Programmed and Nonprogrammed Decisions - pptx2

PROGRAMMED AND
NONPROGRAMMED
DECISIONS
• What is the difference between programmed and
nonprogrammed decisions?
Programmed Decisions
Programmed decisions are those that are repeated over time and for which an existing
set of rules can be developed to guide the process. These decisions might simple, or they
could be fairly complex, but the criteria that go into making the decision are all known or
can at least be estimated with a reasonable degree of accuracy. For example, deciding
how many raw materials to order should be a programmed decision based on anticipated
production, existing stock, and anticipated length of time for the delivery of the final
product. As another example, consider a retail store manager developing the weekly
work schedule for part-time employees. The manager must consider how busy the store
is likely to be, taking into account seasonal fluctuations in business. (such as school).
Establishing the schedule might be complex, but it is still a programmed decision: it is
made on a regular basis based on well-understood criteria, so structure can be applied to
the process. For programmed decisions, managers often develop heuristics, or mental
shortcuts, to help reach a decision.
What is heuristics, and when they are helpful?
Heuristics can be thought of as general cognitive frameworks humans rely on regularly to quickly
reach a solution. For example, the retail store manager may not know how busy the store
will be the week of a big sale, but might routinely increase staff by 30% every time there
is a big sale (because this has been fairly effective in the past). Heuristics are efficient—
they save time for the decision maker by generating an adequate solution quickly.
Heuristics don’t necessarily yield the optimal solution—deeper cognitive processing may
be required for that. However, they generally yield a good solution. Heuristics are often
used for programmed decisions, because experience in making the decision over and
over helps the decision maker know what to expect and how to react. Programmed
decision-making can also be taught fairly easily to another person. The rules and criteria,
and how they relate to outcomes, can be clearly laid out so that a good decision can be
reached by the new decision maker. Programmed decisions are also sometimes referred
to as routine or low-involvement decisions because they don’t require in-depth mental
processing to reach a decision.
Nonprogrammed Decisions
Nonprogrammed decisions are novel, unstructured decisions that are generally based on
criteria that are not well-defined. With nonprogrammed decisions, information is more
likely to be ambiguous or incomplete, and the decision maker may need to exercise some
thoughtful judgment and creative thinking to reach a good solution. These are also
sometimes referred to as nonroutine decisions or as high-involvement decisions because
they require greater involvement and thought on the part of the decision maker. For
example, consider a manager trying to decide whether or not to adopt a new technology.
There will always be unknowns in situations of this nature. Will the new technology
really be better than the existing technology? Will it become widely accepted over time,
or will some other technology become the standard? The best the manager can do in this
situation is to gather as much relevant information as possible and make an educated
guess as to whether the new technology will be worthwhile. Clearly, nonprogrammed
decisions present the greater challenge.
Similarities between programed and non-programed in The Decision-Making Process
1. Recognize that a decision needs to be made.

2. Consider engaging others in brainstorming to generate many ideas.
3. Conduct research; engage in evidence-based decision making.
4. Select the best option.
5. Implement the selected alternative.
6. Evaluate its effectiveness.
BARRIERS TO EFFECTIVE
DECISION-MAKING
• Bounded Rationality
Bounded rationality is the idea that for complex issues we cannot be

completely rational because we cannot fully grasp all the possible
alternatives, nor can we understand all the implications of every
possible alternative. Our brains have limitations in terms of the
amount of information they can process. Similarly, as was alluded
to earlier in the chapter, even when managers have the cognitive
ability to process all the relevant information, they often must make
decisions without first having time to collect all the relevant data.
• Escalation of Commitment
Escalation of commitment is the tendency of decision makers to

remain committed to poor decision, even when doing so leads to
increasingly negative outcomes. Once we commit to a decision, we
may find it difficult to reevaluate that decision rationally. It can
seem easier to “stay the course” than to admit (or to recognize) that
a decision was poor. It’s important to acknowledge that not all
decisions are going to be good ones, in spite of our best efforts.
Effective managers recognize that progress down the wrong path
isn’t really progress, and they are willing to reevaluate decisions
and change direction when appropriate.
• Time Constraints
Managers often face time constraints that can make effective

decision-making a challenge. When there is little time available to
collect information and to rationally process it, we are much less
likely to make a good nonprogrammed decision. Time pressures can
cause us to rely on heuristics rather than engage in deep processing.
While heuristics save time, however, they don’t necessarily lead to
the best possible solution. The best managers are constantly
assessing the risks associated with acting too quickly against those
associated with not acting quickly enough.
• Uncertainty
In addition, managers frequently make decisions under conditions
of uncertainty—they cannot know the outcome of each alternative
until they’ve actually chosen that alternative. Consider, for
example, a manager who is trying to decide between one of two
possible marketing campaigns. The first is more conservative but is
consistent with what the organization has done in the past. The
second is more modern and edgier, and might bring much better
results . . . or it might be a spectacular failure. The manager making
the decision will ultimately have to choose one campaign and see
what happens, without ever knowing what the results would have
been with the alternate campaign. That uncertainty can make it
difficult for some managers to make decisions, because committing
to one option means forgoing other options.
• Personal Biases
Our decision-making is also limited by our own biases. We tend to

be more comfortable with ideas, concepts, things, and people that
are familiar to us or similar to us. We tend to be less comfortable
with that which is unfamiliar, new, and different. One of the most
common biases that we have, as humans, is the tendency to like
other people who we think are similar to us (because we like
ourselves).7 While these similarities can be observable (based on
demographic characteristics such as race, gender, and age), they can
also be a result of shared experiences (such as attending the same
university) or shared interests (such as being in a book club
together).
• Personal Biases
This “similar to me” bias and preference for the familiar can lead to
a variety of problems for managers: hiring less-qualified applicants
because they are similar to the manager in some way, paying more
attention to some employees’ opinions and ignoring or discounting
others, choosing a familiar technology over a new one that is
superior, sticking with a supplier that is known over one that has
better quality, and so on. It can be incredibly difficult to overcome
our biases because of the way our brains work. The brain excels at
organizing information into categories, and it doesn’t like to expend
the effort to re-arrange once the categories are established.
• Personal Biases
As a result, we tend to pay more attention to information that

confirms our existing beliefs and less attention to information that is
contrary to our beliefs, a shortcoming that is referred to as
confirmation bias. In fact, we don’t like our existing beliefs to be
challenged. Such challenges feel like a threat, which tends to push
our brains towards the reactive system and prevent us from being
able to logically process the new information via the reflective
system. It is hard to change people’s minds about something if they
are already confident in their convictions.
• Personal Biases
So, for example, when a manager hires a new employee who she
really likes and is convinced is going to be excellent, she will tend
to pay attention to examples of excellent performance and ignore
examples of poor performance (or attribute those events to things
outside the employee’s control). The manager will also tend to trust
that employee and therefore accept their explanations for poor
performance without verifying the truth or accuracy of those
statements. The opposite is also true; if we dislike someone, we will
pay attention to their negatives and ignore or discount their
positives.
• Personal Biases
We are less likely to trust them or believe what they say at face
value. This is why politics tend to become very polarized and
antagonistic within a two-party system. It can be very difficult to
have accurate perceptions of those we like and those we dislike. The
effective manager will try to evaluate situations from multiple
perspectives and gather multiple opinions to offset this bias when
making decisions.
• Conflict
Finally, effective decision-making can be difficult because of

conflict. Most individuals dislike conflict and will avoid it when
possible. However, the best decision might be one that is going to
involve some conflict. Consider a manager who has a subordinate
who is often late to work, causing others to have to step away from
their responsibilities in order to cover for the late employee. The
manager needs to have a conversation with that employee to correct
the behavior, but the employee is not going to like the conversation
and may react in a negative way. Both of them are going to be
uncomfortable. The situation is likely to involve conflict, which
most people find stressful.
• Conflict
Yet, the correct decision is still to have the conversation even if (or
especially if) the employee otherwise is an asset to the department.
If the bad behavior is not corrected, it will continue, which is going
to cause more problems in the workplace in the long run. Other
employees may recognize that this behavior is allowed, and they
may also start coming to work late or engaging in other negative
behaviors. Eventually, some employees may become sufficiently
frustrated that they look for another place to work. . It’s worth
noting that in this situation, the best employees will find new jobs
the most quickly.
• Conflict
It’s important for managers to recognize that while conflict can be

uncomfortable (especially in the short-term), there are times when it
is necessary for the group, department, or organization to function
effectively in the long run.
• When is conflict beneficial, and when is it harmful?
Process conflict, conflict about the best way to do something, can

actually lead to improved performance, as individuals explore
various options together in order to identify superior solutions.
Relationship conflict is conflict between individuals that is more

personal and involves attacks on a person rather than an idea. This
kind of conflict is generally harmful and should be quelled when
possible. The harm from relationship conflict arises at least in part
because feeling personally attacked will cause an individual to
revert to the reactive system of the brain.

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PROGRAMMED AND

1. Recognize that a decision needs to be made.

Bounded rationality is the idea that for complex issues we cannot be

Escalation of commitment is the tendency of decision makers to

Managers often face time constraints that can make effective

Our decision-making is also limited by our own biases. We tend to

As a result, we tend to pay more attention to information that

Finally, effective decision-making can be difficult because of

It’s important for managers to recognize that while conflict can be

Process conflict, conflict about the best way to do something, can

Relationship conflict is conflict between individuals that is more

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