View
218
Download
2
Category
Preview:
Citation preview
Communication in OrganizationsDecision Theory
1 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Communication in Organizations
Decision Theory Anna Lazor / Bettina Ferring / Christoph
Münch
20. Mai 2003
Communication in OrganizationsDecision Theory
2 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Structure
Introduction Making decisions step by step The bounded rationality model Decision making under uncertainty Advantages and Disadvantages of Group Decision
Making Individual vs. Group Decision Making Ethical Decision Making The Role of Culture in Shaping Decisions
Communication in OrganizationsDecision Theory
3 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
What is a decision?
Communication in OrganizationsDecision Theory
4 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Historical facts
“Sapere aude!“ motto of the enlightenment
Francisco Goya 1797-98: “the sleep of reason produces monsters“
The individual appears, natural freedom to think for yourself
Communication in OrganizationsDecision Theory
5 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Freedom to think = high responsibility The difficulty in life is the choice “It could be argued that the essence of living is free choice - the
process of making decisions. To be deprived of choices is to lose all meaning“ (Driver 1979 p. 59)
Good decision-making brings about a better life, it gives you
some control over your life. A good decision is never an accident; it is always the result of
high intention, sincere effort, intelligent direction and skillful execution; it represents the wise choice of many alternatives.
Communication in OrganizationsDecision Theory
6 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Programmed and nonprogrammed decisionsThere are two general types of decision :
1. Programmed decision: structured, repeatedly tested, well defined, clear set
of options from which a choice can be made Example: Replacement of an office copy machine
2. Nonprogrammed decision: unstructured, unique, new, require a special
treatment, unsharply defined A single solution is custom-tailored to the problem!
Communication in OrganizationsDecision Theory
7 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Making decisions step by stepCreating a model which can
describe different stages in decision making
Two major stages: 1.: problem identification 2.: problem solution
Reflection before action!As a Chinese proverb says, "Tochop a tree quickly, spend twicethe time sharpening the ax.“Carpenters say, "Measure twice,cut once."
Communication in OrganizationsDecision Theory
8 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 1: Monitor the decision environment
The manager monitors internal and external information that will indicate deviations from planned or acceptable behavior. • Talk to colleagues• Financial statements• Performance evaluations• Industry indices• Competitor‘s activities• …
Communication in OrganizationsDecision Theory
9 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 2: Define the decision problem
The manager responds to deviations by identifying essential details of the problem• Where• When• Who was involved• Who was affected• How are current activities influenced
Communication in OrganizationsDecision Theory
10 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 3: Specify decision objectives
The manager determines what performance outcomes should be achieved by a decision.
Communication in OrganizationsDecision Theory
11 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 4: Diagnose the problem
The manager digs below the surface to analyze the cause of the problem. Additional data may be gathered to facilitate this diagnosis. Understanding the cause enables appropriate treatment.
Communication in OrganizationsDecision Theory
12 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 5: Develop alternative solutions
Before a manager can move ahead with a decisive action plan, he or she must have a clear understanding of the various options available to achieve desired objectives. The manager may seek ideas and suggestions from other people.
Communication in OrganizationsDecision Theory
13 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 6: Evaluate alternatives
This step may involve the use of statistical techniques or personal experience to assess the probability of success. The merits of each alternative are assessed as well as the probability that it will reach the desired objectives.
Communication in OrganizationsDecision Theory
14 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 7: Choose the best alternative
This step is the core of the desision making process. The manager uses his or her analysis of the problem, objectives, and alternatives to select a single alternative that has the best chance for success.
Communication in OrganizationsDecision Theory
15 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Step 8: Implement the chosen alternative
Finally, the manager uses managerial, administrative, and persuasive abilities and gives directions to ensure that the decision is carried out. The monitoring activity (step 1) begins again as soon as the solution is implemented.
Communication in OrganizationsDecision Theory
16 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Enter: The reality
Models can not stand the test of reality!
The model is just an ideal managers may work toward but never reach.
In fact, some heavy constraints do avert the model to be realized in an actual decision making process.
Communication in OrganizationsDecision Theory
17 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Constraints
Limited time Limited information Need for agreement (cooperation) Corporate culture and structure Own desire for prestige / success …
Communication in OrganizationsDecision Theory
18 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Bounded rationality model
Herbert A. Simon
Born in 1916
Died in 2001
He got the prize in
economic sciences in memory
of Alfred Nobel in 1978
"for his pioneering research into
the decision-making process
within economic organizations"
Communication in OrganizationsDecision Theory
19 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Sequential consideration of alternatives
Unlike the treatment of alternatives in the step-
by-step model (which requires that all
alternatives under consideration be identified
before any evaluation takes place), here the
various alternatives are identified and
considered one at a time. Those that prove
inadequate in the light of the evaluative criteria
are discarded before other alternatives are considered.
Communication in OrganizationsDecision Theory
20 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Use of heuristics
Heuristics are rules that guide the search for
alternatives into areas where there is a good
chance of finding satisfactory solutions. Aiming at satisfactory sub-optimal solutions! Short-cuts in the decision making process- “When the stock of goods gets down to four,
that is the time to buy more.“- …
Communication in OrganizationsDecision Theory
21 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Satisficing
In the previous model, the optimal course of action is chosen after considering all possible alternatives. Impossibility to do so in reality!
The decision makers judge one alternative at a timeagainst certain standards of acceptability, and choose the first alternative which meets the minimal acceptable criteria or the minimum conditions for success!Acceptance of a satisfactory outcome!
Communication in OrganizationsDecision Theory
22 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Decision making under uncertainty
As a result of the bounded rationality, all decisions carry some element of uncertainty and risk
Cosequences of an action must be undetstood in the cotext of their perceived likelihood to occurrence
Communication in OrganizationsDecision Theory
23 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Reactions to risk I
Rational ideal for decision making under uncertainty is to select the alternative with the highest expected value
The expected value (EV) of an action is the value assigned to each possible consequence of the action, multiplied by the probabilities that each of these possible consequences will occur.
Communication in OrganizationsDecision Theory
24 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Reactions to risk II
Do decision makers rely on expected-value calculations, when they make decisions?
Communication in OrganizationsDecision Theory
25 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Reactions to risk III
You can have (A) $10 million for sure
( EV = $10 million) or (B) flip a coin and receive $22 million if heads appears and nothing if tails appears (EV = $11 million)
Communication in OrganizationsDecision Theory
26 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Reactions to risk IV
Expected value (EV)
EV =
($22,000,000*50%)+($0million*50%)=$11,000,000
Communication in OrganizationsDecision Theory
27 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Risk neutral
Typical decision maker is not risk neutral
it assumes that decision maker is indifferent between risky and certain autsomes if they have same EV
Communication in OrganizationsDecision Theory
28 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Risk-averse
Risk-averse decision makers ignore the EV-solution and choose option associated with less risk
Risk-seeking behavior is just the opposite of risk-averse behavoir
Decision maker is risk seeking when he pays a premium to experience risk• Such as gambling in Las Vegas
Communication in OrganizationsDecision Theory
29 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Risk in organizations – Framing and Escalation Framing – decision makers become
increasingly likely to take risks when confronting potential losses
And increasingly likely to avoid risks when confronting possible gains
Escalation – to commit resources to a failing cause based on the (slim) hope that there will be a dramatic positive change
Communication in OrganizationsDecision Theory
30 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Advantages of Group Decision Making
Brings multiple knowledge and skills to the decision
• Resource pooling: group has more information than do any of its members
• Synergy: members can stimulate and encourage each other
Communication in OrganizationsDecision Theory
31 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Advantages of Group Decision Making
• Diversity: heterogenity of members can alter the group‘s effectiveness
“Cultural diversity provides the biggest asset for teams with difficult, discretionary tasks requiring innovation.“
Communication in OrganizationsDecision Theory
32 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Advantages of Group Decision Making
• Transactive memory: combination of knowledge related to each individual within a team
• Situated expertise: concerning group member‘s external ties, „who knows whom“
Communication in OrganizationsDecision Theory
33 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Advantages of Group Decision Making
Expedits acceptance by the group
Increases commitment to decisions
Generally results in higher quality decisions
Communication in OrganizationsDecision Theory
34 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Disadvantages of Group Decision Making
Requires more time
“satisfice“ even when better decision is possible
Individual expertise may be ignored in favour of group consensus
Encourages riskier decisions
Communication in OrganizationsDecision Theory
35 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Disadvantages of Group Decision Making
Creates possibility of “groupthink“• Irving Janis first identified groupthink as a factor
that influenced the misguided Bay of Pigs invasion in 1961
• Occurs in highly cohesive groups
• Distorted think- and decision processes make it impossible to make rational decisions
Communication in OrganizationsDecision Theory
36 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Groupthink
Communication in OrganizationsDecision Theory
37 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Symptoms of Groupthink
Invulnerability
Members feel they are safe and protected from dangers, ostracism or ineffective action
Rational
Members ignore warnings by rationalizing moral and ethical
Communication in OrganizationsDecision Theory
38 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Symptoms of Groupthink
Morality
Members believe their actions are inherently moral and ethical
Stereotypes
Members view opponents as truly evil or stupid and unworthy of or incompetent at negotiations
Communication in OrganizationsDecision Theory
39 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Symptoms of Groupthink
Pressure
Members pressure all group members to conform to the group‘s decision
Self-censorship
Members do not express any questions about the group‘s decision
Communication in OrganizationsDecision Theory
40 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Symptoms of Groupthink
Unanimity
Members perceive that everyone in the group has the same view
Mindguards
Members may keep averse information that might ruin their perceptions of consensus and the effective decision
Communication in OrganizationsDecision Theory
41 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
When make decisions in groups?
Potential benefits are substantial
High error costs
Difficult to reverse or salvage a decision after action has begun
Feedback will not be available until long after the decision has been implemented
Communication in OrganizationsDecision Theory
42 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
When make decisions in groups?
Information is incomplete or uncertain
Many feasible alternatives exist
Identifying the optimal alternative is difficult
Communication in OrganizationsDecision Theory
43 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Individual vs. Group Decision Making
Type of problem or task• Individual: when efficiency is desired• Group: when diverse knowledge and skills are
required
Acceptance of the decision• Individual: when acceptance is not important• Group: when acceptance by group members is
valued
Communication in OrganizationsDecision Theory
44 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Individual vs. Group Decision Making
Quality of the solution• Individual: if „best member“ can be identified• Group: when several group members can improve
the solution
Characteristics of the individuals• Individual: when person cannot collaborate• Group: when group members have experience
working together
Communication in OrganizationsDecision Theory
45 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Individual vs. Group Decision Making
Climate of the decision making• Individual: when climate is competitive• Group: climate is supportive of group problem
solving
Amount of time available• Individual: when relatively little time is available• Group: when relatively more time is available
Communication in OrganizationsDecision Theory
46 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Summary
Group decision making is not without difficulties.
Group decision making increases communication, commitment, development and ownership of a problem and solution.
Communication in OrganizationsDecision Theory
47 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Summary
It‘s an important step to make the right choice between individual and group decision making.
„A Decision how to make a decision.“
Communication in OrganizationsDecision Theory
48 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Ethical decision making
Ethics are moral standards, not governed by law, that focus on the human consequences of action
Ethics require behaviour that meets higher standards than that established by low, including selfless behaviour rather than calculated
Ethics are a product of a society‘s culture, which includes its traditions, customs, values, and norms
Communication in OrganizationsDecision Theory
49 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Ethical decision making
The capitalist system would not function if individuals were truly altruistic
People are likely to be more highly motivated if they are encouraged to pursue their own self-interest.
Destinction needs to be made• Short-term self-interests
• Long-term self-interests social dilemma
Communication in OrganizationsDecision Theory
50 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Ethical decision making
Social dilemma - when the best long-term interests of the individual (society) conflict with the immediate interests of the individual
Communication in OrganizationsDecision Theory
51 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Managing organizational ethics
78% have codes of ethics 51% have telephone lines for reporting
ethical concerns 30% have offices that deal with ethical
and legal compliance Many companies have corporate ethics
programs
Communication in OrganizationsDecision Theory
52 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Institutionalizing ethics
Board-level committees that monitor the ethical behaviour of the organization• Developing ethics policies • Evaluating company or employee actions• Investigating and adjudicating policy
violations
Ethics training programs
Communication in OrganizationsDecision Theory
53 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
The role of culture in shaping decisionsCulture considered as beliefs assumptions values expectations paradigms frames of reference
that is both a product and a process
Communication in OrganizationsDecision Theory
54 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
The role of culture in shaping decisions profound impact on decision making
predispose individuals to make certain decisions at the expense of others
cultural influence will be subtle and unseen
culture forces its members to see the world to given parameters
Communication in OrganizationsDecision Theory
55 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Decision making participation
In cultures with low expectations for influencing decision making – individual managerial decisions are effective• Subordinates expect to take orders and implement
them
In cultures that value the opinions of individuals - could encounter resistance• Members feel as though they should influence all
phases of management
Communication in OrganizationsDecision Theory
56 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Cultural Contingencies of Decision Making Problem Recognition Information Search Construction of Alternatives Choice Implementation
Communication in OrganizationsDecision Theory
57 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Cultural Contingencies of Decision Making1.Problem Problem Situation
Recognition Solving Acceptance
2.Information Gathering Gathering
Search „facts“ ideas
3.Construction Future-oriented Past-,present-
of Alternatives Alternatives future-oriented
4.Choice Individual Group decision
decision making making
5.Implementation Fast Slow
Communication in OrganizationsDecision Theory
58 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Japan – group decision making
„Ringisei“ – the most frequently used decision-making process
Requires the circulation of documents to organization members
Ensures that subordinates have the opportunity to voice their views and possibly influence the final decision
Communication in OrganizationsDecision Theory
59 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Korea – decision making at the top Large family conglomerates known as chaebols
„Family members“ make all decisions• Employees implement them
Some Korean organizations use the consensus decision making system• Just a formal process to rationalize and formalize
the decisions made by the top executives Highly formal communication structure
Communication in OrganizationsDecision Theory
60 von 6520. Mai 2003
UNIVERSITÄT UNIVERSITÄT HILDESHEIMHILDESHEIM
Israel – democratic decision making
The kibbuz, a collective farm or industry, uses democratic participation in all aspects of its operations
Principles – community ownership, absolute equality of members, democratic decision making and primacy of the group over individuals
Democratic ideology permeates the kibbuz involving all members in major decisions
Recommended