Commerce 2BA3: Communication and Individual

Decision MakingWeek 5 & 6

Dr. T. McAteerDeGroote School of Business

McMaster University

Communication

• Opening Exercise• Basic Model of Communication

What is communication?

• The process by which information is exchanged between a sender and a receiver

• Effective communication is when the right people receive the right information in a timely manner

Organizational Communication

• Chain of Command– Lines of authority and formal reporting relationships

– Upward, downward, horizontal communication

• Deficiencies of the Chain of Command– Failure to consider informal communication– Filtering (messages are watered down)– Slowness

Barriers to Effective Manager-Employee Communication

• Conflicting role demands– Manager must attend to both task and socio-

emotional functions

• The mum effect – The tendency to avoid communicating

unfavourable news to others

The Grapevine• An organization’s informal communication

network

• Pros– Can keep employees informed– Provide a test of employee reactions to proposed

changes– Adds a little interest and diversion to work setting

• Cons– Pipeline for rumours

Non-verbal Language

• The transmission of messages by some medium other than speech or writing

• Body language• Office Décor and Arrangement• Clothing

Gender Differences in Communication

• Getting credit• Confidence and boasting• Asking questions• Apologies• Feedback• Compliments• Indirectness

Information Richness

INFORMATION MEDIUM

INFORMATION RICHNESS

Face to face Highest

Telephone High

Written, personal Moderate

Written, formal Low

Numeric format(computer output)

lowest

How to communicate effectively…

• Take the time• Be accepting of the other person• Do not confuse the person with the

problem• Say what you feel• Listen actively• Give timely and specific feedback

Discussion Question

• What could organizations do to improve communication???

Discussion Question• 360 Degree Feedback

• Employee surveys and feedback

• Suggestion systems

• Telephone hotlines, TV Networks and Intranets

• Management Training

Individual Decision Making

Decision Making

• Opening Exercise

• The process of developing a commitment to some courses of action

The Rational Decision Making Process

• Identify problem• Search for relevant information• Develop alternative solutions to the

problem• Evaluate alternative solutions• Choose best solution• Implement chosen solution• Monitor and evaluate chosen solution

Perfect vs. Bounded Rationality

• Perfect rationality – A decision strategy that is completely

informed, perfectly logical, and oriented towards economic gain

• Bounded rationality– A decision strategy that relies on limited

information and that reflects time constraints and political considerations

Framing & Biases

• Framing – Aspects of the presentation of information

about a problem that are assumed by decision makers

• Cognitive Biases– Tendencies to acquire and process

information in an error-prone way

Bounded rationality can lead to….

• Problems with problem identification– Perceptual defence (defend against

unpleasant perceptions)– Problems defined in terms of the solution– Problems defined in terms of symptoms

Problems with information search….

• Too little information– Confirmation bias

• Too much information– Information overload

Problems with evaluation of alternatives…..

• Anchoring– The inadequate adjustment of subsequent

estimates from an initial estimate that serves as an anchor

• Satisficing– Establishing an adequate level of acceptability

for a solution to a problem and then screening solutions until one that exceeds this level is found

Problems with solution evaluation….

• Escalation of Commitment– The tendency to invest additional resources in

an apparently failing course of action

– Examples???