Explain any two models of decision-making process.

Explain any two models of decision-making process. Which model best characterizes your organization’s (or an organization you are familiar with) decision process; cite examples to justify your answer.
Answer. Decision-making is defined as selection of a course of action from among alternatives. Decision-making is important because people at all levels in an organization must constantly make decisions and solve problems. For managers, the decision making and problem tasks are particularly important parts of their jobs. How should profits be invested? Which employee should be assigned a particular task? Large problem or small, it is usually the manager who must confront it and decide what action to take. Managers’ decisions provide the framework within which other organization members make their decisions.

TWO MODELS OF DECISION MAKING

1. The Garbage Can Model: The view of decision making as an unstructured process is taken to its extreme in the garbage can model. This model turns the decision making process around and argues that organizations are as likely to start making decisions from the solutions side as from the problem side. In others words, decision makers may propose solutions to problems that do not exist; they create a problem that they can solve with solutions that are already available.

Garbage can decisions making arises in the following way: An organization has a set of solutions, or skills, with which it can solve certain problems- for example, how to generate new customers, how to lower production costs, or how to innovate products. Possessing these skills in making custom-designed furniture. The head of the marketing department persuades the company president that the organization should exploit these skills by expanding internationally. Thus a new problem- how to manage how to manage international expansion- is created because of the existence of a solution- the ability to make superior custom-designed furniture.

While an organization is encountering new problems of its own making, it is also trying to find solutions to problems it has identified in its environment or in its internal operations. To further complicate the decision making process, different coalitions of managers may champion different alternatives and compete for resources to implement their own chosen solutions, and the preferences of different individuals and coalitions all mix together and contend with one another for organizational attention and action. In this situation, an organizational becomes an organized anarchy in which the selection of alternatives depends on which coalition’s or manager’s definition of the situation holds sway at the moment. Chance , luck, and timing are important determinants of what the organization decides to do, because the problem that is currently the major source of uncertainty facing the organization has the best chance of being dealt with. Outcomes for the organization become more uncertain than usual, and decision making becomes fluid, unpredictable, and even contradictory.

The following diagram shows the garbage can model.


2. The rational Model: According to the School of Information Sciences and Technology at Penn State University, the Rational Model of decision-making, “requires comprehensive problem definition, an exhaustive search for alternatives, and thorough data collection and analysis. According to this model, information exchange and communication are unbiased, and accurate decision alternatives are intentionally chosen to bring maximum benefits to the individual, organization or group. Essentially, the Rational Model requires people to have a clear understanding of the actual problem. Unless the issue is clearly established, the Rational Model can be ineffective. This model also incorporates extensive research, so that all options or alternatives can be brought before the decision-maker(s). The Rational Model is a step-by-step decision-making model. Basically, the Rational Model can be broken down into four basic steps, which can be further diluted to create the additional three to five steps.

Step 1 – Define the Problem: The first step of the Rational Model is to define the problem. As stated in the definition, in order for the Rational Model to be effective, the problem or issue needs to be clearly understood. It is imperative to truly understand to source of a problem, not just the symptoms.

Step 2 – Generate Ideas/Alternatives: The second step to the Rational Method is the generation of a list of possible solutions or alternatives. The Rational Method requires that all possible solutions to a problem be discovered. No solutions should ever be evaluated or discarded at this point of the decision-making process. This process requires extensive research, and multiple resources and parties should be involved in the generation of this list. This search should continue until all possible solutions are presented or, “until the cost of search outweighs the value of the added information”.

Step 3 – Evaluate Ideas/Alternatives: The third step of the Rational Model is to assess and evaluate all the ideas and alternatives collected in Step 2. This is the point in the Rational Decision making model where all the advantages and disadvantages for each alternative are weighed. Factors such as the ability to implement, the completeness of the solution, the amenability to all parties, the required time and cost are all to be considered. It is important to spend the time here to identify the best all around option as opposed to the quick and easy solution.

Step 4 – Implement Solution: The fourth and final step of the Rational Model for decision-making is to implement the chosen solution(s). Once a solution has been selected, a plan to implement that solution must be developed and rolled-out. This is a very important step as without the successful implementation of the solution; all the work done to find the solution is wasted. It is imperative here to get the buy-in of all parties and stakeholders that are involved with, or affected by, the solution. Often considered as a separate last step, the final piece to Step 4 is the monitoring, or the follow-up of the solution. It is imperative to check the status and success of any implemented solution. This will help to identify any needs for adjustment and provide further input for future decision-making opportunities.

ORGANIZATIONAL EXAMPLE
In my current position with the On-site Services Division of W.W. Grainger, Inc., I am actively involved in Kaizen events sponsored by our clients. Essentially, the purpose of these events is to solve a problem or lean a process. Recently I was involved in an event with a client that utilizes clean room garments. At the time of the event there were no effective controls in place to regulate and track the usage of these garments. The client in question was loosing close to $75K a year in lost and damaged garment charges. Obviously, this was a significant problem that required a long term and effective resolution.

In these Kaizen events, a form of the Rational Decision-Making process is utilized. The first task of the event team is to map out any and all processes involved and identify all the symptoms. This way the root cause of the problem can be uncovered and clearly defined. In this case the issue was that employees were misusing and damaging the garments, losing them and even “allocating” the garments for home use.

The next step is to research and consult subject matter experts in order to collect any and all possible solutions. In this case, clean room, supply chain, garment and electronic distribution experts were all consulted in an effort to seize every potential option. In this case, the options were incredibly varied and ranged every where from bar-coding and tracking all garments to replacing them with disposable garments to methods of controlled distribution and collection.

As it is in the Rational Method of decision-making, the third step in these Kaizen events is to analyze the alternatives. The pros and cons of each potential solution are weighed. Factors such as ease of use, effectiveness, reality of implementation and cost vs. benefit are all evaluated. In this particular instance, the sheer cost of the lost garments was enough to warrant a very strict, but slightly more expensive system of control. A system of electronic point-of-use garment exchange machines (similar to those used by hospitals for scrubs), was the eventual decided upon solution.

The final step to any Kaizen event is the report-out of the event results and the implementation of the solution. In the case of the garments, the machines were leased, the software tailored and the hardware put into place. At this point training occurred, and then the new process went “live”. The results have been closely monitored ever since. To date, this process has been running for three months. For that period of time lost garment charges were just below five hundred dollars. This is a projected annual lost garment cost of under $2,000, and decrease of over $73K in cost annually.