and values.

The Incrementalist Model

In the Incrementalist Model, managers select alternative courses of action that are only slightly, or incrementally, different from those used in the past.

• This approach is perceived to lessen the chances of making a significant mistake.
• It is often called the science of “muddling through.”
• Managers correct or avoid mistakes through a succession of small, incremental changes rather than large, sudden shifts.

The Unstructured Model

This model describes how decision making takes place in environments characterized by high uncertainty.

• The Unstructured Model explicitly recognizes uncertainty in the environment.
• Managers frequently rethink their alternatives when they encounter a roadblock or unexpected outcome.
• Decision making is viewed as a non-linear, non-sequential process.
• It primarily attempts to explain how organizations handle nonprogrammed decisions.

The Garbage-Can Model

The Garbage-Can Model takes the unstructured process to the extreme, viewing organizational decision making as chaotic and random.

• Decision makers are often as likely to start decision making from the solution side as they are from the problem side.
• They may create decision-making opportunities that they can solve with ready-made solutions based on existing competencies and skills.
• Different organizational coalitions may champion different alternatives simultaneously.
• Decision making becomes a “garbage can” in which problems, solutions, and people all mix and contend for organizational action.
• The selection of an alternative depends heavily on which person’s or group’s definition of the current situation holds sway at that moment.

The Carnegie Model of Decision Making

The Carnegie Model introduces a set of more realistic assumptions about the organizational decision-making process, acknowledging human and organizational limitations:

• Satisficing: Managers engage in limited information searches to identify problems and alternative solutions, choosing the first acceptable option rather than the optimal one.
• Bounded Rationality: Decision makers have a limited capacity to process the vast amount of information available.
• Organizational Coalitions: The final solution chosen is often the result of compromise, bargaining, and accommodation between various organizational coalitions.