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Decisional Process
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Rationality Models Bounded Rationality and Heuristics Models Embedded Models Individual Decision Making Organizational Decision Making
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Rationality models
Economics and financial discipline emphasized the complete rationality of decision making based on known alternatives. Evaluated on the basis of calculation of pay-off and known consistent pattern of preferences. Aim:- i.) maximum profit ii.) equalizing managerial cost and iii.) equalizing managerial revenue. Recent models of rational decision based on ABC(activity based costing). Other model is EVA(economic value added) in which true cost of capital is determined. And another is MVA(market value added) which is difference between market value and invested capital.
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Rational choice models maximizes the profit by examining all the alternatives based on all information. However it is UNREALISTIC. So rationality is bounded and decision-makers identify obvious alternative and choose one which is acceptable. It does not discuss how the choice will be influenced. Cognitive decision theorist suggested that decision-makers rely on heuristics. Heuristics are used for decision making like:i.) availability(judgment on available information) ii.) representativeness(judgment on matching against pre-existing category) iii.) anchoring(judgment on the initial value and then adjusting it if necessary)
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Embedded models
Alternative to the rationality or bounded rationality models are the psychological and cultural embedded models. This models emphasize the role of Values, Emotions, Intuition and Habits(for individual decision making) And are Socially, Culturally and Political embedded(for organizational decision making)
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Etziomis concept Franks concept Manbridges concept Flams concept Katzs concept Zeys concept Habit has also been given central place in decision making.
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Micro level decision making to Macro level decision making. Difference between individual decision making and organizational decision making. Organizational decisions are no more made by individuals than the choice of individuals are made by the hand that sign the papers March and Shapira point out five main areas demonstrating how rationality model fails to explain the reality.
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Most organization in reality make decision and then collect information to validate the decision. Most organization copy what others do instead of applying a rational decision making process to organizational change. In reality, means are only loosely coupled to ends and loosely coupled to one another, unlike the means-end relation concept in the rationality model. Rationality choice theories are unconcerned with the possibility of uncertainty about preferences. Myth, symbols and rituals are important in decision making but not recognize by the rational models. Decision making is politically embedded.
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conclusion
Decision making both at the individual and organizational levels, is influenced by rational as well as psychological, social, cultural and political factors. Each case of decision making is unique and requires a multi-disciplinary approach to understand and analyze it.
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Leaders style
(on the centralization-de centralization continuum) STYLES DESCRIPTION
1. Autocratic/directive
Define & diagnose the problem -Generates, evaluates & choose among alternative solution
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- Define problem - Diagnose cause of problem, use group info. To determine cause - List potential solution on his own - Obtain data from group to evaluate the alternatives & make choice from them
3. Autocratic with groups - Define problem, Diagnose its cause & select a review & feedback solution -Then present to group for understanding, review & feedback
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- Define problem -Share definition with individuals -Solicits idea for problem cause & potential solutions -Individuals expertise in evaluation of alternative solution -After obtained info. Leader make choice the solution to implement
5. Group consultative style - Define problem -Share definition with group -Solicits idea for problem cause & potential solutions -Individuals expertise in evaluation of alternative solution -After obtained info. Leader make choice the solution to implement 6. Group Decision Style -Leader Define problem -Share definition with group -Group diagnose the cause of the problem -Group generates, evaluates & choose among the solutions
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7. Participative Style
-Group do the entire decision making process -Leader roles as process facilitator
8. Leaderless Team
-No leader -Person changes from problem to problem -Group do the entire decision making process
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CONSENSUS BUILDING
Identify the problem Identifying alternative strategies Prioritizing strategies Selecting and detailing strategy
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Dominating by few Withdrawal Tendency to make a quick decision Testing strengths Avoiding confrontation Click to edit Master subtitle style Trading or compromising
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Concern for others Listening Identifying and using resources Discussing underlying assumptions and logic Testing consensus and disagreements Process
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CONSENSUS COMPETENCIES
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PROBLEM SOLVING
Deciding priorities Analyzing the problem at several levels Generating alternatives Discussing the consequences of each alternative Developing criteria for decision making
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Task Facilitating
Initiative Information seeking Giving Information Summarizing Expressing opinions Synthesizing Focusing on strategies Time keeping
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Group building
Listening Expressing and responding to feelings Gatekeeping Supporting Building on others ideas Encouraging silent members Process reviewing
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UNDER PERFORMANCE LOW CUSTOMER SATISFACTION LACK OF EMPLOYEE PARTICIPATION PROBLEMS WITH MANAGEMENT
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APPOINTMENT OF NEW MANAGER FIXED TARGETS FOR THE BRANCH JOINT VENTURE WITH SECURE INSURANCE SERVICES.
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MEETING
DISCUSSED BRANCH PROBLEM BANKS FORAY INTO INSURANCE SECTOR ADDITIONAL RESPONSIBILITIES TO EMPLOYEES LITTLE EMPLOYEE PARTICIPATION
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MEETING
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OUTCOMES OF MEETING
ENFORCEMENT OF SALES TARGET . JOB ENLARGEMENT OF EMPLOYEES. NO SUBSTANTIAL INPUTS FROM EMPLOYEES RESENTMENT AMONG EMPLOYEES ACTION PLAN WAS REJECTED BY EMPLOYEES
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OUTCOMES OF MEETING
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RAJ MALHOTRA ENCOURAGED EMPLOYEE PARTICIPATION IN THE DECISION MAKING PROCESS OF HIS BRANCH
TO COPE UP WITH THE NEW CHALLENGE INCREASE IN DOMAIN KNOWLEDGE OF FINANCIAL PRODUCTS EMPLOYEES MISSED THE OPPORTUNITY TO EXPRESS THEIR VIEWS. INNOVATIVE IDEAS FROM THE SUBORDINATES ABLE TO CONCLUDE MEETING/AGENDA IN AN EFFICIENT MANNER EFFECTIVE WAY OF COMMUNICATION
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What could malhotra could do to build consensus leading to commitment for action?
MAKE AN ACTION PLAN FROM ALL THE EMPLOYEES OF THE BANK ABILITY TO DO WORK THROUGH THE OTHERS MAKE THE QUESTIONNIARE TO JUDGE THE SKILLS OF EMPLOYEES
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Malhotra attempted to develop consensus but failed. Which processes impeded consensus building?
MAKE THE TWO WAY COMMUNICATION COACHING, MENTORING EXAMPLES OF CORPORATES WHICH ARE IN DIVERSIFICATION MAKE EMPLOYEES AWARE OF MISSION AND VISSION OF BANK FEEDBACK FROM EMPLOYEES THROUGH A RESULT ORIENTED WAY
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Employee Engagement
Opps for upward feedback Feeling informed Mgt commitment to organisation Managers fairness re: issues Treating employees With respect
Engagemen t Performanc e
Intention to Stay
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