© 2011 Cengage Learning. All rights reserved. Chapter 10 Decision Making by Individuals & Groups Learning Outcomes 1.Identify the steps in the decision-making

© 2011 Cengage Learning. All rights reserved.

Chapter 10 Decision Making by Individuals &

GroupsL

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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

Decision Making Process


Select the bestcourse of action

Gather feedback

Implementthe decision

Follow up

Decision Making Process



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

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

constraints that force a decision

maker to be less than completely

rational

1. Managers select the first alternative that is satisfactory

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

Bounded Rationality Model


• Assumes that managers satisfice – select the first alternative that is “good enough”

• Assumes that managers develop heuristics, short cuts, to make decisions in order to make decisions to save mental activity.

Bounded Rationality Model



Garbage Can Model

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

Problems

Participants

Solutions

Choiceopportunities

Beyond the Book:

Z Problem-Solving Model



Escalation of Commitment

the tendency to continue to commit

resources to a failing course of action


Escalation of Commitment

• Why it occurs– people dislike inconsistency– overly optimistic– illusion of control– sunk costs

• How to deal with it– split responsibility for decisions– closely monitor decision makers– 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


Risk Aversion

the tendency to choose options

that entail fewer risks and less

uncertainty


Risk and the Manager

• Many decisions involve some element of risk.

• Individuals differ in terms of risk aversion.

• Risk aversion is determined by individual tendencies and organizational factors.

• To encourage risk taking, must view failure as “enlightened trial and error.”


Personality, Attitudes, and Values


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


Influences on Creativity• Individual:

– Cognitive Processes• Divergent Thinking• Associational Abilities• Unconscious Processes

– Personality Factors• breadth of interests• high energy• self-confidence

• Organizational:– Flexible organization structure– Participative decision making– Quality, supportive relationships with supervisors

Creative performance is highest when there is a match or fit between the

individual and organizational influences.


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.

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

Beyond the Book:Mapping Changes in the Industry


Four Types of Creativity

Responsive

Expected Contributory

Proactive


Can you think of new solutions to these common organizational problems?

• Employees’ productivity declines sharply the day after the Super Bowl.

• Your organization has been in deficit for three consecutive quarters. Where do you make cuts in the budget?

• You learn that the company can no longer afford to provide lunch to employees. How would you maintain morale?

Beyond the Book:Be Creative!


Learning Outcome

Explain how groups make decisions.

4


Group Decision Making

• Synergy – occurs when group members stimulate new solutions to problems through the process of mutual influence and encouragement within the group.

• Social decision schemes – simple rules used to determine final group decisions

Majority WinsTruth 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



Limits of Group Decision Making

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 Dialectical

InquiryBrainstorming

Devil’s Advocacy

Delphi Technique

Nominal Group Technique

Quality Circles and Quality Teams

Group Decision Techniques



Special Decision-Making Groups

• Quality circles – small groups that meet voluntarily to address work-related problems.

• Quality teams – a team that is part of an organization, empowered to act on its decisions regarding quality

• Self-managed teams – more broadly focused than above two types


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


Beyond the Book:Decisions in Japan

“Teamwork” and “Collaboration” look much different in Japan than in the United States. In Japanese firms, workers (especially lower level) tend to remain silent during meetings, avoid sitting next to upper management, and rigorously avoid using their boss’ first name. Upper management, meanwhile, steer clears of direct feedback or delivering the “hard truth.” At all levels, harmony and restraint, rather than independence and risk-taking, are prized values.


Decision Making in the Virtual Workplace

Desktop Videoconferencing

Systems

Internet/IntranetSystems

Tools for

Virtual Teams

Group DecisionSupport Systems

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Learning Outcome

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

6


Participative Decision Making

Occurs when individuals who are affected by decisions influence decision-making

Supportive organizational cultureTeam-oriented work design

People must be psychologically equipped

Motivation to act autonomouslyEmployees must be able to see benefit

OrganizationalFoundation

IndividualFoundation


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


Workers face a growing problem – the computers, applications and phones they use at work are ancient compared to what they use personally. For example, some chafe at having to use email systems with limited storage when free webmail options provide gigabytes of space. Others are frustrated that their company still uses an operating system released in 2001.

How would you resolve this issue? How would you provide cutting-edge technology while maintaining costs? How would you deal with employees who are not tech savvy?

Beyond the Book:Can I Use Another Computer?


Failure to Launch

1. Does “The Bird Problem” present Kit and Ace with a programmedor nonprogrammed decision? What features of their decision problemled to your choice?

2. Review the earlier section describing the decision-making process. Which steps in that process appear in “The Bird Problem?” Note the examples of each step that you see.

3. Assess the degree of certainty, uncertainty, and risk that Kit and Aceface in this decision problem. What factors set the degree of certainty,uncertainty, and risk?

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© 2011 Cengage Learning. All rights reserved. Chapter 10 Decision Making by Individuals & Groups Learning Outcomes 1.Identify the steps in the decision-making