ÖRGÜT KURAMI VE TASARIMI - Deneme Sınavı - 8

Escalation of commitment means that if you also have proofs that prove the truth of the idea against your own idea, you still insist on the accuracy of your own idea. Although many decisions by top level managers satisfy them, these ideas may not be that much rational. And despite this possibility, they may have the tendency to show an increasing commitment to their previous decision, which can be seen frequently in top level managers’ decision-making process. According to some explanations, the reason of the commitment to these wrong decisions is the denial of first mistaken decision by the manager himself. The correct answer is Choice E.

resim

resim

Managerial decision-making is a matter of finding solutions or action plans for problems and providing the maximum benefit for organizational stakeholders

Human Resource Manager

Where should we recruit for employees?

Should we set up a testing program?

Should I advise settling the equal-employment complaint?

Non-programmed decision-making includes the most creative, original and unstructured decisions by which managers help organizations to produce solutions to changing and uncertain situations.

Programmed - Decision-making tools - Policies and rules; capital budgeting; computerized solutions

STEP 1 Define problem

STEP 2 Determine the requirements that the solution to the problem must meet

STEP 3 Establish goals that solving the problem should accomplish

STEP 4 Identify alternatives that will solve the problem

STEP 5 Develop evaluation criteria based on the goals

STEP 6 Select a decision-making tool

STEP 7 Apply the tool to select a preferred alternative

STEP 8 Check the answer to make sure it solves the problem

Rational Model

Cognitive bias means a tendency to make irrational decisions about other people and situations.

Overconfidence: Overconfidence means the individual’s tendency to assume his/her ability or capacity to make a prediction much greater than it normally is.

Thanks to certain symptoms, it is possible to understand that a group is closed to different views and away from alternative decisions because of excessive harmony. • If group members suppose that their decisions are perfect and insist on it, • If managers are not informed about the arguments supporting the opposing view, • If group members give more importance to the data supporting their own views and ignore the others, • If no one tries to consider alternative options, • If members that do not share the majority’s opinion are excluded,

Hindsight Bias: When you create a false belief that when the result of an event becomes clear, you knew this very result beforehand, it means that you have hindsight bias. If you have hindsight bias, your predictions change retrospectively. If the decisionmaker realizes that his/her past decision is mistaken, he/she increasingly believes that living through this is inevitable due to hindsight bias. Meanwhile, hindsight bias are the reflections of overconfidence, which causes decision-maker to re-build the past and matches his/her current knowledge.

The rational approach presents a systematic and analytical point of view for managers to make decisions. However, the rational decision-making approach has been criticized and considered to be non-realistic; thus, it has been argued that this approach should be reviewed and made as practical and realistic as possible because the limited capacity of the manager is insufficient to analyze the complexity of business relations in the modern world and to completely clear up problems. It is also impossible to create a rational model for each decision. Time pressure, internal and external factors affecting decisions, ill-defined problems do not allow a systematic analysis every time. Even if we assume that managers have the cognitive capacity to solve each problem, they cannot evaluate every problem and every alternative. Additionally, decision-makers do not have all information, which makes a complete evaluation impossible.

The administrative model of decision- making was developed as an alternative to the criticized rational decision-making model and is, to a certain extent, based on satisfaction. Simon’s (1979) administrative decision-making model is not a predictive but descriptive model as opposed to the rational model. In the administrative model, decision-makers make decisions by trial and error, taking advantage of their past experience.

Carneige model, one of the organizational decision models, was developed by Cyert, James March and Herbert Simon from Carnegie-Mellon University. They adapted the notion of limited rationality to the decision behaviors of managers. This new model led to new opinions about organizational decision. Until the development of this model, researchers especially based-on economics acted with the assumption that the managers had all the information while deciding. At the same time, they assumed that the organizations made decisions as if it was the only one individual ignoring various people and opinions within the organization. The first important element arising from this model for decision mechanisms is that decision mechanism within a whole organization must not be restricted to just one person. Many managers within the organization are included in the decisions and act as a coalition. Coalition means a consensus of managers’ decisions about organizational goals and privileged problems. This coalition may consist of different departments, individuals working in different levels and even customers and sometimes suppliers. Bankers, advisors outside the organization and union representatives may be included in this coalition since they must be involved in decision- making process.

The garbage can theory that has important points in common with the bounded rationality approach is suggested by Michael D. Cohen, James G. March, and Johan P. Olsen. They actually focused on the operation of universities and the communication problems of sub-departments. Garbage can model has been constructed after the examination of decision-making processes on this issue. The name of it was given due to its possible colorfulness and complex appearance. This model is clearly emphasized to be used in complex organizations where organizational anarchy rules, information flow procedures are uncertain and technology usage is low. Underlying this view, there are assertive behaviors, decisions and practices argued against the rational decision- making models. This model, shortly, means “do it before think about it.” Decisions, policies and practices whose results are not searched, traps and disadvantages are not considered are eventually thrown into garbage can.

This model, which tries to combine organizational design and organizational anarchy, states that there is no connection between problems that tried to be solved and solution methods.