Decision Making and Problem Solving

Decision making is choosing one alternative from among several. Problem solving, on the other hand, involves finding the answer to a question. Note that in some situations decision making and problem solving start out alike but may lead down different paths. Decisions made in organizations can be classified according to frequency and to information conditions. In a decision-making context, frequency is how often a particular decision situation recurs, and information conditions describe how much information is available about the likelihood of various outcomes. The frequency of recurrence determines whether a decision is programmed or nonprogrammed. Several approaches to decision making offer insights into the process by which managers arrive at their decisions. The rational approach is appealing because of its logic and economy. Yet these very qualities raise questions about this approach because decision making often is not a wholly rational process. The behavioral approach, meanwhile, attempts to account for the limits on rationality in decision making. Of course, as we will see, many managers combine rationality with behavioral processes when making decisions. The rational decision-making approach is a systematic, step-by-step process for making decisions. The rational approach has several strengths. It forces the decision maker to consider a decision in a logical, sequential manner, and the in-depth analysis of alternatives enables the decision maker to choose on the basis of information rather than emotion or social pressure. Evidence-based management (EBM) is about the commitment to identify and utilize the best theory and data available to make decisions. Rather than prescribing how decisions should be made, the behavioral view of decision making, now called the administrative model, describes how decisions often actually are made. Ethics are a person’s beliefs about what constitutes right and wrong behavior. In general, ethical dilemmas for managers may center on direct personal gain, indirect personal gain, or simple personal preferences. Managers also find it helpful to discuss potential ethical dilemmas with colleagues. Others can often provide an objective view of a situation that may help a manager avoid unintentionally making an unethical decision.