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Decision Making Theory & Process

This research provides an overview of decisionmaking theory and the decisionmaking process. Emphasis is placed on the making of decisions under conditions of risk and uncertainty.

In the early1970s, scientific approaches to decisionmaking were introduced, as tools with which organizational leaders could (1) minimize the effects of risk and uncer tainty in the development and implementation of strategy, and (2) optimize outcomes in the conduct of operations.1 While not yet commonplace as some other managerial tools, the various manifestations of scientific decisionmaking are well established.2

Decisionmaking in organizations has been described as a process of behavior with the economic model (or total ration ality) at one extreme, and with the social model (or complete irrationality) at the other extreme. This description implies

1R. S. Clark, "The Strategic Planner's Toolbox," CA Magazine, 120, July 1987, 28.

that only irrational decisionmaking accords human values precedence over economic values.3 In the organizational environments of the early1990s, leaders must find some middle ground between these extremes, for it is evident that neither set of values can be ignored. In many organizations, administrators and managers have been confronted with the tasks of making severe, undesirable, and unpleasant cuts of personnel and services in a hasty manner, because, in part, they failed to heed economic values in earlier decisions. Similarly, organizations have often been forced to retract decisions, and to act in confusing manners, in chaotic situations, because, in part, they failed to heed human values in reaching earlier decisions. A better approach to decisionmaking is obviously required by many organizations.

In the early1990s, it is recognized that the application of scientific approaches to decisionmaking must, to some extent, consider leadership styles and personalities.4First, in the context o...

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