Decision making describes making options among alternate of action—which may additionally include inaction. When it have the right to be argued that management is decision making, half of the decisions made by managers within organizations at some point fail.  Therefore, increasing efficiency in decision do is an important part of maximizing your performance at work. This chapter will assist you understand exactly how to make decisions alone or in a group while preventing common decision-making pitfalls.

You are watching: Satisficing is the tendency of ____.

Individuals throughout organizations use the info they gather to do a wide range of decisions. These decisions may affect the lives of rather and readjust the food of an organization. Because that example, the decision made through executives and also consulting firms for Enron at some point resulted in a $60 exchange rate loss because that investors, countless employees without jobs, and the loss of every employee retirement funds. However Sherron Watkins, a previous Enron employee and also now-famous whistleblower, uncovered the audit problems and tried come enact change. Similarly, the decision do by this firm to trade in mortgage-backed securities is having negative consequences for the entire economy in the unified States. All parties associated in together outcomes make a decision, and also everyone is now living through the results of those decisions.

“Most discussions that decision do assume that only senior executives make decisions or the only an elderly executives’ decision matter. This is a danger mistake.” Peter Drucker

Despite the far-reaching nature of the decision in the ahead example, not all decisions have significant consequences or also require a the majority of thought. For example, prior to you pertained to class, friend make an easy and habitual decision such together what come wear, what to eat, and which route to take as you go to and also from home and also school. You probably do not spend lot time on this mundane decisions. These species of straightforward decisions room termed programmed decisions, or decisions that occur commonly enough that we construct an automated response to them. The automated an answer we usage to do these decision is dubbed the decision rule. For example, many restaurants challenge customer complaints together a routine component of doing business. Because complaints space a recurring problem, responding come them may become a programmed decision. The restaurant might enact a policy stating that every time they receive a precious customer complaint, the customer have to receive a totally free dessert, which to represent a decision rule.


Figure 11.3 In order come ensure consistency around the world such together at this St. Petersburg, Russia, location, McDonald’s corporation trains every restaurant managers at Hamburger college where they take the indistinguishable to 2 years of college and learn just how to do decisions top top the job. The curriculum is taught in 28 languages. Source:

On the other hand, unique and important decisions require mindful thinking, info gathering, and also careful consideration of alternatives. This are referred to as nonprogrammed decisions. Because that example, in 2005 McDonald’s corporation became aware of the have to respond to cultivation customer concerns regarding the unhealthy facets (high in fat and also calories) that the food castle sell. This is a nonprogrammed decision, since for numerous decades, customers of fast-food restaurants were more concerned through the taste and price that the food, fairly than that healthiness. In response to this problem, McDonald’s made decision to sell healthier alternatives such together the selection to substitute French fries in Happy Meals with apple slices and in 2007 castle banned the use of infectious diseases worldwide fat at your restaurants.

A dilemm situation also constitutes a nonprogrammed decision for companies. Because that example, the leadership of Nutrorim was facing a tough decision. They had actually recently introduced a brand-new product, ChargeUp v Lipitrene, an improved version of their famous sports drink powder, ChargeUp. At part point, a phone call came indigenous a state wellness department to notify them that 11 cases of gastrointestinal distress that might be regarded their product, which brought about a decision to recall ChargeUp. The decision was made there is no an investigation of the information. When this decision to be conservative, it was made there is no a process that weighed the information. Two weeks later it ended up being clear the the report health problems were unrelated to Nutrorim’s product. In fact, every the situations were traced ago to a contaminated wellness club juice bar. However, the damages to the brand and to the balance sheets was already done. This unfortunately decision led to Nutrorim to rethink the way decisions were made as soon as under pressure. The firm now gathers details to do informed selections even once time is that the essence.

Decisions can be classified into three categories based on the level in ~ which castle occur. Strategy decisions collection the course of an organization. Tactical decisions space decisions around how things will obtain done. Finally, work decisions describe decisions that employees do each work to do the company run. Because that example, think around the restaurant the routinely offers a complimentary dessert when a customer complaint is received. The owner of the restaurant made a strategic decision to have good customer service. The manager that the restaurant imposed the cost-free dessert policy as a way to manage customer complaints, which is a tactical decision. Finally, the servers at the restaurant room making individual decisions each day by analyzing whether every customer complaint received is legitimate and warrants a free dessert.


Figure 11.4 examples of Decisions typically Made in ~ Organizations

In this thing we room going to talk about different decision-making models designed to understand and evaluate the effectiveness of nonprogrammed decisions. We will certainly cover four decision-making approaches, beginning with the reasonable decision-making model, relocating to the bounded rationality decision-making model, the intuitive decision-making model, and ending through the an imaginative decision-making model.

Making reasonable Decisions

The reasonable decision-making model describes a collection of measures that decision devices should think about if your goal is to maximize the high quality of your outcomes. In other words, if you desire to make certain that you make the finest choice, going with the formal steps of the reasonable decision-making model may make sense.

Let’s imagine the your old, clunky vehicle has damaged down, and also you have sufficient money saved for a an extensive down payment top top a new car. It will certainly be the an initial major acquisition of your life, and you want to make the best choice. The first step, therefore, has currently been completed—we recognize that you desire to buy a brand-new car. Next, in step 2, you’ll need to decide which factors are vital to you. How many passengers carry out you want to accommodate? How important is fuel economy to you? Is safety and security a major concern? you only have actually a particular amount that money saved, and you don’t want to take it on too much debt, so price range is vital factor together well. If you recognize you want to have room because that at least five adults, acquire at least 20 miles per gallon, journey a car with a solid safety rating, no spend more than $22,000 ~ above the purchase, and also like how it looks, friend have identified the decision criteria. All the potential choices for purchase your vehicle will it is in evaluated versus these criteria. Prior to we deserve to move too much further, you should decide how important each aspect is to her decision in action 3. If every is same important, then there is no should weigh them, yet if you understand that price and mpg are vital factors, you can weigh them heavily and keep the various other criteria with medium importance. Step 4 needs you to generate all alternatives around your options. Then, in action 5, you have to use this info to evaluate every alternative versus the criteria you have actually established. You choose the best alternative (step 6), and also then you would certainly go out and also buy your brand-new car (step 7).

Of course, the result of this decision will affect the following decision made. That is where step 8 comes in. For example, if you acquisition a car and have nothing but problems through it, you will be less likely to consider the same make and also model when purchasing a auto the next time.


Figure 11.5 actions in the rational Decision-Making Model

While decision machines can get off track during any of these steps, research shows that browsing for choices in the fourth step can be the most difficult and regularly leads to failure. In fact, one researcher found that no different generation occurred in 85% the the decision he studied. Conversely, successful managers recognize what they desire at the outset that the decision-making process, collection objectives because that others come respond to, carry out an unrestricted find for solutions, get vital people to participate, and also avoid making use of their power to push their perspective.

The reasonable decision-making model has important lessons for decision makers. First, when making a decision, you may want come make sure that you develop your decision criteria prior to you find for alternatives. This would protect against you from liking one alternative too lot and setting your criteria accordingly. For example, stop say girlfriend started looking cars online prior to you created your decision criteria. You may come throughout a car that friend feel shows your sense of style and you build an emotional bond v the car. Then, since of your love for the particular car, you might say come yourself that the fuel economic situation of the car and also the innovative braking mechanism are the most important criteria. After ~ purchasing it, you may realize that the auto is too tiny for your friends come ride in the earlier seat, which to be something friend should have actually thought about. Setup criteria prior to you find for alternatives may stop you native making such mistakes. Another advantage of the rational version is the it urges decision equipments to create all alternatives instead of just a few. By generating a large number of options that sheathe a wide variety of possibilities, you room unlikely to make a an ext effective decision that does not require sacrificing one criterion because that the sake of another.

Despite every its benefits, friend may have actually noticed the this decision-making model requires a number of unrealistic assumptions as well. That assumes the people fully understand the decision to it is in made, the they know all their easily accessible choices, that they have no perceptual biases, and that they desire to do optimal decisions. Nobel prize winning economist Herbert Simon observed the while the reasonable decision-making model may be a helpful an equipment in aiding decision devices when working through problems, it no represent just how decisions are typically made in ~ organizations. In fact, Simon said that it didn’t also come close.

Think around how friend make necessary decisions in her life. It is most likely that you seldom sit down and complete every 8 of the actions in the reasonable decision-making model. For example, this design proposed the we need to search for all possible alternatives prior to making a decision, but that procedure is time consuming, and also individuals are regularly under time pressure to make decisions. Moreover, also if us had access to every the details that was available, it might be an overwhelming to compare the pros and cons the each different and rank them according to our preferences. Anyone who has actually recently to buy a new laptop computer or cabinet phone can attest come the challenge of sorting through the various strengths and also limitations of each brand and also model and arriving at the systems that ideal meets certain needs. In fact, the accessibility of too lot information have the right to lead to analysis paralysis, in which more and more time is invested on collection information and thinking around it, yet no decisions actually gain made. A senior executive at Hewlett-Packard development Company LP admits the his company suffered from this spiral of assessing things because that too long to the suggest where data gathering led to “not making decisions, rather of us making decisions.” Moreover, you may not constantly be interested in getting to an optimal decision. For example, if you are looking to purchase a house, you might be willing and able to invest a great deal the time and also energy to uncover your dream house, yet if you room only in search of an apartment come rent because that the academic year, you might be willing to take it the very first one the meets her criteria of being clean, close to campus, and within her price range.

Making “Good Enough” Decisions

The bounded rationality design of decision making recognizes the constraints of our decision-making processes. Follow to this model, people knowingly border their choices to a manageable collection and choose the an initial acceptable different without conducting an exhaustive search for alternatives. Critical part of the bounded rationality technique is the propensity to satisfice (a ax coined by Herbert Simon native satisfy and suffice), which refers to accepting the first alternative the meets her minimum criteria. Because that example, countless college graduates perform not conduct a nationwide or international search for potential task openings. Instead, they focus their find on a restricted geographic area, and they often tend to expropriate the first offer in their liked area, even if it may not be the ideal job situation. Satisficing is similar to reasonable decision making. The main difference is that fairly than choosing the ideal option and maximizing the potential outcome, the decision an equipment saves cognitive time and also effort by accepting the first alternative the meets the minimum threshold.

Making Intuitive Decisions

The intuitive decision-making version has arised as an alternate to other decision do processes. This model refers to arriving at decision without conscious reasoning. A full of 89% of managers surveyed admitted to utilizing intuition to make decisions at the very least sometimes and 59% stated they supplied intuition often. Managers make decision under an overwhelming circumstances, consisting of time pressures, constraints, a an excellent deal of uncertainty, transforming conditions, and also highly visible and also high-stakes outcomes. Thus, it provides sense that they would not have the time to use the reasonable decision-making model. Yet as soon as CEOs, gaue won analysts, and also health care workers space asked around the an essential decisions castle make, seldom perform they attribute success to luck. Come an exterior observer, it might seem favor they room making guesses regarding the course of activity to take, yet it turns out that specialists systematically do decisions making use of a various model 보다 was previously suspected. Study on life-or-death decisions made by fire chiefs, pilots, and nurses find that professionals do no choose amongst a perform of well assumed out alternatives. They nothing decide between two or three options and select the ideal one. Instead, they take into consideration only one alternative at a time. The intuitive decision-making model says that in a provided situation, specialists making decisions scan the environment for cues to identify patterns. As soon as a pattern is recognized, they have the right to play a potential course of action through come its outcome based upon their prior experience. Thanks to training, experience, and also knowledge, these decision makers have an idea of exactly how well a provided solution might work. If castle run with the psychological model and find the the solution will not work, they alter the equipment before setup it right into action. If that still is not considered a workable solution, the is discarded together an option, and also a new idea is tested until a workable equipment is found. As soon as a viable course of activity is identified, the decision an equipment puts the solution right into motion. The crucial point is that just one selection is taken into consideration at a time. Novices room not able to make efficient decisions this way, due to the fact that they do not have sufficient prior experience to attract upon.

Making an innovative Decisions

In enhancement to the reasonable decision making, bounded rationality, and intuitive decision-making models, an imaginative decision make is a an important part of gift an effective decision maker. Creative thinking is the generation the new, imaginative ideas. With the flattening the organizations and also intense competition amongst companies, individuals and organizations are driven to be an innovative in decisions varying from cutting expenses to generating brand-new ways of doing business. Please note that, while creative thinking is the very first step in the development process, creativity and also innovation space not the same thing. Innovation begins with an imaginative ideas, yet it likewise involves reality planning and also follow-through. Developments such together 3M’s Clearview window Tinting prosper out of a an imaginative decision-making procedure about what may or might not work-related to settle real-world problems.

The 5 steps to creative decision make are similar to the ahead decision-making models in some tricks ways. Every the models include trouble identification, which is the step in i m sorry the require for trouble solving becomes apparent. If you perform not identify that you have actually a problem, that is impossible to settle it. Immersion is the step in i m sorry the decision maker consciously thinks about the problem and also gathers information. A an essential to success in an imaginative decision do is having actually or acquiring expertise in the area being studied. Then, incubation occurs. Throughout incubation, the individual sets the trouble aside and also does no think around it for a while. In ~ this time, the mind is actually working on the problem unconsciously. Climate comes illumination, or the understanding moment when the solution to the difficulty becomes obvious to the person, periodically when it is least expected. This sudden insight is the “eureka” moment, comparable to what occurred to the old Greek inventor Archimedes, who discovered a solution to the problem he was working on while taking a bath. Finally, the verification and also application stage happens as soon as the decision an equipment consciously verifies the feasibility that the solution and implements the decision.


Figure 11.6 The creative Decision-Making Process

A NASA scientist describes his decision-making process leading to a creative outcome as follows: He had been make the efforts to figure out a better way to de-ice airplane to do the procedure faster and also safer. After recognizing the problem, that immersed himself in the literature to recognize all the options, and he worked on the problem for month trying to number out a solution. It to be not until he to be sitting outside a McDonald’s restaurant through his grandchildren that it dawned on him. The golden arches the the M of the McDonald’s logo inspired his solution—he would style the de-icer together a series of Ms.In human interview carried out by author Talya Bauer at Ames study Center, hill View, CA, 1990. This stood for the illumination stage. After he tested and verified his an innovative solution, he to be done with that problem, other than to reflect on the outcome and also process.

How perform You understand If your Decision-Making process Is Creative?

Researchers emphasis on three factors to evaluate the level of imagination in the decision-making process. Fluency refers to the number of ideas a human being is able to generate. Flexibility refers come how different the principles are native one another. If you space able to generate several unique solutions to a problem, her decision-making procedure is high top top flexibility. Originality refers to how distinctive a person’s ideas are. You can say the Reed Hastings, founder and CEO that Netflix Inc. Is a pretty an innovative person. His decision-making procedure shows at least two elements of creativity. We perform not know exactly how many ideas he had over the food of his career, yet his concepts are relatively different from each other. After teaching math in Africa with the tranquility Corps, Hastings was accepted at Stanford, where he earn a master’s level in computer science. Shortly after beginning work at a software company, he created a effective debugging tool, which resulted in his founding of the computer troubleshooting company Pure software program LLC in 1991. After a merger and also the subsequent sale that the resulting company in 1997, Hastings started Netflix, which reinvented the DVD rental organization with online rentals ceded through the mail through no late fees. In 2007, Hastings was elected to Microsoft’s plank of directors. As you deserve to see, his principles are high in originality and also flexibility.


Figure 11.7 dimensions of Creativity

Some specialists have suggest that imagination occurs together an interaction among three factors: people’s personality traits (openness to experience, hazard taking), their features (expertise, imagination, motivation), and the situational paper definition (encouragement native others, time pressure, physics structures). For example, research reflects that people who are open to experience, much less conscientious, an ext self-accepting, and more impulsive have tendency to be much more creative.

OB Toolbox: ideas for enhancing Organizational Creativity

Team CompositionDiversify her team to provide them an ext inputs to construct on and an ext opportunities to create functional problem while avoiding an individual conflict.Change group membership to stimulate brand-new ideas and new interaction patterns.Leaderless teams can enable teams liberty to create without trying to you re welcome anyone up front.Team ProcessEngage in brainstorming to create ideas. Mental to collection a high goal for the variety of ideas the team should come up with, encourage wild ideas, and take brainwriting breaks.Use the in the name group technique (see Tools and Techniques for Making far better Decisions below) in person or electronically to stop some typical group procedure pitfalls. Consider anonymous feedback together well.Use analogies to envision problems and also solutions.LeadershipChallenge teams so that they room engaged yet not overwhelmed.Let civilization decide how to accomplish goals, rather than telling them what objectives to achieve.Support and also celebrate creativity also when it leader to a mistake. Be sure to collection up processes to learn from mistakes together well.Role model creative behavior.CultureInstitute organizational memory therefore that people do not invest time on regime tasks.Build a physical room conducive come creativity the is playful and humorous—this is a location where principles can thrive.Incorporate creative behavior into the power appraisal process.

Sources: adapted from concepts in Amabile, T. M. (1998). How to kill creativity. Harvard company Review, 76, 76–87; Gundry, L. K., Kickul, J. R., & Prather, C. W. (1994). Structure the an innovative organization. Organizational Dynamics, 22, 22–37; Keith, N., & Frese, M. (2008). Efficiency of error monitoring training: A meta-analysis. Journal of applied Psychology, 93, 59–69. Pearsall, M. J., Ellis, A. P. J., & Evans, J. M. (2008). Unlocking the impacts of gender faultlines top top team creativity: Is activation the key? Journal of used Psychology, 93, 225–234. Thompson, L. (2003). Boosting the creativity of organizational work groups. Academy of administration Executive, 17, 96–109.

There are countless techniques obtainable that enhance and also improve creativity. Linus Pauling, the Nobel compensation winner who popularized the idea that vitamin C could assist strengthen the immune system, said, “The best method to have actually a good idea is to have actually a lot of ideas.” One popular method of generating concepts is to use brainstorming. Brainstorming is a group process of generating ideas that monitor a collection of guidelines, including no criticism of concepts during the brainstorming process, the idea that no tip is too crazy, and building on other concepts (piggybacking). Research mirrors that the amount of concepts actually leader to far better idea quality in the end, so setup high idea quotas, in which the group must reach a set number of ideas before they room done, is encourage to avoid process loss and maximize the effectiveness of brainstorming. Another unique element of brainstorming is that because the variety of backgrounds and approaches offer the group much more to draw upon, the much more people are included in the process, the better the decision outcome will certainly be. A variation of brainstorming is wildstorming, in i m sorry the group focuses on principles that space impossible and then imagines what would require to happen to do them possible.

See more: Which Of The Following Is A Limitation Of Humanistic Therapy? ? A


Figure 11.8 Which decision-making version should i use?

Key Takeaway

Decision making is choosing among different the action, consisting of inaction. There room different species of decisions varying from automatic, programmed decisions to more intensive nonprogrammed decisions. Structured decision-making processes include rational, bounded rationality, intuitive, and an innovative decision making. Every of these have the right to be useful, relying on the circumstances and the trouble that needs to it is in solved.

What carry out you watch as the key difference in between a successful and an not successful decision? how much walk luck matches skill need to do v it? exactly how much time needs to happen to recognize if a decision is effective or not?Research has presented that over fifty percent of the decision made within organizations fail. Does this surprised you? Why or why not?Have you used the reasonable decision-making design to make a decision? What to be the context? exactly how well go the model work?Share an instance of a decision in i m sorry you provided satisficing. Were you happy v the outcome? Why or why not? as soon as would you it is in most most likely to connect in satisficing?Do girlfriend think intuition is respected as a decision-making style? execute you think it should be? Why or why not?