Difficulties and errors in management decisions

A characteristic feature of any decision-making situation is the presence of a large number of options from which the best one must be chosen.

One of the difficulties of decision making is that the goal(s) need to be given quantitative and qualitative characteristics. Moreover, quantitative characteristics are more preferable, since they allow us to formalize the selection task. Another difficulty is the limited resources, the need to distribute them, and the choice of methods of use.

The same goal can be achieved in different alternative ways. The best course of action that ensures maximum efficiency is usually called optimal (according to a given criterion or group of criteria), and the process of finding this solution is called optimization.

Options of action that are close to optimal in effectiveness are called acceptable.

The task is to choose from the many goals (methods) that can be achieved with available resources the most preferable combination of them (a very difficult problem) and at the same time find the best ways to achieve these goals.

It is advisable to divide the problem of finding the best solution into two parts. From a variety of options, it is necessary to select rational ones (this is the first part), and from a small number (5-10) rational options, select the optimal one (this is the second part).

Typically, a decision affects the interests of several departments, and in such situations, conflicts of goals and preferences are possible both at the stage of preparation and at the stage of implementation of a management decision.

At the stage of preparing a management decision, there may be discrepancies in the goals of divisions (each division will strive to solve its own problem). This problem is solved by group work, defining the main goal of the enterprise and, accordingly, subordinating the sub-goals of the unit to this main goal.

At the stage of implementation of the decision, conflicts may arise in the distribution of powers, responsibilities, resources and responsibilities. Therefore, it is important to take into account and, if possible, detail who should do what, how, by what means, in what time frame.

The final decision can be made by the decision-maker (one person) or the decision-maker (the decision is made by a group) based on personal or group preferences, respectively; both decision-making options have their own characteristics.

Features of making individual decisions:

• responsibility for the results of the decision lies with one person
• personal preferences have a big influence on the final choice
• limited judgment of one person
• ease of choice (no need to agree on preferences)
• little time spent on decision making
• high probability of making an unsatisfactory decision
• low probability of making a risky decision
• high dependence of making a satisfactory decision on the competence of the decision maker
• influence on the choice of various phenomena of perception and features of the human information processing system.

Features of group decision making:

• distributed responsibility
• high probability of making a risky decision
• low degree of influence of each person’s personal preferences on the overall result of choice
• the need to organize the subordination of the goals of the subjects to the goals of the enterprise
• breadth of judgment, difficulty of choice
• takes a lot of time to make a decision
• low probability of making an unsatisfactory decision
• the dependence of making a satisfactory decision on the competence of the subjects is low.

Errors in management decisions
Decisions made at all levels of management in some cases lead to disorganization. Errors in management decisions are associated with violations of the principles of organizational management. If an erroneous, ill-considered strategic decision is made, then, as a consequence, the organization’s strategy and all decisions made within its framework will contain an error. The following errors in management decisions can be identified.

Pendulum solutions. Such decisions are erroneous in nature and consist in “correcting” an erroneous decision by attempting to “return” to what was before. For example, older people during the perestroika period complained that under socialism it was still not as bad as it is now, it is necessary to return to the old order and everything will return “to normal.” Another example: the company decided to reduce the sales department. The marketing department, which was entrusted with the functions performed by the sales department (due to an increase in the total volume of work), stopped conducting marketing research. The marketing strategy began to lose effectiveness. With a new decision, the sales department was restored again.

Decisions that duplicate organizational order or (even worse) contradict it. Decisions of this kind may arise in the event of a change in management. Each leader brings his own “charter” to the organization, i.e. establishes its own rules, which in some cases may contradict established traditions, organizational order established by job descriptions or other internal regulatory documents. Organizational duplication is more dangerous than is commonly thought. The functions are divided into two unequal parts: some are mandatory, those that are reminded by management, others are secondary, since no one additionally points to them. Thus, not only the dominance of orders over the regulated order is recognized, but the latter is also destroyed and called into question.

Solutions that ignore organizational hierarchy. In this case, the principle of management “by command” is violated, meaning that top management makes decisions addressed to middle managers, and middle managers make decisions further “down” in the hierarchy. Violation of this principle means that the solution is addressed through a hierarchy level. For example, the general director issues orders addressed to the head of a department, bypassing the department's management.

Decisions “tied” to the organizational hierarchy. Solutions of this type imply the dominance of structure over function, when new structures are created to solve problems, while existing units (functionally suitable for performing these functions) work at 50% intensity. This may also include decisions in which rules dominate function (for example, bureaucracy).

Conflicting decisions. Decisions that contradict previously made ones pose a problem to the performers: what actually needs to be done? As a rule, such situations arise when previously adopted orders and other acts containing information and instructions that contradict the newly approved ones are not canceled in the newly adopted ones. A similar situation also arises when the principle of unity of command is violated and subordinates receive two instructions containing conflicting instructions. For example, the shift manager gives the command “break for lunch,” and the section manager orders to work without a break in order to speed up production. Typically, in this case, employees give preference to orders from the highest level, while at the same time ignoring the instructions of their immediate superior.

Impracticable (adventurous) solutions. The essence of such decisions is based on an overestimation of the organization’s capabilities, inadequate perception and understanding of the decision-making situation. Such decisions are usually not implemented at all, and if they are implemented, they lead to results that are unexpectedly opposite to the goal.

Late decisions. Decisions of this type are made by managers due to the fear of making mistakes and making the wrong decision, when an unreasonably large amount of time is spent on developing an operational measure. In this case, a thoroughly developed decision, relevant for the past period, is made later than necessary, and no matter how well it was thought out, tested and detailed, it has already lost its relevance in the changed situation.

Demotivating decisions. Solutions that use inadequate motivation (not corresponding to the socio-psychological characteristics of the team), for example, the use of coercive motivation where incentive could be used, or the guarantee of benefits, the receipt of which does not meet the needs of employees. For example, the director issues an order, which, among other things, states that failure to comply with this decision entails a financial penalty in a certain amount from the employee’s salary, instead of guaranteeing a bonus in case of successful execution of the decision, or guaranteeing the free issuance of tights in the team, consisting of 82% men.

Wrong decisions. Such decisions are made due to insufficient information about the problem situation, misinformation accepted as reliable, incorrect interpretation of the organization’s performance indicators, i.e. based on opinion, not based on the real state of the company and the environment.

Undeveloped solutions. These are decisions that are relevant to a given organization, which are constantly talked about, but no one makes them. They are the most dangerous type of decisions, since even an erroneous decision gives some result. In some cases, inaction, avoidance of the need to decide, ignoring the changes required by the organization and, moreover, attempts to maintain artificially necessary development for the organization lead to stagnation and are always accompanied by a loss of enthusiasm of staff, clients and those with whom the organization interacts at all its levels. Such an organization is perceived as “dying.”

Decision Theories

Decision theory is usually understood as a formal interdisciplinary theory of rational decisions of an individual or social organization, as well as an algorithm for choosing an alternative when faced with many possibilities. Of the theories of decision making, the theory of limited rational choice is the most widespread. The basic elements of any decision theory are presented in the figure.

Rice. Basic Elements of a Decision Model

Decision theories are usually divided into normative and descriptive. IN regulatory(prescriptive) theories explore logical foundations and develop formal rules for rational decisions. Descriptive(descriptive) theories answer the question of how and why decisions are made in real life. Attempts are also being made to combine both approaches into one. These are the so-called integrative theories that take into account both objective, logical factors and subjective, individual aspects of decision making.

Models of normative decision theory, in turn, are divided into two types: closed and open models. Closed decision models are based on rational choice theory. In this case, it is assumed that the situation is fully formulated and all connections are specified, so that decision rules can be derived that ensure optimal achievement of the goal. At the same time, they talk about so-called well-structured problems.

Operations research techniques (such as linear programming) can be used to solve problems. The non-calculated influence of subjective and individual behavioral factors is often excluded, i.e. it assumes unlimited rational behavior of the decision maker who makes decisions and strives to maximize benefits (Homo Economicus).

The main premises of rational choice theories are as follows:

• goals are known, clearly and unambiguously formulated; there is a complete, internally consistent system of decision priorities, which allows for rational, benefit-maximizing choice;
• the problem to be solved is known and clearly formulated;
• all possible alternatives are known and considered by the decision maker;
• all consequences of individual alternatives are known and thought through by the decision maker;
• the values ​​of individual consequences are known or can be easily determined;
• there are no restrictions in terms of the complexity of the calculations that must be performed to find a solution that gives the maximum benefit;
• The decision maker acts as an individual who is not influenced by personal values ​​and group norms.

Under these premises, the process of rational choice and implementation of a decision alternative includes the following stages:

• problem recognition;
• goal setting;
• search for alternatives;
• evaluation of alternatives;
• choosing the best alternative;
• implementation of the solution.

It is obvious that the premises of rational choice theories for many life situations seem too idealized. Due to limited information, lack of time and other resources, the decision maker is not able to identify and evaluate all possible alternatives and is inclined to accept the first alternative that satisfies the level of his aspirations. In the literature, this approach is called bounded rationality.

Environmental conditions and requirements limit the field of decision-making; in addition, decision-makers have to take into account multi-layered conflicting goals (this circumstance in the literature is characterized as contextual rationality).

Although it is impossible to make the optimal decision, the decision maker can try to use approaches and techniques for finding solutions that allow, perhaps, to find a more or less good solution. This approach is called procedural rationality.

Often decisions are sufficiently justified, i.e. rationalized only after their adoption. Essential phases of the decision-making process are carried out only after, and not before, the choice (this behavior is called retrospective rationality).

Open Models of Normative Decision Theories are based on a more realistic theory of bounded rational choice. Open decision models take into account that the prerequisites for a decision are not yet clearly defined, and also take into account boundedly rational behavior. These models are used for ill-structured problems that are incompletely defined or with low precision. A typical form of an open model is, for example, a decision tree. The choice of solutions is carried out on the basis of a simplified model of reality (bounded rationality). Decisions are made within the individual horizon of perception of the decision maker. The search for alternatives is limited only to the identification of satisfactory alternatives; Only in exceptional cases do they look for the optimum. Repeated unsuccessful attempts to achieve satisfactory solutions lead to a decrease in the level of aspirations, and conversely, successes lead to its increase.

Prerequisites for theories of limited rational choice:

• Decision makers have incomplete information and an incomplete picture of the problem situation;
• Decision makers can never know all possible alternatives and their consequences;
• alternatives for action are not assessed fully, since it is impossible to accurately assess the results and the likelihood of their occurrence;
• it is never possible to determine the optimal solution in advance; Only the search for a satisfactory result can be accepted as a criterion.

In practice, the solution process consists of a whole series of preliminary and partial solutions. In this case, the degree of approach to the optimum is determined by the level of aspirations of the decision maker, who poses the question of whether, at certain costs, it can achieve a solution to the problem and what consequences are associated with this.

Types of decision theory models

In decision-making theory, there are several approaches that are called decision-making models. These include the following types of models: normative (classical), descriptive (descriptive), Carnegie model, incremental decision-making process model, “trash can” model, etc.

Regulatory The (classical) model proposed by Herbert Simon allows decision-makers to identify the most effective ways to achieve their goals. They are functional equations that reflect the relationships between dependent and independent variables. The independent variables in such models are the action parameters, and the dependent variables in these models are the expected variables resulting from the effects of the independent variables. These models usually look like this:

E=f(a,b,c),

where E is the expected variable being analyzed; a, b, c – independent variables, parameters of actions (decisions).

These equations are supplemented by a system of restrictions that limit the freedom of action of the decision maker.

Normative decision theory is based on two concepts: the concept of utility maximization and the concept of bounded rationality.

Utility maximization concept . The essence of this concept lies in considering an “economic” person as a decision-maker, endowed with rational thinking and choosing the optimal solution. The optimal solution is the one with the maximum utility. The utility of a particular alternative is determined in accordance with a utility function that reflects the individual preference system of the decision maker. When comparing alternatives, the decision maker explicitly or implicitly compares their utilities according to certain criteria that make up the utility function.

In decision theory, special methods have been developed for constructing and maximizing the utility function, which actually help determine the best decision. The use of these methods in practice is time-consuming and therefore not always possible or advisable.

The normative decision-making model is based on economic assumptions:

1. The decision maker strives to achieve known and agreed upon goals. Problems are identified and precisely formulated;

2. The decision maker strives for certainty, obtaining all the necessary information, all permissible options and possible consequences are calculated;

3. the criteria for evaluating alternatives are known. The decision maker chooses the option that has the greatest economic benefit for the organization;

4. The decision maker acts rationally and has a logical approach to evaluating options, setting priorities, and his choice best suits the achievement of the organization’s goals.

The value of the model is that it encourages managers to make rational decisions. The prevalence of normative models is largely due to the emergence of various quantitative methods of decision-making using computer technology. Quantitative methods include decision trees, payment matrices, break-even point analysis, linear programming, forecasting, and operating models. Corporate information systems also contribute to the development of the regulatory model. The normative model is most adequate to programmed decisions, situations of certainty or risk, when there is access to all the necessary information, which allows one to calculate the probabilities of outcomes.

Descriptive(descriptive) models are based on empirical observations, they contain a small number of elements and explain economic relationships as they exist in the real world, but in a simplified form. The descriptive model describes the actual decision-making process in difficult situations (unprogrammed decisions and situations of uncertainty and uncertainty), when managers, even if they wanted to, cannot make an economically rational decision.

The descriptive model of decision making is based on the work of Herbert Simon, who proposed the concepts of normative and descriptive models and proved that bounded rationality means that the activities of individuals in an organization lie within the limits or boundaries of acceptable rationality (bounded rationality and acceptability).

Herbert Simon sharply criticized the classical model of “economic man”, who makes optimal decisions in all situations. This model is extremely far from reality, since in fact human rationality is limited and there is a lot of irrationality in human behavior. These conclusions led G. Simon to develop the concept of bounded rationality, which considers the so-called administrative person who makes decisions based on simplified ideas about reality. While exploring the technique of making management decisions, G. Simon introduced the concepts of programmed and unprogrammed decisions and came to the conclusion that in order to increase their efficiency, organizations should strive to program as many decisions as possible.

An organization is an extremely complex system, and managers do not have the time or capacity to process all the information necessary to make informed choices. Therefore, the decisions they make are not so much rational as they are acceptable. Acceptability means that the decision maker chooses the first option that meets the minimum acceptability criterion. Instead of analyzing all the options, choosing from them, promising the highest economic result, managers settle on the first option that can solve the problem, even if they admit the possibility of other, more profitable solutions. Searching for comprehensive information and the “optimum point” takes up too much of a manager’s precious time.

The assumptions on which the descriptive model is based are as follows:

1. The goals of the decision, as a rule, are not clear and are in conflict with each other. Managers are often unaware of the problems and opportunities that exist in the organization;

2. rational procedures are not always used, and if they are used, they are limited to a simplified view of the problem that does not reflect the complexity of real events;

3. the boundaries of managers’ search for various options are determined by human, information and resource limitations;

4. Most managers are content with acceptable rather than maximizing decisions. This is partly due to the limited information available to them, partly due to the vagueness of the maximization criteria.

The descriptive model is descriptive in nature, reflects the real process of making management decisions in complex situations, and does not dictate how they should be made in accordance with the theoretical ideal; it takes into account human and other limitations that influence the rationality of choice. The descriptive decision-making model is largely based on the intuition of managers. Intuitive decision making uses personal experience and insight more than consistent logic or clear conclusions. Intuition is not arbitrary or irrational, since it is based on many years of practice and common sense stored in the subconscious. By turning to their intuition, based on years of problem-solving experience, managers are much quicker to recognize that there is a problem in the organization; and at the same time an intuitive feeling appears, prompting them to choose a solution to the problem, which significantly speeds up the decision-making process.

In a descriptive model, the relationships between elements can be described in the form of simple mathematical equations. Their disadvantage is that they do not reflect functional relationships and constraints, but they provide a basis for building more complex models. An example of descriptive models could be models of ideal competition for predicting prices in the real world, or planned costing, or simple investment calculations.

Descriptive models express the required objective function in terms of production operations, i.e. they prescribe a certain technology, procedures, using which the decision maker can select the optimal solution, taking into account the specified restrictions and criteria. Therefore, the descriptive model is the basis for constructing optimization models.

Unlike normative decision theory, which is based on the concept of utility maximization and prescribes how people should make decisions, there is currently no sufficiently general descriptive theory of decision making. At the same time, there are several private models that describe and explain people’s behavior in real choice situations. These include the concept of bounded rationality, prospect theory, remorse theory, and multicriteria choice strategies, among others.

The concept of bounded rationality . In practice, people rarely behave rationally. In most cases, they are usually limited to satisfactory solutions, which, although inferior to the optimal ones in terms of assessment, are quite acceptable from the point of view of achieving the set goals.

Managers limit themselves to satisfactory solutions for the following reasons:

1) due to limited time, experience and knowledge, the decision maker takes into account only a limited number of alternatives;

2) due to time constraints, some alternatives are not accepted for consideration and evaluation as found unsatisfactory upon first consideration;

3) foreseeing all possible outcomes requires multi-criteria assessment, complex mathematical calculations and the development of scenarios, which is associated with time expenditure and the involvement of specialists in the development process (often a manager believes that decision-making is exclusively his prerogative and that the involvement of specialists will mean admitting his own incompetence );

4) the manager often has to make decisions in conditions of uncertainty (insufficient reliable information about organizational problems; the latent nature of real problems that are the causes of those that are being solved; the untapped potential of the organization, its strengths, opportunities that are in the external environment and can be used for solving problems of the organization; threats from the external environment);

5) risk assessment involves the use of special methods of probability theory, which imposes restrictions on their use;

6) decision-making occurs constantly, in a “chronic lack of time” mode, so errors are possible;

7) the lack of a strategy or its clear formulation, as well as detailing to policies, projects, programs and specific activities leads to a “blurring of the goals” of the organization. It is unclear “in the name of what” a decision is made, which should be the result not only of a specific operation, but also of the function of a specific subsystem and the activities of the organization as a whole.

All of the above reasons are due to mental and organizational factors: limited human capabilities for processing information; distortion of information in the process of transmitting it to decision makers; the presence of hidden organizational processes, organizational pathologies, etc.

Prospect theory. Prospect theory or “prospect theory,” proposed by D. Kahneman and A. Tversky in 1979, describes the behavior of people when they make decisions under risk conditions. A prospect is a certain choice situation with probabilistic outcomes. The conclusions of prospect theory, based on numerous psychological experiments, also differ from the recommendations of normative expected utility theory.

First, experiments have shown that people attach more importance to losses than to gains, even if their magnitude is the same. In other words, losses always seem “bigger” than gains. For example, we will be more upset by the loss of $500 than we will be pleased by the discovery of the same amount of money. In particular, the attitude towards losses is manifested in the so-called property (or contribution) effect, according to which the loss of an item is felt by people more strongly than its acquisition. For example, people usually agree to sell something they own (say, a car) for more than what they would pay for it if they didn't own it. It is logical to assume that in this case the sellers seem to be parting with an item that is valuable to them and therefore consider its sale as a loss. However, for buyers this item does not yet have such a high value, and therefore they consider its acquisition as a gain. Since in both cases we are talking about the same item, the objective values ​​of loss (for the seller) and gain (for the buyer) are the same. However, due to these reasons, the subjective value of the loss is usually higher than the subjective value of the gain. Thus, the value of losses is subjectively inflated compared to the value of the same “quantity” of acquisitions.

This phenomenon is used by some firms that offer their products on a trial basis. Owning an item subjectively increases its value, and the buyer may find it difficult to part with it. In addition, the ownership effect causes the main contradiction that is present in any negotiations. The fact is that a joint agreement concluded during negotiations is tended to be viewed by some as a loss, and by others as a gain, even if objectively it is equally beneficial to both parties.

Second, the authors of prospect theory found that people's attitudes toward risk strongly depend on the formulation of the choice problem. This feature of human behavior is closely related to the attitude towards losses and is also not taken into account in the theory of expected utility. It lies in the fact that people tend to avoid risk to get a guaranteed gain, and prefer risk to avoid a guaranteed loss. To illustrate this pattern, D. Kahneman and A. Tversky give two examples that they used for experiments. In the first example, subjects were asked to choose between alternatives A and B.

A: There is a 0.50 probability that you will receive $1000, or a 0.50 probability that you will receive nothing.

Q: You will definitely receive $500.

Both options have the same expected utility of plus $500 ($1000*0.5+ 0$*0.5 = $500*1.0). Therefore, theoretically, the responses of the subjects should be equally divided. However, this did not happen. The vast majority of participants refused to take risks and chose alternative B, associated with receiving a guaranteed win. In this case, the experiment showed risk avoidance.

In another example, subjects were asked to choose between alternatives C and D.

C: With a probability of 0.50 you will lose $1000 or with a probability of 0.50 you will not lose anything.

D: You will probably lose $500.

This time, the majority of the experiment participants chose alternative C, i.e. agreed to take a risk to avoid a guaranteed loss of $500, although in this case both options have the same expected utility equal to minus $500 (–$1000*0.5 + $0*0.5 = –$500*1, 0). Thus, risk seeking was demonstrated in this case.

These examples, as well as the results of other studies, support the general conclusion of prospect theory that problem formulation influences people's preferences and attitudes towards risk. If the choice task is presented “in terms of acquisitions,” then people are risk averse. Conversely, if the choice task is presented “in terms of losses,” then people prefer to take risks. This psychological phenomenon is called the framing effect.

The framing effect helps to better understand people's behavior in risky situations. However, it has not only theoretical significance, but can also be used for practical purposes. For example, it can be used to predict people's decision-making behavior depending on how the choice problem is formulated - in terms of gains or losses. If the problem is presented in terms of payoffs, then in most cases people will tend to avoid risk. If the task is presented in terms of losses, then most likely the opposite tendency will be observed - the desire for risk. Moreover, we can not only predict people's behavior, but also influence it by changing the type of framing depending on what kind of decision we want to initiate - cautious or risky.

Third, another difference between prospect theory and expected utility theory lies in people's attitudes toward the likelihood of obtaining a particular outcome. It was found that people tend to overestimate small probabilities and underestimate medium and large probabilities of achieving results that are significant to them. This phenomenon is called the effect of subjective assessment of small, medium and large probabilities. Thus, the tendency of people to overestimate low probability can be demonstrated by the example of two tasks. In the first task, subjects were asked to choose between alternatives A and B.

A: 1 in 1,000 chance of winning $5,000.

Q: Get 5$ for sure.

Most people who were presented with this task chose alternative A, i.e. chose to take the risk to win $5,000, although the expected utility of both options is the same and equals plus $5 ($5,000*0.001 + $0*0.999= $5*1.0). The second task asked to choose between alternatives C and D.

C: 1 in 1,000 chance of losing $5,000.

D: Just lose $5.

Now the majority of subjects chose alternative D, i.e. refused to take risks, although in this problem the expected utility of both options is the same and equal to minus $5 (– 5000$*0.001 + 0$*0.999 = – 5$*1.0). Since the expected utility of the alternatives is the same, in both cases the subjects would have to be divided into two approximately equal groups. However, this did not happen again. According to the authors of the experiment, the observed effect can be explained by the fact that people overestimate small probabilities (for example, 0.001) of large wins or losses. Therefore, the expected utility of option A compared to B subjectively increases, and option C compared to D decreases.

As the authors of prospect theory note, people's tendency to overestimate the risk of large losses is used in the insurance business, when people agree to pay certain insurance premiums to “protect” themselves from probable accidents.

The theory of remorse. Along with the theory of prospects, which explains the “irrational” behavior of people in situations of choice, in 1982, American economists G. Looms and R. Sugden proposed the so-called theory of repentance, which is based on two main provisions.

First, many people experience feelings of remorse or regret after making a decision. This is because, in some cases, they evaluate the quality of their decisions not in terms of what actually happened, but in relation to what could have happened if they had done their best. This phenomenon is called “counterfactualization” because it is based on imaginary rather than real events.

Secondly, people not only experience these feelings, but also try to imagine and predict them before making a decision. For example, if a group of subjects is offered a choice between alternative A—with a 0.50 probability of getting $1,000 or with a 0.50 probability of getting nothing—and alternative B—certainly getting $500, then the majority will choose the second option due to fear of disappointment, which they can experience if they fail. In this situation, we observe a similar risk-averse tendency as described in prospect theory, but remorse theory explains it differently - using the concept of regret. which is added to the simple utility estimate of each alternative. Thus, the theory of remorse enriches and develops the previously proposed theory of prospects, explaining many decisions of people under risk conditions by their desire to avoid regrets associated with unfavorable outcomes of random events.

Multicriteria selection strategies. Most often in their lives, people are faced with such problems when alternatives are evaluated according to several indicators of efficiency or quality (for example, profit, risk, costs), which describe various properties of the objects presented for choice. These properties are called attributes of alternatives, and the problems that arise are called multi-criteria or multi-attribute decision-making problems. They represent a rather complex class of tasks for the human information processing system. The presence of several selection criteria leads to a sharp increase in the amount of information required to evaluate and compare alternatives, and, as a result, to a heavy load on a person’s short-term memory. Since its scope is limited, it forces people to use various heuristics to simplify the task and make an informed choice. There has also been much research in this area to describe people's behavior and identify the basic heuristics they use in multicriteria choice situations. As a result of the experiments, two groups of such rules, or heuristics, were established, which were called the compensation strategy and the exclusion strategy.

Compensation strategies are used when people seek to compare the advantages and disadvantages of each alternative in order to compare them with each other and choose the best one. These include the additive strategy, the additive difference strategy, and the ideal point strategy.

1. The additive strategy is where people determine the total utility of each alternative as the sum of the scores on the individual attributes based on the relative importance of those attributes. In this case, attribute ratings are given subjectively or calculated as some scaled values ​​expressed on a single dimensionless scale. So, in the example of buying a house, you can identify the main attributes such as price, location, age of construction and others, determine their importance for the buyer, evaluate each option for all attributes and then add up the resulting estimates, having previously multiplied them by the “weights” of the attributes. Then the best choice will be the option with the maximum total utility.

Clearly, the additive strategy is consistent with normative utility theory. However, this does not mean that people actually perform the arithmetic operations of addition and multiplication when using this strategy. We are talking only about a person’s way of thinking, when he gives a “total” assessment of each alternative, taking into account the values ​​of all attributes and their importance. In addition, as it turned out in experiments, when making pairwise comparisons, people often use a simplifying technique - they simply count the number of attributes in which one of the alternatives is superior to the other, and choose the alternative with this number higher.

2. The additive difference strategy is used in pairwise comparisons of alternatives and consists in the fact that people do not evaluate the overall utility of each alternative, but only the difference between them. Formally, this difference looks like the sum of the “weighted” differences in the assessments of alternatives for all attributes. If the resulting sum is positive, then the first of the two alternatives is preferable. than the second one. It has been established that people often neglect those attributes for which the difference in evaluations of alternatives is small. Continuing with our example, we can estimate the “difference” between two purchase options based only on price and location, if they are approximately the same in other attributes. Then an opinion is formed about their differences in general and a judgment is made about the preferability of one or another option.

3. The ideal point strategy resembles the rule of additive differences, but differs from it in that all alternatives are compared not with each other, but with some standard, i.e. an ideal option that exists only in our minds, but is practically unattainable. Then the best alternative is considered to be the one closest to the “ideal”, taking into account the values ​​of all attributes.

Elimination strategies, also called non-compensatory strategies, are used when people give up comparing the merits and demerits of all alternatives and use simple heuristics to eliminate as many "not worth considering" options from consideration and leave a small number of alternatives. from which you can make an intelligent choice. This group of selection strategies includes the dominance strategy, conjunctive strategy, disjunctive strategy, lexicographic strategy and aspect removal strategy.

1. The dominance strategy is used to search for an alternative that is no worse in all attributes and is better in at least one attribute than all other choices. For example, when choosing a job from several offers, you should choose the more prestigious one, provided that in terms of other attributes (position, salary, growth prospects, etc.) it is at least no worse than the other options. This strategy eliminates some possibilities and reduces many alternatives, but usually does not lead to the selection of the best alternative because it does not always exist. At the same time, it has been proven that if such an alternative exists, then any of the compensation strategies also makes it possible to find it. In this case, the advantage of the dominance strategy is its relative ease of use.

2. The conjunctive strategy eliminates alternatives that do not satisfy the minimum requirements for all attributes simultaneously. This strategy is consistent with the concept of bounded rationality and leads to the selection of the first satisfactory alternative, if one exists. For example, when deciding to purchase a car, in accordance with the opportunistic strategy, we choose a fairly prestigious model, the price of which is not higher than acceptable, and whose power and reliability are not lower than the required values. If a satisfactory solution is not found, then it is necessary to expand the list of alternatives or weaken the requirements for them on individual attributes.

3. The disjunctive strategy is that each alternative is evaluated on its best attributes, regardless of the values ​​of the other attributes. After this, only those alternatives that are “best” for each individual attribute are left for the final selection. For example, at first we can choose the cheapest model, even if in other qualities it is clearly inferior to other options, then choose the most prestigious model, even if its price is too high, etc. Other options are excluded from further consideration.

4. The lexicographic strategy is similar to the disjunctive one, except that first the alternatives that are the best among all for the most important attribute are selected. If there are several such alternatives, then among them the best ones are again determined by the most important attribute of the remaining ones, etc., until the number of options is reduced to the required value. For example, we can first select the most prestigious models, then the cheapest among them, etc.

5. The deletion strategy is similar in aspects to the lexicographic one, but is based on a different principle. First, alternatives that do not meet our requirements for the most important attribute are removed, then among the remaining ones, alternatives that are not suitable for a less important attribute are eliminated, and so on, until one or more options remain for the final choice. So, by analogy with the previous example, we first select not the most, but rather prestigious models, then among them – quite cheap ones, etc.

Research shows that in fact, people are not limited to any one strategy, but use combinations of them. At the same time, as a rule, they try to reduce the set of alternatives to reasonable limits using elimination strategies. If after this there are several options left, then the best one is determined among them using one or another compensation strategy.

Carnegie model (Political decision-making model) was formulated by G.A. Simon (H. Simon), J. March (J. March), R. Cyert (R. Cyert), whose scientific works prove that in organizations managers can make their choice of strategy in coalitions - informal alliances between several managers, equally understanding the organization's goals and problem priorities.

The political decision model is based on the fact that participants in the political system are all the actors in the organization who are involved in the goal-setting process. Since they, as a rule, have different interests, they also have different target expectations, i.e. place different demands on the organization, which inevitably leads to conflicts.

The model distinguishes between two types of actors:

• core - a group of persons who, by law or by agreement, are legitimized to responsibly determine the goals of the organization (for example, the board of directors of a concern);
• satellite groups that influence the goal-setting process (for example, a labor council).

The goals of the organization are established through negotiations between members of the organization. This process is followed by a control process, as a result of which specific private goals are developed, and a learning process, in which goals are adjusted in relation to changes in the external environment. These processes do not ensure symmetrical consideration of the interests of all participants. Certain groups, usually the core, are formally legitimized to set goals. However, their decisions, depending on the actual distribution of power in the organization, may be significantly influenced, as a result of which certain concessions are made to other groups.

This model is used, as a rule, to make non-programmed decisions in conditions of uncertainty, limited information and lack of consensus about what goal to pursue or what line of behavior to choose.

Developing the concept of bounded rationality, James March identifies three types of constraints inherent in managers - cognitive, political and organizational. Specifically, cognitive ones include attentional limitations, mental capacity limitations, and preference disorder. The last type of restrictions manifests itself in organizations that have the properties of organizational anarchy. J. March identifies four features of decision-making in organizations: quasi-conflict resolution, uncertainty avoidance, problematic search, organizational learning. The study of these features led J. March to develop the “garbage can” model, which describes the decision-making process in organizations as a chaotic and disorderly interaction of various “elements” (problems, decisions, participants, alternatives), which can appear and disappear randomly and independently from each other.

The descriptive model and the Carnegie model, as well as intuition, are more adequate to a turbulent external environment, when decisions are made quickly, under conditions of high uncertainty.

Incremental process model decision making was proposed by G. Mintzberg (McGill University, Montreal). This model can be used to make unprogrammed decisions and the focus of solving organizational problems is on the structural sequence of actions taken throughout the decision-making process. The main decision consists of a series of “small” choices, because the organization passes through several key points in the decision-making process, where it is possible to encounter “barriers”, which G. Mintzberg called interruptions in the decision process. Interrupting the decision-making process means that the organization must return to previous decisions and repeat the cycle (stages of the decision-making process), trying to offer some new courses of action (alternatives). These cycles, or “loops” according to G. Mintzberg, of the process of finding a solution (alternatives, strategies, courses of action) are one of the ways to train the organization’s personnel, finding an understanding of what alternatives and solutions need to be implemented. G. Mintzberg also proposed dividing the decision-making process into three phases: problem identification, development of options for management decisions, assessment and selection and adoption of management decisions.

Trash can model was developed by Michael Cohen, J. March, J. Olsen to explain the pattern of decision-making under conditions of extreme uncertainty, which the above-mentioned authors defined as “organized anarchy.”

"Organized anarchy" does not rely on the normal vertical hierarchy and rational bureaucracy to make management decisions. It is characterized by three features: problematic preferences; unclear and poorly understood decision-making technology; staff turnover. “Organized anarchy” is characteristic of organizations characterized by frequent change and a collegial, non-bureaucratic environment.

The model of “organized anarchy” was developed based on an analysis of decision-making processes in universities as typical representatives of organized anarchies, which are characterized by:

• incompatible and poorly defined goals
• unclear/fuzzy causes of problems, technologies, environmental conditions, consequences of actions
• insufficient interpretation of the development of the past
• unclear competence and lack of continuity of decision makers. The latter applies not to Russian, but to European and American universities.

In organized anarchies, the decision-making process is often carried out according to a “garbage can” model, into which the following flows flow:

1. problems - interests, demands and claims of internal and external (in relation to the organization) groups
2. solutions – the potential of solution opportunities (ideas, technologies, products) that develop regardless of real problems is used
3. reasons for decisions - situations in which certain decisions must be made
4. Participants are actors who contribute to defining the problem and its solution alternatives.

A unique feature of the garbage can model is that the decision-making process does not appear as a series of steps that begin with a problem and end with a solution. Decisions in this model are the result of independent streams of events occurring within the organization that are relevant to the decision-making process: a stream of problems, a stream of potential solutions, decision-makers, and favorable opportunities for choice.

Taking into account the concept of four streams, the overall decision-making pattern in an organization becomes random. Problems, proposed solutions, participants and chosen solutions all pass through the organization, because in a sense, the organization is a big wastebasket. in which all these flows are mixed. If the problem, the solution, and the decision maker are accidentally connected at one point, then the problem can be resolved; but if the solution does not fit the given problem, then the problem may remain unsolved. Thus, considering the organization as a whole in an extreme degree of uncertainty, you can see problems that are not being solved and solutions that are not being implemented, because the situation is so complex that solutions, problems and results are completely independent of each other.

The decision process in the trash can model typically includes the following phases:

• problem definition - the four above flows are identified
• negotiations – searching for coalitions and negotiating compromise solutions
• persuasion – “selling” a compromise solution to less active participants
• bureaucratic phase – specification (operationalization) of decisions and supplementing them with instructions for execution.

Consequences of using the garbage bin model:

1. solutions can be proposed even when the problem is not identified and does not even exist;

2. choices can be made without solving problems;

3. problems may remain unresolved in the organization;

4. but some problems are being solved.

During computer modeling under the conditions of the “garbage box” model, the most important problems were often solved, because it became possible to connect problems with corresponding decisions and participants, in such a way that a successful choice of management solution was made.

Local increment theory Ch. Lindblom. Charles Lindblom (Ch. Lindblom) is a famous American researcher in the field of strategic decision making, professor of economics and political science at Yale University. For a long time, he served as director of the Center for Social and Political Research, as well as a policy adviser to US government agencies. His theoretical work became famous for his criticism of rational (“synoptic”) models of decision making in organizations and the development of the original theory of local (or separate) increments.

Charles Lindblom describes two approaches to management decision making – synoptic And local increment strategy. Within the synoptic approach, managers strive for a “rational deductive ideal”, using the principle “the ends determine the means” to make decisions. The local incremental strategy, or the method of sequential limited comparisons, is characterized by the fact that management decisions are made with the goal of small sequential changes that are introduced in small increments. C. Lindblom emphasizes such characteristics of this strategy as limitation, focus on means, reconstructionism, seriality, practicality and fragmentation.

The incremental model was created to inform policy decisions. In real life, consensus on major goals among powerful groups of decision makers is almost impossible. In addition, it is almost impossible to unambiguously assess the consequences of actions. Agreement can only be reached on small steps and improvements. Therefore, decisive political changes, even if they seem very necessary, remain outside the discussion. Participants in the search for a solution look only for goals and means that are in a familiar area. Modification of the existing situation is carried out in small steps. There is no final solution, only constant new adjustments. Process phases include:

• formulation of the original problem
• attempts to solve the problem
• eliminating errors and weaknesses and reformulating the problem.

In principle, the process is trial and error with feedback.
A concrete example of the application of such a model can be the long-term negotiations between the USSR and the USA on the problem of limiting strategic offensive weapons.

V. Vroom's decision-making model . Victor Vroom is a contemporary Canadian researcher of organizational behavior, psychologist, teacher and consultant in the field of management sciences. Laureate of the competition of American psychologists of the Foundation. G. Ford. He has taught at universities in the USA and Canada, most recently working as a professor of management at the University of Wales. The main views of V. Vroom and the results of his research are presented by him in such works as “A New Look at Management Decision Making,” 1960: “Leadership and Decision Making,” 1973 (together with P. Yetton); “New Leadership: Participation in Organizational Management”, 1988 (together with A. Yago).

Victor Vroom studied in detail the processes of managerial decision-making and various options for the participation of subordinates in them. Based on these studies, he formulates possible leadership decision-making styles, designated as autocratic, consultative and group. The effectiveness of each of these styles depends on the specific situation and is assessed taking into account such factors as the quality of the decision, the approval of the decision by subordinates and willingness to implement it, as well as the time required to make the decision. Based on these findings, V. Vroom proposed a normative model of decision-making, which prescribes the manager to choose a certain style depending on the current situation.

V. Vroom's decision-making model allows a manager to determine to what extent he should involve subordinates in the development and adoption of management decisions. At the same time, it is assumed that he must concentrate on both the problem that must be solved and the situation in which the decision is made.

The model represents a decision tree.B. Vroom and F. Yetton suggested that the degree to which subordinates are involved in decision making depends on certain situational factors. Seven such factors were identified:

1. requirements for the quality of decision making (QQ)
2. requirements for the commitment of subordinates (TS)
3. manager's awareness (IR)
4. task structure (TS)
5. probability of support from subordinates (VP)
6. consistency of goals of the organization and its members (SC)
7. conflict between subordinates (CP).

In the process of revising the model, V. Vroom and A. Yago added three more factors:

• awareness of subordinates (IP);
• time limit (TL);
• geographical dispersion of subordinates (GR).

Each of these factors influences a particular decision-making style. The first eight factors formed the basis of the decision tree developed by V. Vroom and A. Yago. Each of them is rated on a “low/high” scale, and depending on the combination of factors, a specific decision-making style is selected.

To make decisions in the model, depending on the situation and the degree of involvement of subordinates, V. Vroom and F. Eatton proposed using five styles located on a continuum from an extremely authoritarian to a pronounced group (partnership) approach:

1. authoritarian I (AI): the leader makes decisions independently;
2. authoritarian II (AII): the leader receives the necessary information from his subordinates and then independently makes a decision;
3. consultative I (CI): the leader consults with each subordinate individually, and then makes a decision himself;
4. consultative II (SP): the leader consults with the group and then makes a decision on his own;
5. group (partnership) II (GII): the leader sets out the problem to the group and makes a decision together with it. In an early version of the model, there was also a GI style, but it was later eliminated because it differed little from the GII style.

The degree of participation of subordinates depends not so much on the personality of the leader, but on the nature of the situation.

These five styles represent a chain, starting with autocratic decision-making style (A1 and A2), then consultative (C1 and C2) and ending with full participation (G2). The application of each of these styles depends on the characteristics of the situation or problem.

By adding to the above decision-making styles, the authors emphasize that in any case, the manager retains his official powers and bears full responsibility for the decision made. At the same time, the degree of participation of subordinates depends not on the personality of the leader, but on the nature of the situation.

V. Vroom's decision-making model, which is shown in the figure, is the most valid leadership model at present.

Organization model M. Croisier (conflict model) . Michel Crozier (M. Crozier) is a famous French sociologist, director of the Center for the Sociology of Organizations in Paris. For a long time he has been engaged in research into intra-organizational processes and the interaction of the main participants in the organization. Since most modern organizations are rational bureaucracies, M. Croisier's attention was focused on studying the processes of management and decision-making in bureaucratic organizations.

Studying decision-making processes and organizational behavior. Michel Croisier developed the conflict-game concept of the organization. According to this concept, any organization is a so-called ensemble of games. The game here refers to a special type of relationship that develops between participants in order to achieve the most advantageous position within the organization. This means the players’ desire to maintain freedom of their own actions and decisions. Moreover, the strength of the players and, consequently, their chances of winning in such a game depend on how much they control the main sources of uncertainty within the organization. Controlling uncertainty allows players to maintain freedom in decision making and maintain a balance of power in the organization. Regulating uncertainty removes the power of those who control it.

The conflict decision model assumes that serious decisions are associated with feelings such as hatred, fear, jealousy, irritation, and, above all, stress. It has been proven that for optimal decision-maker behavior, stress should be at a moderate level. When stress is very low, the decision maker neglects to search for information, and when stress is too high, the decision maker retreats to the costs and makes an emotional decision or makes no decision at all. The decision maker consciously or unconsciously asks the following questions:

• Will there be serious risks if you do nothing? If not, then conflict-free doing nothing is advisable;
• will there be serious risks if something is changed? If not, then a conflict-free margin change is appropriate;
• Is it realistic to hope to find a better solution? If not, then it is advisable to shift responsibility for the decision to others (defensive avoidance);
• Is there enough time available to find information and think? If not, then an extreme stress situation (hypervigilance) arises, which leads to the nearest acceptable solution.

The optimal result is obtained when the answer to all the above questions is “yes”, i.e. There is moderate stress (vigilance). In this case, the decision maker is motivated to carefully collect and process the necessary information.

The strategic model of the organization by M. Croisier helps to better understand the features of management decision-making processes and allows us to draw the following conclusions.

Firstly, management decisions in organizations are always made under conditions of uncertainty. Moreover, the source of uncertainty can be not only the external environment, but also the behavior of the organization participants themselves, who pursue their own goals and try to improve their situation.

Secondly, managers try to “program” as many management decisions as possible in order to increase management efficiency and reduce their dependence on specialists who control the main uncertainties affecting the organization.

Thirdly, subordinates strive to maintain freedom in decision-making and resist bureaucratic pressure from managers. And fourth, in order to maintain the balance of power in the organization, subordinates deliberately limit the information intended for managers, which leads to the need to make decisions under conditions of uncertainty and, therefore, strengthens the power of specialists who have complete information.

The model focuses less on the political and social factors described in the Carnegie model, but on the structural sequence of actions taken throughout the process - from the moment a problem is identified to the moment it is solved. Henry Mintzberg and his colleagues from McGill University in Montreal looked at the problem of decision-making in organizations from various points of view. Their study looked at each step in the decision-making sequence.

One of the findings of this research was that the major choices in an organization that lead to a major decision usually consist of a series of “minor” choices. Thus, many management decisions made in an organization are a series of small bites rather than one big bite. Organizations go through several key points in the decision-making process and may encounter barriers along the way. Mintzberg called these barriers decision interruptions. Interrupt may mean that the organization must go back to a previous decision and repeat the cycle, while trying something new. These loops, or cycles, of the solution search process are one way for the organization to learn - so that the organization begins to understand which of the possible solutions work. The final solution may differ significantly from the one originally planned.

A diagram of the stages of decision making discovered by Mintzberg and his colleagues is shown in Fig. 5. Each square indicates a possible step in the decision sequence. All steps are placed within three main phases of the process: identification, development and selection.

Figure 5 – Model of the incremental decision process

Identification phase starts with awareness. Awareness means that one or more managers become aware that there is a problem and a decision needs to be made. Awareness is usually stimulated by the problem itself or by an opportunity to change something for the better. The problem exists when some elements of the external environment change or when there is a feeling that work within the organization is being performed below the proposed standards. At this stage, if necessary, the situation around the problem is determined, for which it is necessary to collect additional information. Problems that are not acute usually undergo more thorough diagnosis.

Development phase. When the identification phase is completed - the problem is defined, the development phase begins, in which it is formulated solution . The development of a management decision proceeds in one of two directions. First, search procedures can be used to find alternatives within the set of ready-made solutions available to the organization. Another direction of development is management decision design customer-oriented. The need for it appears when the problem is unusual and existing experience is therefore not helpful. Mintzberg found that in these cases, the core developers only have a vague idea of ​​the ideal solution. Only gradually, through trial and error, is it possible to formulate a solution that meets the interests of the client.

Selection phase. The selection phase occurs when a single solution is selected from several solutions. Everything is not always clear here. In the case of a client-oriented decision, an assessment is most often made and the option that seems most acceptable is selected. Evaluation and selection can be made in three ways. Form expressions of authoritative opinion is used when the final choice is up to one person, who makes this choice relying on his own experience. When conducting alternative analysis are assessed on a more systematic basis, for example, using control theory methods. Mintzberg, however, found that most decisions did not involve systematic analysis and evaluation of alternatives.

Negotiation form occurs when a group of people is involved in the process of choosing a management decision. Moreover, each of the negotiation participants has his own interest, and if it does not coincide with the interests of others, a conflict may arise. Discussion and negotiations continue until a coalition similar to the one described in the Carnegie model is formed.

When the organization has come to a final decision, it must be authorize . This means that the decision is approved at all levels. But such authorization is often a purely mechanical procedure, since all responsibility is usually assigned to those who identified the problem and made the decision. Some decisions are rejected because their results cannot be predicted.

“Decision making is not what you think about it” - G. Mintzberg.

The difference between the models he proposed is that we must abandon excessive formalization, the idea that the decision always precedes the action and is also localized in time.

Common features of the three Mintzberg models:

1. These are models for forming a solution idea.

2. Descriptive approach.

3. Recognition of three parallel existing models for the formation of solution ideas.

Garbage bin model

The garbage can model represents one of the newest and most interesting examples of the development of management decisions in organizations. It is not directly comparable to the other models described earlier because the garbage can model deals with a system or flow of multiple decisions within an organization, while the Carnegie and incremental models focus on making a single decision. The garbage can model helps us think about the organization as a whole and the decisions most frequently made by organizational managers.

Garbage bin model was developed to explain the pattern of management decision-making in organizations whose activities are highly uncertain.

Michael Gohen, James March and Johan Olsen, who pioneered the creation of this model, called conditions of extreme uncertainty by organized anarchy, which is an extremely organic organization. Organized anarchy does not rely on the normal vertical hierarchy of power and bureaucratic decision-making rules. It is characterized by three features.

1. Preferences are problematic. Goals, objectives, alternatives and solutions are poorly defined. Uncertainty is inherent in every step of the decision-making process.

2. Fuzzy, poorly understood technology. Cause-and-effect relationships within an organization are difficult to identify. Comprehensive information needed to reach a decision is not available.

3. Staff turnover. The organization experiences staff turnover. In addition, employees are too busy and pressed for time to focus on a single problem and solution. Participation in any decision-making turns out to be unstable and limited.

Organized anarchy is characteristic of organizations characterized by frequent change and a collegial, non-bureaucratic environment. No organization conforms to such extreme organic conditions all the time, although modern learning organizations and Internet-based companies can remain in a state of organized anarchy for quite a long time. Many organizations may from time to time be faced with situations where decisions must be made in complex and uncertain environments. The garbage can model is useful for understanding how such decisions are made.

Event streams. A unique feature of the garbage can model is that the management decision-making process does not appear as a sequence of steps that begin with a problem and end with a solution. In fact, problem identification and solution may not be related to each other. An idea can be proposed as a solution even in cases where there are no problems. Conversely, a problem may exist but not generate any solutions.

Decisions are the result of independent streams of events occurring within an organization. There are four types of event streams, relevant to the decision-making process in organizations.

1. Problems. Problems are moments of dissatisfaction with current activities and job performance. They represent the gap between the desired performance of a job and current performance. Problems are perceived and require attention. However, they are separated from solutions and alternatives. A problem may or may not lead to a decision. And vice versa,” a decision can be made, but the problem remains unresolved.

2. Potential solutions. A solution is someone's idea proposed for adoption. These kinds of ideas constitute the flow of alternative solutions passing through the organization. Ideas can be brought into the organization by both new employees and long-time employees. Participants in the process may simply get carried away by certain ideas and push them as logical solutions everywhere, regardless of the existing problems. Attachment to an idea may cause an employee to begin looking for a problem to which the idea can be applied and thus validated. The main point to take into account here is that solutions exist regardless of problems.

3. Participants in decision making. Decision participants are employees who come into the organization and pass through it. People get hired, change positions and quit. Participants differ significantly in their ideas, perceptions of the problem, experience, assessments and education. The problems and solutions perceived by one manager will be different from the problems and solutions perceived by another.

4. Favorable opportunities for choice. Opportunities for choice are typically occasions when an organization makes a decision. They appear when contracts are signed, people are fired, or approval is given for the release of new products. They also occur when the “right mix” of actors, solutions, and problems is observed. Thus, a manager who suddenly has a good idea may suddenly recognize a problem to which it can be applied, and thus may provide the organization with an opportunity to make a choice. When problems and proposed solutions coincide, this often leads to a resolution of the problem.

Taking into account the concept of four streams, the general pattern of management decision-making in an organization becomes random. Problems, proposed solutions, participants, and chosen solutions all flow through the organization. In a certain sense, the organization is a big wastebasket in which all these flows are mixed, as shown in Fig. 6.

Figure 6 – Illustration of independent streams of events in the garbage can model when making a management decision

If the problem, the solution, and the participant coincidentally connect at one point, then the problem can be resolved; but if the solution does not fit the problem, the problem may remain unsolved.

Thus, by observing the organization as a whole and viewing it in extreme uncertainty, one can see that there are problems that are not solved and there are solutions that do not work. Decisions cannot be ordered and are not the result of a step-by-step logical sequence. The situation may be so complex that the solutions, problems and results are completely independent of each other. When they collide, some problems are solved, but most remain unresolved.

Practice shows the following most common mistakes during the development process of SD:

▪ initially preference is given to one alternative, the others, regardless of their quality, encounter resistance;

▪ managers adhere to the chosen decision, even if the implementation process shows them to be wrong;

▪ risky decisions are mainly caused by a reluctance to collect additional information and the habit of purely intuitive methods;

▪ The greatest moral resistance is to urgent and precise decisions, especially if there are options that are satisfactory in their qualities.

Stages of the SD adoption process

Let's consider the list of stages when solving complex problems according to R.A. Fatkhutdinov. The process of adopting the SD according to Fatkhutdinov includes 16 stages.

1. Identifying a management problem or task.

Let us formulate methods for implementing this stage:

• management consulting;
• diagnostics by the enterprise (internal environment);
• forecasting;
• analysis of financial statements;
• customer satisfaction analysis;
• analysis of the external environment;
• methods of brainstorming, synectics and development scenarios;
• systems analysis;
• compilation of the Kepner-Tregoe matrix.

2. Preliminary goal setting.

Let us list the most common methods of goal setting: forecasting, strategic planning, business planning, building a tree of goals; expert methods; economic and mathematical modeling.

3. Gathering the necessary information(where to get):

• enterprise reports;
• enterprise information systems;
• marketing research; information about competitors;
• advertising, newspapers, magazines, abstract collections, patents;
• concluded contracts;
• analysis of complaints;
• using a selection of literature and newspaper articles from technical information bureau employees;
• ordered, purchasing information;
• data from ongoing research and development work carried out at the enterprise.

4.Analysis of information.

Let's consider methods of information analysis.

1. Contents and stages of the management decision-making process A management decision is the result of specific management activities of management. Organizational decision making is defined as a process of identifying and solving problems that consists of two distinct stages.

At the problem identification stage, information is collected about the state of the organization itself and the environment. This is necessary to assess its activities and diagnose the causes of possible risks. The problem solution stage occurs when alternative courses of action are considered and one of them is selected and implemented.

Development and decision-making is a creative process in the activities of managers at any level, including: developing and setting goals; studying the problem based on the information received; selection and justification of efficiency criteria (effectiveness) and possible consequences of the decision; discussion with specialists of various options for solving a problem (task); selection and formulation of the optimal solution; decision-making; specification of the solution for its implementers.

Organizational decisions vary in complexity and can be divided into: PROGRAMMED decisions - repeatable and well-developed; there are ready-made procedures for their implementation. They are well structured, there is necessary information regarding current activities for their adoption, alternatives are well known, and there is confidence in their success. These types of decisions include: - rules for replacing office equipment and machinery; - reimbursement of various expenses to personnel (transport, communications, etc.); - assessment of personnel qualifications, etc.

Nonprogrammed decisions are new and poorly developed solutions when there is no ready-made procedure for solving the problem. They are used when an organization is faced with a situation for the first time and may not know how to respond to it. There are no clear criteria for evaluating such decisions in an organization, and the alternatives are vague. To make this kind of decision, several alternatives are put forward, and one of them is “tailored” to the problem. Unprogrammed decisions are often made during strategic planning, under conditions of high uncertainty. An example is reorganization. Airline Industry (Delta). Unstable demand from passengers due to various reasons (threat of terrorist attacks, rising fuel prices, etc.).

Some management technologies consider a management decision as a process consisting of three stages: preparation of a decision; decision-making; implementation of the solution. At the stage of preparing a management decision, an economic analysis of the situation at the micro and macro level is carried out, including search, collection and processing of information, and problems that require solutions are identified and formed. At the decision-making stage, alternative solutions and courses of action are developed and evaluated on the basis of multivariate calculations; criteria for choosing the optimal solution are selected; choosing and making the best decision. At the stage of implementation of the decision, measures are taken to concretize the decision and bring it to the attention of the executors, the progress of its implementation is monitored, the necessary adjustments are made, and the result obtained from the implementation of the decision is assessed.

Decision-making methods aimed at achieving the intended goals can be different: 1) a method based on the manager’s intuition, which is due to his previously accumulated experience and amount of knowledge in a specific field of activity, which helps to choose and make the right decision; 2) a method based on the concept of “common sense”, when the manager, making decisions, justifies them with consistent evidence, the content of which is based on his accumulated practical experience; 3) a method based on a scientific and practical approach, involving the selection of optimal solutions based on the processing of large amounts of information, which helps to justify the decisions made.

2. The process of individual decision making By a rational decision we mean the choice of the best alternative from all possible ones; extracting maximum benefits at minimum costs. 2.1 Rational approach A rational decision is based on a scientific approach, without making allowances for the unreliable human factor. Making a rational decision is preceded by several stages: -diagnosis of the problem or task on which a decision needs to be made; -formulation of restrictions and decision-making criteria; -development and identification of alternatives; -evaluation of alternatives; - selection of the optimal alternative.

2.2 The bounded rationality model was first proposed by H. Simon. G. Simon's main efforts were aimed at fundamental research into organizational behavior and decision-making processes. He is rightfully considered one of the creators of the modern theory of management decisions (the theory of bounded rationality). The main results he obtained in this area are presented in books such as Organizations (with James March), published in 1958, as well as Administrative Behavior and The New Science of Management Decisions (1960).

The decision maker based on this model greatly simplifies the situation, taking into account only a small number of factors that he is able to cover. The reasons for adopting this approach are obstacles that do not allow managers to achieve a more effective result: limited material and time resources, very often an individual, when making a decision, does not have the much-needed relevant information, and besides, it is difficult to concentrate on one problem, putting it aside other matters.

Based on the research, G. Simon identified three main stages of the decision-making process: 1. Search for reasons explaining the need to make a decision. At this stage, the manager (DM), solving a particular problem, carries out so-called intelligence activities, i.e. thoroughly considers the situation, searches for symptoms of the problem and the causes of its occurrence. 2. Inventing, developing and analyzing possible areas of activity. At the second stage, the decision maker carries out “project” activities, i.e. preparation for decision-making, which includes the search for alternatives and analysis of their consequences, taking into account various factors influencing the outcome of the choice. 3. Choosing a specific course of action. At this stage, the choice of alternative is made directly, i.e. making a management decision. It is obvious that all these stages are logically ordered and interconnected. “Intelligence” activity precedes the preparation of a decision, which, in turn, precedes the choice of an alternative.

G. Simon points out that after choosing an alternative, the decision-making process does not end. As you know, any decision is only worth something if it is successfully implemented. Consequently, the activity of the organization as a whole, from the moment of its inception to its death, can be represented not as a set of discrete actions that implement some decisions, but as a continuous process of making some decision that served as the initial reason for the emergence of this organization.

3. Approaches to making organizational decisions 3.1 The approach based on management theory began to be used during World War 2, first by the military in their calculations, and then for purely peaceful purposes. Theory tools: linear programming, statistical methods, network planning and computer modeling. Management theory methods have been used to correctly solve a variety of problems: trial marketing of the first batch of a new product, oil drilling, radical transformation of the telecommunications services distribution system, etc. Disadvantage: does not take into account qualitative indicators in calculations (takes into account only quantitative ones) Things such as the reaction of competitors, consumer tastes, etc. are qualitative indicators.

3.2 The Carnegie Model The model of organizational decision making, known as the Carnegie Model, was formulated in the joint work of Richard Cyert, James March and Herbert Simon, and was so named because all of these authors were somehow connected with Carnegie Mellon University. Before this work, all economic research was based on the fact that companies make decisions as if all the relevant information is filtered through a funnel to the manager responsible for the decision in order for him to make his choice. A study carried out by the Carnegie group showed that decisions at the organizational level, as a rule, involve many managers, and that managers can make the final choice only in a COALITION.

A coalition refers to an alliance between several managers who share the same vision of the organization's goals and problem priorities. It is necessary to create coalitions of managers when making decisions for two reasons: First, it often happens that the goals of the organization are not defined, and the operational tasks of the departments are contradictory. When goals are unclear and inconsistent, managers cannot agree on problem priorities. Therefore, they must certainly get together and determine which problems should be solved first. The second reason for creating a coalition is that each of the managers, of course, strives to be rational, but, nevertheless, he cannot avoid the restrictions associated with the factors described above.

The formation of coalitions has several implications for organizational decision making. First, it should be understood that decisions are made primarily not to find the optimal solution to a problem, but to achieve satisfaction. When considering problems, the coalition will make a decision that is perceived as satisfactory by all members of the coalition. Secondly, managers are concerned with pressing problems and their quick solutions. Third, discussions and debates are especially important at the problem identification stage of the decision-making process. Until coalition members understand the problem, no action will be taken.

The Carnegie model indicates that reaching agreement through the creation of a coalition of managers is a fundamental part of the decision-making process in an organization. 1. Relevant for the highest level of management. 2. Discussions and disputes require a lot of time, so the procedures for finding solutions are usually simplified, and the chosen alternative is more likely to be the most satisfactory rather than the optimal solution to the problem. 3. When problems are predictable, the organization will rely on previously used procedures and standard operating programs. 4. Rules and procedures eliminate the need for coalition renewal and debate about organizational policies. In contrast, unexpected decisions require discussion and conflict resolution.

3.3 Model of incremental decision-making Henry Mintzberg and his colleagues from McGill University in Montreal looked at the problem of decision-making in organizations from various points of view. They analyzed twenty-five decisions made in organizations and traced all the nuances associated with making these decisions from beginning to end. Their study looked at each step in the decision-making sequence. This approach to the problem, called the incremental decision-making model, focuses less on the political and social factors described in the Carnegie model, but on the structural sequence of actions taken throughout the process from the moment the problem is identified to the moment it is solved.

The model of the incremental decision-making process assumes: - the main choice in the organization, leading to the main decision, usually consists of a series of “small” choices; - organizations go through several key points in the decision-making process and may encounter barriers along the way (decision interruptions); - the final solution may differ significantly from the one originally planned.

The identification phase begins with awareness: one or more managers become aware of a problem and must make a decision. Usually this process is stimulated by the problem itself or by emerging opportunities. The problem appears when elements of the external environment change. Diagnosis - additional information is collected to clarify the problem. Acute problems do not allow time for a comprehensive diagnosis, since the answer must be given immediately.

In the development phase, a solution is formulated that can solve the problem. The solution is being developed in one of two directions. First, search procedures can be used to find possible alternatives to solutions that the organization already has. Another direction of development is the design of a consumer-oriented solution. This is what one does when faced with a new problem when previous experience is no longer applicable (decision makers have a vague idea of ​​the ideal solution).

In the selection phase, the final solution is selected. Choice in the form of an authoritative statement is used when the final choice rests with one person, and whose decision is based on experience. During the analysis process, alternatives are evaluated more systematically, using the mathematical procedures of control theory. Negotiations are said to occur when several people make a decision.

3.4 The “garbage can” model The study of the characteristics of decision making in organizations led J. March and his colleagues to develop the well-known model of organizational choice in the form of a “garbage can” (or “can”), which describes the process of making management decisions under conditions of high uncertainty.

James March (J. March) is a famous modern American political scientist, researcher in the field of organization theory, organizational behavior and management; Professor of Management at Stanford University in California. Working with Herbert Simon and Richard Saert at the Carnegie Mellon Center of California, he made significant contributions to the understanding of decision-making processes in organizations and the development of the concept of bounded rationality.

In their opinion, decision-making processes in organizations vividly resemble a situation where people actively strive to acquire something, and then, having achieved what they want, lose interest in it (“throw it in the basket”). Similarly, employees of the organization fight for the right to participate in decision making, and then do not participate: - they demand information and then do not use it; -spend energy and time on making a decision, and then show only little interest in whether it will be implemented at all. Thus, the opportunity or need to make a decision can be seen as a wastebasket into which "various types of problems and decisions are dumped as they are produced."

Revealing the essence of this concept, J. March identifies three types of restrictions inherent to managers and influencing the process of making management decisions, cognitive, political and organizational restrictions. COGNITIVE LIMITATIONS. J. March refers to cognitive limitations as limitations of attention, limitations of mental abilities and disorder of preferences. A. Limitations of attention. As J. March notes, “a decision maker cannot pay attention to all problems at the same time and cannot be everywhere at the same time.” Therefore, managers and executives actually solve not everything, but only the most important problems of the organization. They focus their attention only on individual solutions depending on the situation and the requirements placed on them. In this regard, it is clear that more attention to one type of decision leads to insufficient attention required for making other decisions. Therefore, the correct distribution of attention and establishing the moment when and what tasks should be solved is of great importance in the activities of a manager.

B. Mental limitations. The human brain is busy solving many problems, but it can actually process only a limited amount of information and store only a small number of alternatives in memory. As subsequent studies have shown, these factors are associated with the limited capacity of a person’s short-term memory, which is actively used in the decision-making process. Therefore, any leader is forced to come to terms with severe limitations on his capabilities, which do not allow him to be rational. Indeed, as experience shows, all management decisions are made in conditions “when the manager knows much less than could, in principle, be known.”

B. Disordered preferences. People's preferences are changeable and unpredictable. People often change their attitude towards alternatives and goals of activity and sometimes even do not know what they want. At the same time, they may experience self-doubt, ignore their own preferences, fall under the influence of other people and follow other people's advice or traditions. In addition, people may formulate their preferences vaguely and vaguely. Finally, their preferences may conflict with the preferences of others. This is most acute in organizations where many important decisions are made collectively. Moreover, in modern organizations, most individual decisions are made in a collegial form, where the manager is forced to prepare and coordinate them with other people or groups who have their own goals and preferences. All of these factors allow us to talk about the “disorderliness” of the decision maker’s preferences and, therefore, the impossibility of making an objectively best decision.

POLITICAL RESTRICTIONS. The cognitive limitations of rationality are closely related to so-called political reasons. J. March showed that a company and any organization represents a “multi-purpose political coalition.” The “coalition,” as defined by J. March, includes managers, workers, engineers, shareholders, suppliers, consumers, lawyers, tax collectors and other government agents, as well as all the units (services, departments) that make up the organization. Each of the participants in such a “coalition” has his own ideas about what the company should be and what goals it should pursue. The wide variety and inconsistency of interests, goals, ideas and preferences of different participants lead to the fact that management decisions are made not in a rational way, but through negotiations, transactions and compromises.

ORGANIZATIONAL LIMITATIONS. J. March identifies this type of restrictions in connection with a phenomenon in the life of organizations, which he called organizational anarchy. Organizational anarchy is a social system consisting of relatively autonomous groups between which there are weak and unstable ties. In fact, it represents an organization with an undefined and vague structure that is not used to manage this organization. Therefore, management in “organizational anarchies” is not a regular process, but rather a “problematic initiative.” J. March notes that the properties of organizational anarchy are inherent in many organizations, but they are especially pronounced in cases where the organizations belong to a public form of ownership or are educational institutions, such as universities.

Organizational anarchy has “three main properties”: 1. The organization has unclear goals and unclear preferences and does not formulate them in advance, but directly in the process of activity. Of course, the lack of clearly defined goals serves as a strong limitation for making optimal decisions. 2. The organization has an “unclear technology” of activity and works not through a clear understanding of what it is doing, but through trial and error. Therefore, many phenomena and processes occurring within an organization are often not understood by its employees. 3. The organization has a variable composition of participants; the people involved in its work are constantly changing.

Decision-making models must contain the basic elements of the process itself, such as the goal, alternatives, state of the external environment, and the time aspect. The classification of decision-making models is based on the manifestation of the above-mentioned elements of the model. A clear way to structure and represent decision problems under uncertain expectations is the basic decision theory model. The essential elements of this model are results matrix(Fig. 4) and objective function.

Rice. 4. Results matrix

In the results matrix, the subject presents the evaluated action alternatives (A1, A2, ..., AA), and the predicate presents the states of the external environment (S1, S2, ..., SS), which the decision maker considers as possible, and for each of them indicators of the probability of the occurrence of this state are put into correspondence (w(S1), ..., w(Ss)). The elements of the matrix are the results, and Eas (a = 1, 2, ..., A; s = 1, 2, ..., S) means the result that will be achieved if alternative Aa is chosen and the state of the external environment Ss .

The decision-making model should more or less accurately represent the following elements: action alternatives (AA); results (Eas); state of the external environment (taking into account the probability of its impact on the results of the decision) (SS, w(Ss)); decision maker's target function (Z,F).

Organizational activities aimed at managing the decision-making process are carried out by influencing certain determinants of the decision. Distinguish primary and secondary determinants (factors) of decision making. When compiling a list of primary determinants, they are based directly on the elements of the decision-making model. The primary determinants (factors) of the solution are presented in Fig. 5.

Rice. 5. Primary determinants of the decision

The behavior of a decision maker in a choice situation depends on: the type of model (EM); on the number of alternatives covered by the model (AA); from target indicators (values) according to which alternatives are evaluated (Eas); from the probability indicators set in the model in accordance with the occurrence of certain states of the external environment (w(SS)); from its objective function (ZF); from the decision maker's forecasting function (PF); from the information structure of the decision maker (IS). The decision maker's forecasting function (PF) characterizes the probabilities that he puts in correspondence with the states of the external environment under alternative information structures (IS); it shows how information is transformed into a (subjective) probability assessment. The determinant of the decision “probabilistic assessment of the occurrence of environmental conditions” (w(SS)) is in turn determined by the determinants “information structure” (IS) and “forecasting function” (PF).

Secondary determinants solutions are presented in Fig. 6. The first group of secondary determinants characterizes the (subjective) qualities of the decision maker, the second describes the objective limitations of the external environment within which the decision maker operates. An individual's motivation for a certain behavior is determined by:  the structure of his needs; his expectations about the possibility of such behavior to contribute to the satisfaction of his needs. Qualifications are characterized by the secondary determinants of “knowledge”, “cognitive abilities”, “social skills” and “physical skills”. Knowledge is especially clearly characterized by knowledge of facts, theories (relations like “if..., then...”) and decision-making models. Cognitive abilities are characterized by creativity and the ability to collect, accumulate and logically process information. Social skills usually mean the ability to express one’s feelings, motivate and lead employees, participate in cooperation, and gain sympathy. Physical skills are characterized by the ability to work with objects and means of labor. Also, depending on whether the fundamental attitude towards the future is optimistic or pessimistic, the probabilistic assessments of the consequences of the alternatives being evaluated, which the decision maker makes on the basis of the information available to him, will differ. In addition, primary determinants have a dependence on secondary ones

Rice. 6. Secondary determinants of decisions

Types of Decision Models

1. Regulatory the decision-making model is based on economic assumptions: 1) the decision-maker strives to achieve known and agreed upon goals, problems are defined and precisely formulated; 2) The decision maker strives for certainty, obtaining all the necessary information, all permissible options and possible consequences are calculated; 3) the criteria for evaluating alternatives are known, the decision maker selects the option that has the greatest economic benefit for the organization; 4) The decision maker acts rationally and logically approaches the assessment of options, setting priorities, his choice best suits the achievement of the organization’s goals. The normative model is most adequate programmed decisions, situations of certainty or risk, when all necessary information is available to allow the probability of outcomes to be calculated.

2. Descriptive(descriptive) models are based on empirical observations, they contain a small number of elements and explain economic relationships as they exist in the real world, but in a simplified form. Descriptive model describes the actual process of decision-making in difficult situations (unprogrammed decisions and situations of uncertainty and uncertainty), when managers, even if they wanted to, cannot make an economically rational decision. The assumptions on which the descriptive model is based are:

1) the goals of the decision, as a rule, are not clear and are in conflict with each other. Managers are often unaware of the problems and opportunities that exist in the organization;

2) rational procedures are not always used, and if they are used, they are limited to a simplified view of the problem that does not reflect the complexity of real events;

3) the boundaries of managers’ search for various options are determined by human, information and resource limitations;

4) most managers are content with acceptable rather than maximizing decisions. This is partly due to the limited information available to them, partly due to the vagueness of the maximization criteria.

The descriptive model is descriptive in nature, reflects the real process of making management decisions in complex situations, and does not dictate how they should be made in accordance with the theoretical ideal; it takes into account human and other limitations that influence the rationality of choice. This model corresponds to the theory of bounded rationality put forward by G.A. Simon. It can also describe irrational decisions - decisions made contrary to common sense, intuitively, unexpectedly.

3. Political The decision-making model (Carnegie model) was formulated by G.A. Simon, J. March, R. Kayert, whose scientific works prove that in organizations managers can make their choice of strategy in coalitions– informal alliances between several managers who have the same vision of the organization’s goals and problem priorities. This model is used, as a rule, to make non-programmed decisions in conditions of uncertainty, limited information and lack of consensus about what goal to pursue or what line of behavior to choose. Coalition building facilitates the development of solutions that are supported by all stakeholders. When considering problems, the coalition will accept a solution that is perceived as satisfactory, and not as the maximum level of goal achievement, since managers are looking for a solution that can quickly neutralize the problem. The Carnegie model is closest to the real conditions in which managers and all other decision makers work. Goals and alternatives are developed through debate. Decisions are the result of discussions and “negotiations” between members of coalitions. The descriptive model and the Carnegie model, as well as intuition, are more adequate to a turbulent external environment, when decisions are made quickly, under conditions of high uncertainty.

4. Model of incremental decision making process proposed by G. Mintzberg. This model can be used to make unprogrammed decisions and the main attention in solving organizational problems is focused on structural sequence of actions undertaken throughout the decision-making process. The main decision consists of a series of “small” choices, because the organization goes through several key points decision-making process, where it is possible to encounter “barriers”, which G. Mintzberg called interruptions in the decision process. Interrupting the decision-making process means that the organization must return to previous decisions and repeat the cycle (stages of the decision-making process), trying to offer some new courses of action (alternatives). These cycles, or “loops”, according to G. Mintzberg, of the process of finding a solution (alternatives, strategies, courses of action) are one of the ways to train the organization’s personnel, to find an understanding of what alternatives and solutions need to be implemented.

5. Garbage bin model was developed by Michael Cohen, J. March, J. Olsen with the aim of explaining the pattern of decision-making under conditions of extreme uncertainty, which the above-mentioned authors defined as “organized anarchy”. "Organized anarchy" does not rely on the normal vertical hierarchy and rational bureaucracy to make management decisions. It is characterized by three features: problematic preferences; unclear and poorly understood decision-making technology; staff turnover. “Organized anarchy” is characteristic of organizations characterized by frequent change and a collegial, non-bureaucratic environment. A unique feature of the garbage can model is that the decisions in this model are the result of independent event streams, occurring within the organization, relevant to the decision-making process: 1) problem flow, 2) potential solution flows, 3) decision-making participants and 4) favorable opportunities for choice. Taking into account the concept of four streams, the overall decision-making pattern in an organization becomes random character. Problems, proposed solutions, participants, and chosen solutions all flow through the organization because in a sense, the organization is a big wastebasket in which all these flows are mixed. If the problem, the solution, and the decision maker are accidentally connected at one point, then the problem can be resolved; but if the solution does not fit the given problem, then the problem may remain unsolved.

Consequences of using the garbage can model: 1) solutions can be proposed even when the problem has not been identified and does not even exist; 2) choices can be made without solving problems; 3) problems may remain unresolved in the organization; 4) but some problems are being solved. During computer modeling under the conditions of the “garbage box” model, the most important problems were often solved, because it became possible to connect problems with corresponding decisions and participants in such a way that a successful choice of management decisions was made.

Henry Mintzberg and his colleagues from McGill University in Montreal looked at the problem of decision-making in organizations from various points of view. They identified twenty-five decisions made in organizations and traced all the nuances associated with making these decisions from beginning to end. This approach to a problem, called the incremental decision-making model, focuses less on the political and social factors described in the Carnegie model and more on the structural sequence of actions taken from the moment the problem is identified to the moment it is solved. Organizations go through several key points in the decision-making process and may encounter barriers along the way. G. Mintzberg called these barriers decision interruptions. An interruption may mean that the organization must return to a previous decision and repeat the cycle, while trying something new. These loops, or cycles, of the solution process are one way the organization learns—so the organization begins to understand which possible solutions work. The final solution may differ significantly from the one originally planned.

Each square of the decision-making stages diagram discovered by G. Mintzberg and his colleagues indicates a possible step in the decision-making sequence. All steps are placed within three main phases of the process: identification, development and selection.

The identification phase begins with awareness. Awareness means that one or more managers become aware that there is a problem and a decision needs to be made. The second step is diagnosis. At this stage, if necessary, the situation around the problem is determined, for which it is necessary to collect additional information. Diagnosis can be systematic or informal - it all depends on the severity of the problem. Acute problems do not allow time for a comprehensive diagnosis; the reaction must follow immediately. Problems that are less acute are usually more thoroughly diagnosed. When the identification phase is completed and the problem is defined, the development phase begins, in which the solution is formulated.

The development of a management decision proceeds in one of two directions. First, search procedures can be used to find alternatives within the organization's set of ready-made solutions. Another direction of development is the design of a client-oriented management solution. The need for it appears when the problem is unusual and existing experience is therefore not helpful.

G. Mintzberg found that in these cases the main developers only have a vague idea of ​​​​the ideal solution. Only gradually, through trial and error, is it possible to formulate a solution that meets the interests of the client. Developing a solution is an incremental procedure of groping and building a solution, “brick by brick”

The selection phase occurs when a single solution is selected from several solutions. When conducting an analysis, alternatives are evaluated on a more systematic basis, for example, using methods from control theory.

When the organization has come to a final decision, it must be sanctioned. This means that the decision is approved at all levels. But such authorization is often a purely mechanical procedure, since all responsibility is usually assigned to those who identified the problem and made the decision. Some decisions are rejected because their results cannot be predicted.