LECTURE

CATEGORIES OF DECISION MODELS

1. Descriptive – Attempt to document “HOW” do managers actually do make decision.

a. Rational (logical thinking) – step by step process.
b. Non-rational – suggest that information gathering and processing limitations make it difficult for
managers to make decision.
1. Satisficing – bounded rationally – ability of the managers to be perfectly rational in making
decisions is limited by such factors as cognitive capacity and time frame.
2. Incremental – List response to reduce problem to a tolerable level.
3. garbage can – random pattern of making decisions.
2. Normative – it answers how managers should make decisions.

SCIENTIFIC APPROACH OF J. DEWEY

1. Formulate the objective and goals of the organization

2. identify and define the problem
3. formulate hypothesis
4. gather and evaluate information
5. identify and explicate assumption

RATIONAL DM OF JAMES STONER

1. Diagnose and define the problem

2. gather and analyze facts
3. develop alternatives
4. evaluate alternatives
5. select best alternatives
6. analyze possible consequence
7. implement decision

POLICY MAKING

Is a process of decision making wherein it affects a certain group of people either everybody in one
particular organization or everybody in one particular country or a certain portion in a particular country that will
actually bring about certain Rules or certain guidelines for us to abide.

* In policy making first we formulate the policy, after formulating, we make everybody adopt the policy
through a votation in a particular organization, in the particular LGU or National Government after adopting it
we implement, after implementation, evaluation.

USEFULNESS OF CASE STUDIES

1. Enhancing problem solving analysis (how to answer certain problem)

2. developing an awareness of interpersonal situations (point of view)
3. providing an opportunity to test ideas and learn from these ideas.

4 STAGES OF MENTAL DEVELOPMENT IN CASE STUDY

1. One looks at the villain

• finding the person at fault
2. participants desires to “play GOD”
• The problem could have been avoided if they have done this, the supervisor that and the superior
another thing.
3. participants seek a simple solution and start to feel frustrated
 • They asked for more facts and through understanding starts to blossom at this stage. There is a need
to know more of the background and experience of individual inorder to interpret the correct behavior.
4. Inform outgrowth of Stage 3
• They see the whole web of circumstances in which the compromise give and take mutual
understanding and reasonable expectations are develop.

WHAT IS DECISION MAKING?

- Choosing from among alternatives.

- The choice made from two or more alternatives.

TYPES OF DM BASED ON TIME FRAME

1. Programmed – routine / repetitive

2. Non programmed – unstructured situation
a. Uncertainty – complete certainty and ---
b. risk

PLANNING – is a decision making process

Characteristics:

• Forward thinking
• Decision making
• Goal oriented

PERSPECTIVE

1. Time Horizon – length of time between the preparation and its implementation.
2. Subject matter – what is to be planned.
3. Organizational unit – Whole or sub-units involved in a particular plan
4. Plans characteristics – confidential or not.
5. Elements of plan – setting primary and intermediate goal
(what is to achieve in a goal)
• Search for opportunities
• Formulators of plane
• Target setters
• Follow up plan

HIERARCHY OF PLANS

Purpose or mission

Objectives

Strategies

Policies major or minor

Procedures

Rules

Program major or minor supporting

Budgets numberized or dollarize programs

(Purpose or Mission: Identifies the basic functions or task of enterprise or agency or of any part of it).

CONTROLLING AND DECISION MAKING

Assures that the organizational resources are being used in a most effective ways in making the
organizations goals and objectives.

4 TYPES OF CONTROL

1. Personnel – HR’s
2. financial – ensure access to sufficient funding
3. Informational – should be taken from variety of sources
4. operational – monitor the use of physical resources

4 TYPES OF CONTROL METHODS

1. Pre-action
2. steering
3. screening
4. post-action

BASIC CONTROL PROCESS (WILLIAM NEWMAN)

1. Establishment of standards
2. measurement of performance
3. correction of deviations

5 BASIC STEPS OF CONTROL SYSTEM

1. Defined desired result

2. established predictors of result
3. established standards for predictors and results
4. establish the information and feedback network
5. evaluate information and take corrective action.

CHARACTERISTICS / REQUIREMENTS OF CONTROL SYSTEM

1. Accuracy – information on performance must be accurate.

2. Objectiveness and comprehensiveness – should be understandable and be seen as objective by the
individual who use it.
3. Flexibility – control must remain in the face of changed plans unforeseen circumstances or outright
failure.
4. Timely – the ideal control system detects projected deviation before it occur.
5. Forward looking
6. Focus on strategic control points
7. Economically realistic
8. Organizationally realistic
9. Lead to corrective action
10. Accepted by organization members

* there is no best control all of them has characteristics.

ORGANIZATIONAL CONTROL

Implies regulation especially when we talked about bureaucracy.

CONTROLLING

• Is the measurement and correction of performance in Order to make that organization objectives and
plans are attained.
• It is the process of monitoring performance and taking action to ensure desired results.
• Actual performance are consistent plan.

IMPORTANCE OF CONTROL

• Doing what is necessary when it is necessary an in the way it is required.

• A way of making sure that the organization do not spend more in deviation.

FORCES WHICH CONSIDERS IT IMPORTANT

1. Uncertainty of plans and objectives

2. Complexity – as an organization grows in size and diversities, they become complex hence adequate
control are required to help coordinates activities and accomplish integration to face complexities.
3. Human limitations – mistakes of people
4. Delegation and decentralization – authority to act moves down the hierarchy, control mechanism are
required to ensure that accountability for results.

COMPLEX TECHNOLOGY AND CIRCUMSTANCES

1. PERT – program evaluation and review technique.

3 time estimates
a. optimistic
b. Pessimistic
2. CPM – critical path method

CHARACTERISTICS OF AN EFFECTIVE CONTROL

1. Strategic and Result Oriented – focuses on what needs to be done.

2. Information based – supports problem solving and decision making.
3. No more complex than necessary – tailored to the people involved, task requirement and situation.
4. Prompt and exception oriented – reports deviations quickly, ideally control is triggered before anything
actually g- -
5. Understandable – easy and concise.
6. Flexible – where authority lies, control must be there.
7. Designed to accommodate self control whenever necessary – appropriate job design and selection of
capable purpose.
8. Consistent with organizational structure.
9. Positive in nature – emphasized development, change and improvement it minimizes penalty and
reprimand.

PURPOSE AND NATURE OF CONTROL MAY BE SUMMARIZED AS FOLLOWS

1. Principle of the purpose of control – plans succeeded by detecting deviations.

2. Principle of future directed controls.
3. Controls of future responsibility
2 CONTROL METHODS

1. Use of formal authority – classical view of voluntary acceptance of legitimate authority where legitimacy
arises out of the office or level of job. It implies that this form of control will involve the manager in
directing, assisting and correcting actions
2. Control thru standardization –
a. It includes among others the existence of Rules and procedures. Guides management as to its
discretion.
b. Work methods
c. Technical authority

PROBLEM – A discrepancy between some current state or affairs in some desired courses of action.

DEVIATION – is a problem and so with obstructions

TYPES OF PROBLEMS - - -

1. Crisis – serious difficulty that requires action.

2. Non-crisis – issue that requires resolution but does not simultaneously have the importance and
immediacy characteristics of action.
3. Opportunity – a situation that offers a strong potential for significant organizational gain if appropriate
action is taken.

PROBLEM SOLVING – A requirement in non programmed decisions.

CHARACTERISTICS OF PROBLEM SOLVING

1. Novel – what causes the problem? Collection of data.

2. Unstructured – because:
a. Information is ambiguous
b. No clear procedure in making the decisions.
c. Goals are often vague.

SOURCES OF PROBLEM SOLVING

• DEVIATION
• OBSTRUCTION

Sources needs to be identified

1. Pro-activity – actually check upon our eyes and ears in the organization.
2. Responsiveness – how do we respond to certain changes in the environment, the immediate changes
in the environment.
3. Management style –

3 key features for effective problem solving

1. Information gathering
2. information assessment
3. information analysis
4. information evaluation

BEST WAY IN PROBLEM SOLVING: Face to face especially if it is a three fold problem
MANAGERS PROBLEM

1. Staff problem
2. Peer and Superior Problem
3. Problem with customers

COMPLAINTS – PUBLIC SERVICE

1. Lack of completeness of the Service provided

2. Accuracy of Public Service
3. Records management

ACTIONS – When we make actions we have to be able to find out the reason for the problem. Try to identify
who took the action, where did the action happen, where and why and under what or whose
authority the action were taken. What is the outcome of actions is also part of the gathering of
the information because the action

Devils Advocate – programmed conflict to come out of - -

– assign a person saying negative to - -
– assigned as a critique.

Characteristics:
1. The conflict generated by the devil’s advocate may cause the decision maker to avoid false
assumptions and wisely analyze the information.
2. The devils advocate raises question that force an in depth review of the problem solving situation.

A proposed course of action is generated

|
A devils advocate is assigned to criticize a proposal
|
The critique is presented to key decision maker
|
Additional information relevant to the issues is gathered
|
Decision is adopt, modified - -
|
Proposed course of action is taken
|
Decision is monitored

DIALECTIC DECISION METHOD

• A proposed course of action is generated

• Assumption is underlying the proposal are identified
• A conflicting counter proposal is generated based on different assumption
• Advocates of each position present and debate the merits of their proposals before decision maker
• The decision to adopt either position.

DECISION MAKING – The process of choosing from among several alternatives.

DECISION –
• The choice made from among two or more alternatives.
• Means rather than an end.
 • Organizational response in problem solving.
BASIC ELEMENTS

1. Decision maker action is guided by a goal.

2. Each of several alternative courses of action is linked with various out come.
3. Information is available on the various alternatives on the link hood that each outcome will occur
on the values of each outcome relative to the goal.
4. Decision maker chooses one alternative on the basis of ones evaluation of the information.

2 CATEGORIES OF HEURISTICS

1. AVAILABILITY – The tendency of decision makers to base their judgments on information that is readily
available to them like incident occurred just recently.
2. REPRESENTATIVE – Assessing the likehood of an occurrence by drawing analogies and seeing
identical situations in which they don’t exist or by matching it with pre-existing category.

DECISION MAKING - the process through which managers identify organizational

problems and attempt to resolve them.

MAJOR STEPS IN DECISION MAKING

1. Identify the problem

2. Generate alternative solution
3. Evaluate and choose among alternative solutions.
4. Implement and monitor the chosen solution.

CLASSIFICATIONS

1. Frequency –
2. Information condition – how much information is available about the like hood of various out come.

TYPES OF DECISION

1. PROGRAMMED – A decision that recurs often enough for a decision rule to be developed. They are
repetitive and routine and

2. NON-PROGRAMMED – It tells decision makers the alternative to choose once they have information
about the decision situation.

FACTORS AFFECTING NON-PROGRAMMED DECISIONS

1. UNCERTAINTY
a. Complete certainty
b.
2. RISK

PERCEPTION

● process whereby people become aware of others and the world around them
● framework of references
● a process of interpreting reality
● a process which in turn assist in the formation of attitudes and the development of patterns of
consistent behavior
● it is a person's view of reality and is affected by among other things the individuals values
*THEORIES OF PERCEPTION*

1. INTUITIVE
● is the judgment immediately following assimilation of facts and circumstances
● it involves consideration of whether perception occurs directly within and out of total view.
GESTALT THEORY – this theory propounds the notion that the whole is greater than the sum of its
individual parts and that the brain organizes or adds information to the other inputs receive.
a. Isomorphism- if an individual in communication with another conveys to that person some
knowledge of his psychic disposition. The information is conveyed through some physical expression such as
facial movement. The other person in the relationship sees this and through his psychic processes this
perceive to understand the individual
b. Empathy – one person cannot understand how the other sense because he is able to visualize
himself in a similar situation.
2. PROCESS OF INFERENCE – the individual creates his framework of reference.
Ex: a proposition based on inference
a. an individual with firm handshakes have a strong character.
b. this individual has a firm handshake
c. the same individual is a strong character

*2 TYPES OF REALITIES OR PERCEPTION*

1. SENSORY OR PHYSICAL – they are perceived accurately however some physical things may present
some illusion.
2. NORMATIVE INTERPRETATIVE – there is no right answer, matters of opinion related to personal trait,
politics, religion, and other area where there is no correct answer or examples. Interpretative really
affects or influence behavior which bring out selective perception and stereotyping.
a. selective perception – making or choice of perception received
b. stereotyping – generalizing a particular trait or behavior of all members of a given groups

FRAME OF REFERENCE (Fox 1966 & 74) – using the distinction of unitary and pluralistic frame of reference
in order to analyze certain perspective

1. UNITARY FRAME OF REFERENCE – assumes that goals of management and the union work force
are shared; both cooperates in the pursuit of organizational goals as formulated by management and
that the management prerogative is indisputable.
2. DICHOTOMOUS FRAME OF REFERENCE – it assumes that there is fundamental conflict or interest
between two groups and that this cannot be resolved by which they have no common ground.
a. Soft Dichotomous – view would incorporate willingness to compromise an issue to avoid
deadlock.
b. Hard Dichotomous – not prepared to compromise on matters of principles or issues where
the two groups took an opposing stand.
3. PLURALISTIC FRAME OF REFERENCE – it assumes that different groups within an organization
have different goals, they work together within the same organizational environment. There is
recognition for the right of each groups, right to express their different interest, this will be more
influence attempts and a balancing or power between the groups.
 PERCEPTION PROCESS

Environment selectivity

awareness

Information individual perspective & reinforcement

framework of reference
interpretation
or reality recognition

ETHICS
● a way of life
● the study of standard and moral judgments
● perception of what is right and wrong or what is good or bad
● it is the society's view of what constitutes appropriate behavior of its public officers
● the system or code of morals of a particular person, religion, group, profession, etc.

MORAL – relating to, dealing with, or capable of making the distinction between right and wrong in conduct or
character.

ETHICAL – having to do with ethics

ETHICAL PERFORMANCE – it means the avoidance of blatant overt corruption involving money, such as the
acceptance of bribes in return for dispensing some favor of for exemption from some governmental imposition
or the taking of action that advances one's own financial interest.

MANAGERIAL ETHICS – they are standards and principles that guide the actions and decisions of managers
and determine if the action or decisions are good or bad or right or wrong.

FACTORS THAT AFFECT MANAGERS DECISION

Manager as a person
− family influence
− religious values
− personal standards and needs

Ethical Managerial Behavior

Employing organization External environment

- behavior of supervisor - government regulation
- formal policies - norms and values of society
- behavior of peers - ethical climate of industry

ETHICAL DILEMMA – situation that require a personal judgment of what is right and wrong and for which
there are no rules, policies or legal statutes guiding such decision.
*2 TYPES OF ETHICAL DILEMMA*

1. TYPE A DILEMMA – they are situation which a high level of uncertainty about what is right or wrong and
where there appears to be no best solution.
2. TYPE B DILEMMA OR RATIONALIZING DILEMMA – are situation where right and wrong are clear.
a. employee know what is right but choose another solution based on what is most advantageous to
themselves
b. they convince themselves that what they are doing is right because everyone else doing it

UNETHICAL WORK BEHAVIOR

1. Copying company's software for personal use.
2. Using sick leave day instead of vacation when you are not sick
3. Viewing pornographic material on web sites.
4. Supervisor dating subordinates.
5. Taking longer lunch hours are not allowed

CREATIVITY

● the cognitive process of developing an idea, a concept, a commodity or discovery that is viewed as
novel by its creator for a target audience.

CONVERGENT THINKING – is effort to solve the problem by beginning with a problem and
attempting to move logically to a solutions
DIVERGENT THINKING – an effort to solve a problem by generating new ways in viewing a problem
and seeking novel alternatives

*BASIC INGREDIENTS OF CREATIVITY*

1. DOMAIN RELEVANT SKILLS – referred to expertise, technical, artistic ability, talent in the area and
factual knowledge.
2. CREATIVITY RELEVANT SKILLS – explaining new ideas and a work style that is conducive in
developing creating idea. Creative work style means ability to concentrate effort and attention for a
long period of time; ability to abandon unproductive avenues; period of time; ability to abandon.
3. TASK MOTIVATION – genuine interest on the task

*HOW TO CHALLENGE GROUP ACTIVITY*

1. BRAINSTORMING – elicits idea to solve problems using the following rules:

a. no idea is too ridiculous
b. each idea presented to the group not to the person stating it.
c. no idea can be criticized
2. DELPHI TECHNIQUE – involves solicitation and comparison of anonymous judgments on the topic that
are interspersed with summarized information and feedback opinions from earlier response
- consensus decision
3. NOMINAL GROUP TECHNIQUE (NGT) – refers to processes that bring people together but do not
communicate verbally
Group (7-10) gather around the table and write idea to the paper and after five minutes, shared idea
which is structured in nature, clarification are necessary before any decision.

WHY IS CREATIVITY IMPORTANT IN DECISION MAKING

● It allows the decision maker to more fully apprise and understand the problem including problems
others can't see. It helps the decision maker identify all viable alternative looking at it in divergent
ways.
*STAGES OF CREATIVITY*

1. PREPARATION – gathering information, defining the problem or task, requiring creativity, generating
alternative and seeking and analyzing further data relating to the problem
2. INCUBATION – subconscious mental activity to wok on a solution
3. ILLUMINATION – a new level of insight achieved
4. VERIFICATION – testing the idea to determine the validity of the insight

BUREAUCRACY

● it is a specific form of social organization for administrative purposes and for dealing with activity of a
large number of people in a way similar to family, social club or church.
● Connotes the exercise of power by officials carrying out the wishes of those who wield sovereign
power, ex: president or parliament member
● it is administrative and social instrument in a political community

LIMITATION OF BUREAUCRACY

1. too general for such complex organization, i.e. Project type or matrix type
2. it was appropriate in the past especially when organizations are stable and have predictable
environment
3. encourages
a. rigid adherence to rules and regulations
b. tendency for paperwork systems
c. managerial actions to slow down
d. psychological cost increase
e. effectiveness to decline
f. bring out trained incapacities (Robert Merton)
- too specialized and a change may cause adverse inability to perform
4. impersonal roles.
5. Results to staff-line conflict because it focuses more on line activity or function

HAROLD LASCI – observed that bureaucracy is characterized by a system with a passion for routine in
administration, sacrificing flexibility to rule, delay in making decisions and refusal to embark on experiment.
Result of this type of bureaucracy is red tape

RED TAPE – is a bureaucratic disease, failure of pathology characterized by excessive devotion to formality,
ritualized adherence to routine, technicism or over conformity in the pursuit or implementation of laws, policies,
rules, regulations, procedures and so forth leading to duplicative paperwork, delay in action or other
reasonable requirement.

2 TYPES OF BUREAUCRACY (Accdg. to BURNS & STALKER CLASSIFICATION)

1. MECHANISTIC OR STANDARD – large organizations that perform routine work in a stable

environment where task are well defined which unchanging and there are clear economic advantages
to be gained from specialization and most work are prescribed in certain ways.
2. ORGANIC OR PROFESSIONAL – with rapidly changing environment which requires non-routine and
often innovatory decision. This type differ from standard in the kind of persons the organization will
employ.

E. MASA'S DEVELOPMENT

● oriented bureaucracy exists where administrator has to be concerned with productivity, efficiency,
effectiveness, responsibility, accountability, integrity and above all sensitivity to the issues of poverty,
inequity and welfare in society.
 ● It is insulated form pressure of politics bound, observed laws and rules without question and unmindful
at the vagaries (whims) and sentiments of flawed individuals.

DECISION MAKING VS. POLICY MAKING

DECISION MAKING

● involves choosing from among 2 or 3 alternatives, design criteria and processes are involve in making
choices

POLICY MAKING

● encompasses a pattern of action that extends over time and includes many decisions, some routine
and some non-routine

NEGOTIATION

• Process in which two or more parties exchange goods or services and attempts to agree upon the
exchange rather for them…..
• Entails having two sides with differing or conflicting interests come together to force an agreement.
• It is sometimes referred to as collaborative pursuit join gains and a collaborative effort to create value
where more previously existed

*2 GENERAL APPROACHES*

1. DISTRIBUTIVE BARGAINING
• Negotiation that seeks to divide up fixed amount of resources. A win lose situation. It means any gain I
make is your expense.
2. INTEGRATIVE BARGAINING
• Negotiation that seeks one or more settlements that can create a win-win situation. It builds long term
relationships and facilitates working together in the future. It bonds negotiation and allows each to
leave the bargaining table feeling that he or she has victory.

DISTRIBUTIVE/INTEGRATIVE BARGAINING

BARGAINING DISTRIBUTIVE INTEGRATIVE

BARGAINING BARGAINING

CHARACTERISTIC

Available resources Fixed amount of Variable amount of resources

resources to be divided to be divided

Primary negotiation I win you lose I win you win

Primary interest Opposites to each other Convergent or congruent with

each other

Focus of relationship Short term Long term

 *NEGOTIATION PROCESS*

Preparation &
planning

Definition of ground
rules

Clarification and
justification

Bargaining and
problem solving

Closure and
implementation

1. PREPARATION AND PLANNING

Pre-negotiation task:
a. Understanding the other side in their needs, positions on issues and interest
b. Knowing all the options and developing understanding and evaluating.

Prepare the knowing answer to the following:

a. What’s the history leading to negotiation?
b. Who’s involved and what are their perception of the conflict?
c. What do we want from the negotiation?
d. What are their goals – develop range of outcomes from most hopeful to minimally acceptable.
e. What are the other party’s goals?
f. What are they he/she likely to ask?
g. What intangible or hidden interests maybe important to the other party?
h. What might he/she be willing to settle on?

And once we know the answer to the move of the above, then we develop a strategy by knowing the past
alternative to a negotiation agreement (PATNA) or the most accepted values to an individual for a
negotiation agreement.
2. DEFINITION AND GROUND RULES
• Defining ground rules and with other party know the following:
a. Who will do the negotiating?
b. Where will it takes?
c. What the constraints if any will apply?
d. To what issues will negotiate be limited?
e. Will there be a specific procedure to follow in case of impasse?
3. CLARIFICATION AND JUSTIFICATION
• To the demands and both parties must explain, amplify, clarify, bolster and justify the original
demands.
4. BARGAINING AND PROBLEM SOLVING
5. CLOSURE AND IMPLEMENTATION

*ISSUES ON NEGOTIATION*

1. Role of personal trait in negotiation

• Predicting the opponents negotiating tactics by knowing one’s personality. Overall assessment
of the personality negotiation relationship, finds that personality traits have no significant direct
effect on either the bargaining process of negotiation outcomes, concentrating on issues on
personalities
2. Gender difference in negotiation
• They believe that women are “nicer” than men in negotiation. It is probably due to confusing
binds and the lack of power typically held by women in most large organization. An observation
includes that low power managers, regardless of gender, attempt to placate their opponents and
to use persuasive tactics rather than direct confrontation.
3. Cultural differences – in regards
American - relies on facts and appeal to logic
Arabs - appeal to emotions
Russian - asserted ideas
Verbal and non verbal:
American and Japan – in no response – they say it only a few times and touch only when shaking
hands; while the Brazilian repeatedly see no touches often.
4. Third party negotiation – conciliator, mediator arbitrator

*4 MOST COMMON TYPE OF PERSONALITY*

Manager will seek in negotiation:

1. Power seeker – result oriented, seeks challenge and opportunity and positively confrontational, a good
decision maker.
2. The Persuader – outgoing, socially oriented, ambitious, and tough under the cloak of amiability, likability
and affability; a dangerous opponent at the negotiation table.
3. The Reliable Performer – solid, dependable, confrontable
4.

*KEY DECISION MAKING BARRIER*

1. Accepting the problem challenge because of four basic reaction patterns:

a.
b. Defensive Avoidance – individual either deny the important of danger or
an opportunity or deny any responsibility for taking action due to rationalization, procrastination and
back passing.
c. Panic – individual becomes so upset that one frantically seeks a way out
of the problem or try to swiftly solve a problem.
d. Deciding to decide – individual makes and accept the challenge
2. Searching for sufficient alternative – cost and time are essential factors.
3. Recognizing decision making biases, i.e.,
a. Framing – the tendency to make different decision
on how problem is presented, uses prospect theory where loss is more painful than gain.
b. Representatives – the tendency to be overly
influenced by stereotype in making judgments about the likelihood of occurrence.
c. Availability – tendency to judge the likelihood of an
occurrence in the basis of the extent to which other like instances or occurrences can easily be
recalled.
d. Anchoring and adjusting – tendency to be
influenced by an initial figure, even when the information is largely irrelevant.
 e. Overconfidence – tendency to become more
certain of judgments regarding the likelihood of the future events from one's
predictive accurate warrants.
4. Avoiding the decision escalation phenomenon.
ESCALATION SITUATION – situation that signals the strong possibility of escalating commitment
(where there is an increase in commitment to a previous decision in spite of negative information) and
accelerating losses.

SUNK COST – money invested in a decision.