© 2009 Cengage Learning. All rights reserved. Chapter 10 Decision Making by Individuals & Groups...

© 2009 Cengage Learning. All rights reserved.

Chapter 10 Decision Making by Individuals &

Groups

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1 Identify the steps in the decision-making process.

2 Describe various models of decision making.

3 Discuss the individual influences that affect decision making.

4 Explain how groups make decisions.

5 Describe the role culture plays in decision making.

6 Explain how organizations can improve the quality of decisions through participation.


Learning Outcome

Identify the steps in the decision-making process.

1


Types of Decisions

Programmed Decision

a simple, routine matter for which a manager has an established decision rule

Nonprogrammed Decision

a new, complex decision that requires a creative solution

Recognize the problem and the need for a decision

Gather and evaluate dataand diagnose the situation

Identify the objective ofthe decision

List and evaluatealternatives

Deci

sion-M

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Select the bestcourse of action

Gather feedback

Implementthe decision

Follow up

Deci

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Learning Outcome

Describe various models of decision making.

2


Rationality

a logical, step-by-step approach to decision

making, with a thorough analysis of

alternatives and their consequences


Models of Decision Making

Effective Decision

a timely decision that meets a desired objective and is acceptable to those individuals affected by it

Bounded Rationality Model

Rational Model

1. The outcome will be completely rational

2. The decision maker uses a consistent system of preferences to choose the best alternative

3. The decision maker is aware of all alternatives

4. The decision maker can calculate the probability of success for each alternative

Rational Model


Bounded Rationality

a theory that suggests that there are

limits upon how rational a decision

maker can actually be

1. Managers suggest the first satisfactory alternative

Satisfice – to select the first alternative that is “goodenough,” because the costs in time and effort are too great to optimize


1. Managers suggest the first satisfactory alternative

2. Managers recognize that their conception of the world is simple


3. Managers are comfortable making decisions without determining all the alternatives

4. Managers make decisions by rules of thumb or heuristics

Heuristics – shortcuts in decisionmaking that save mental activity


Garbage Can Model –

a theory that contends that decisions in organizations are random and unsystematic

Problems

Participants

From M.D. Cohen, J.G. March, and J.P. Olsen in Administrative Science Quarterly 17 (March 1972) 1.25. Reprinted by permission of the Administrative Science Quarterly

Garbage Can Model

Solutions

Choiceopportunities

Beyond the Book:

Z Problem-Solving Model

Look at the facts

and details

Can it beanalyzed

objectively?

What alternativesdo the facts

suggest?

What impactwill it have on

those involved?

Sensing Intuition

Thinking Feeling

Figure from Type Talk at Work by Otto Kroeger and Janet M. Thuesen. Copyright © 1992 by Otto Kroegerand Janet M. Thuesen. Used by permission of Dell Publishing, a division of Random House. Inc.


Escalation of Commitment

The tendency to continue to commit

resources to a failing course of action


Escalation of Commitment

• Why it occurs– humans dislike inconsistency– optimism– control– sunk costs

• How to deal with it– split responsibility for decisions– provide individuals with a graceful exit– have groups make the initial decision


Learning Outcome

Discuss the individual influences that affect decision making.

3


Cognitive Style

an individual’s preference for gathering

information and evaluating alternatives


Jung’s Theory

Jungian theory offers a way of

understanding and appreciating

differences among individuals.


Risk and the Manager

[Risk takers]– accept greater potential for loss– tolerate greater uncertainty– more likely to make risky decisions

Evidence: Successful Managers Take Risks


Risk Aversion

the tendency to choose options that entail

fewer risks and less uncertainty

Jung’s Cognitive Style

Style

Sensing/thinking

Sensing/feeling

Intuiting/thinking

Intuiting/feeling

Ideal Organization

Facts/ Impersonal Analysis

Facts & Org. Relationships

Broad Issues/ Impersonal & Ideal

Serve Humankind/General Values

ST

SF

NT

NF


Two Brains, Two Cognitive Styles

Left Hemisphere Right Hemisphere

VerbalSequential, temporal,

digitalLogical, analytic

RationalWestern thought

Nonverbal, visuospatialSimultaneous, spatial,

analogicalGestalt, synthetic

IntuitiveEastern thought

Ideal = “brain-lateralized” making use ofeither or both sides, depending on situation

From Left Brain, Right Brain by Springer and Deutsch © 1989, 1985, 1981 by Sally Springer and Georg Deutsch. Used with permission by W.H. Freeman and Company


Influences onDecision Making

Intuition – fast, positive force in decision making utilized at a level below consciousness, involves learned patterns of information

Creativity – a process influenced by individual and organizational factors that results in the production of novel and useful ideas, products, or both


GPS devices and freely-available online maps are forcing the mapping industry to change how it does business.

Map companies are incorporating digital services into their business model, capitalizing on the benefits of paper maps, expanding into related fields like astronomy and planetary mapping, or simply scaling back their businesses.

Beyond the Book:Mapping Changes in the Industry

Faced with a challenge, map industry professionals are charting a variety of courses--which decisions will succeed?

Four Stages of Creative Process

Verification

thinking,

sharing,

testing the

decision

Illumination

insight into

solving

a problem

Incubation

reflective,

often

unconscious

thought

Preparation experience/opportunity

to build knowledge

base


Influences on Creativity

• Individual examples– Cognitive Processes

• Divergent Thinking• Associational Abilities• Unconscious

Processes– Personality Factors

• breadth of interests• high energy• self-confidence

• Organizational examples– Flexible organization

structure– Participative decision

making– Quality, supportive

relationships with supervisors


CREATIVITY

1324 because it is expected of you

in your job

because you want to be creative

You discover problems

You respond to problems

Expected creativity

Responsive creativity

Proactive creativity

Contributory creativity

4 T

YP

ES


Subjects in a study were assigned a task requiring creative solutions and allowed varying amounts of sleep throughout the task.

The group that was introduced to the problem, “slept on it,” and returned to the task were twice as likely to discover the creative solution than other groups.

Conclusion: a full night’s sleep facilitates creative problem solving!

Beyond the Book:Eight Hours of Power


Learning Outcome

Explain how groups make decisions.

4


Group Decision Making

• Role of synergy – a positive force that occurs in groups when group members stimulate new solutions to problems through the process of mutual influence and encouragement in the group

• Role of social decision schemes – simple rules used to determine final group decisions

(prediction 80% correct) Majority Wins

Truth Wins

Two-thirds Majority

First-shift

Group Decision Making

1. more knowledge through pooling of group resources

2. increased acceptance and commitment due to voice in decisions

3. greater understanding due to involvement in decision stages

Advantages

1. pressure in groups to conform2. domination by one forceful member

or dominant clique3. amount of time required, because

group is slower than individual to make a decision

Disadvantages


Group Phenomenon

Groupthink – a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressures

Group Polarization – the tendency for group discussion to produce shifts toward more extreme attitudes among members


Preventing Groupthink

• Ask each group member to act as critical evaluator

• Have the leader avoid stating his opinion prior to the group decision

• Create several groups to work simultaneously

• Appoint a devil’s advocate• Evaluate the competition carefully• After consensus, encourage rethinking

the position

From Janis, Irving L., Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company.

Self-Managed Teams

DialecticalInquiry

Brainstorming

Devil’s Advocacy

Delphi Technique

Nominal Group Technique

Quality Circles and Quality Teams

GroupDecision

Techniques


Learning Outcome

Describe the role culture plays in decision making.

5


Hofstede’s Dimensions• Styles of decision

making vary by culture

• Many of Hofstede’s

dimensions have implication for

how people deploy the decision-

making process


Technological Aids to Decision Making

Expert Systems – a programmed decision tool set up using decision rules

Decision Support Systems – computer and communication systems that process incoming data and synthesize pertinent information for managers to use

Group Decision Support Systems – systems that use computer software and communication facilities to support group decision-making processes in either face-to-face meetings or dispersed meetings

Beyond the Book:


Decision Making in the Virtual Workplace

Desktop Videoconferencing

Systems

Internet/IntranetSystems

Tools for

Virtual Teams

Group DecisionSupport Systems

Bey

ond

the

Boo

k


Learning Outcome

Explain how organizations can improve the quality of decisions through participation.

6


Participative Decision Making

• Organizational Foundations– Participative, supportive organizational culture– Team-oriented work design

• Individual Prerequisites – Capability to become psychologically involved in participative

activities– Motivation to act autonomously– Capacity to see the relevance of participation for one’s own well-

being

Individuals who are affected by decisions influence the making of those decisions

:

Participative Decision Making


Beyond the Book:Ethics Check

• Is it legal? – Does it violate law– Does it violate

company policy• Is it balanced?

– Is it fair to all– Does it promote win–win relationships

• How will it make me feel about myself


Your top salesperson Jake was picked up by the police for a DUI on New Year’s Eve and had his car impounded. You later discover Jake didn’t tell you the whole story: his BAC was .20 (over twice the legal limit) and he’s had two other DUIs. Jake can’t make sales appointments until he bails his car out.

How do you decide whether or not to keep Jake on? Is Jake’s performance as number-one salesperson worth the potential risks of continued employment?

Beyond the Book:Decision Making: Your Turn

© 2009 Cengage Learning. All rights reserved. Chapter 10 Decision Making by Individuals & Groups...

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