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Chapter 10 Organizational
BehaviorNelson & Quick, 6th edition
Decision Making by Individuals and Groups
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The Decision-Making Process
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
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The Decision-Making Process
Recognize the problem and the need for a decision
List and evaluatealternatives
Gather and evaluate dataand diagnose the situation
Identify the objective of the decision
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The Decision-Making Process
Select the bestcourse of action
Implementthe decision
Gather feedback
Follow up
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Models of Decision-Making
Effective Decision - a timely decision that meets a desired objective and is acceptable to those individuals affected by it
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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
Rationality - a logical, step-by-step approach to decision making, with a thorough analysis of alternatives and their consequences
Rational Model
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Managers suggest the first satisfactory alternative
Bounded Rationality - a theory that suggests that there are limits upon how rational a decision maker can actually be
Satisfice – to select the first alternative that is “good enough,” because the costs in time and effort are too great to optimize
Bounded Rationality Model
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Managers recognize that their conception of the world is simple
Managers are comfortable making decisions without determining all the alternatives
Bounded Rationality Model
Managers make decisions by rules of thumb or heuristics
Heuristics – shortcuts in decision making that save mental activity
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Garbage Can Model
Garbage Can Model -
a theory that contends that decisions in organizations are random and unsystematic
SOURCE: 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
Problems
Participants
Solutions
Choiceopportunities
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Risk and the ManagerRisk Aversion - the tendency to choose
options that entail fewer risks and less uncertainty
Risk takers– Accept greater potential for loss– Tolerate greater uncertainty– More likely to make risky decisions– Often lead the group discussions
Evidence: Successful Managers Take Risks
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Escalation of Commitment - The tendency to continue to commit resources to a failing course of actionWhy 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
Escalation of Commitment
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Cognitive Style
Cognitive Style - an individual’s preference for gathering information and evaluating alternatives
Cognitive Style
Individual’s Perceiving
Style
Individual’s Sensing
Style+ =
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Cognitive Style
Jungian theory offers a way of understanding and appreciating differences among individuals.
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Style Ideal Organization
ST Sensing/thinking Facts Impersonal analysis
SF Sensing/feeling Facts and organizational relationships
NT Intuiting/thinking Broad issuesImpersonal and ideal
NF Intuiting/feeling Serve humankind General values
Jung’s 4 Cognitive Styles
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Z Problem-Solving Model
What alternativesdo the facts
suggest?
Sensing Intuition
Thinking Feeling
SOURCE: Excerpted from Type Talk at Work by Otto Kroeger and Janet M. Thuesen, 1992, Delacorte Press. Reprinted by permission Otto Kroeger Associates.
Look at the facts
and details
Can it beanalyzed
objectively?
What impactwill it have on those involved?
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Two Brains, Two Cognitive Styles
Left HemisphereVerbal
Sequential, temporal, digitalLogical, analytic
RationalWestern thought
Right HemisphereNonverbal, visuospatialSimultaneous, spatial,
analogicalGestalt, synthetic
IntuitiveEastern thought
Ideal = “brain-lateralized” making use ofeither or both sides, depending on situation
SOURCE: Created based on ideas from Left Brain, Right Brain by Springer and Deutsch, p.272. © 1993 by Sally Springer and Georg Deutsch. (New York: W.H. Freeman and Company, 1993).
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Influences on Decision-Making
Intuition - fast, positive force in decision making utilized at a level below consciousness and 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
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Four Stages of the Creative Process
Illuminationinsight into solvinga problem
Verificationthinking, sharing, testing the decision
Incubation reflective thought, often unconscious
Preparation experience/opportunity to build knowledge base
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Influences on Creativity
Individual examples–Cognitive Processes
• Divergent thinking• Associational abilities• Unconscious
processes–Personality Factors
• Intellectual, artistic values
• Breadth of interests• High energy• Self-confidence
Organizational examples– Autonomous
feelings– Diverse team skills– Quality, supportive
relationships with supervisors
– Flexible organization structure
– Participative decision making
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Four Types of Creativity
Creativity Type
Presented or Discovered
Internal or External Trigger
Responsive You respond to problems
Because it is expected of you
Contributory You respond to problems
Because you want to be creative
Expected You discover problems
Because it is expected of you
Proactive You discover problems
Because you want to be creative
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Participative Decision Making - Individuals who are affected by decisions influence the making of those decisions
Participation in Decision Making
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• 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
Foundations for Participation and Empowerment
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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
Majority Wins
Truth Wins
Two-thirds Majority
First-shift
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Group Decision Making
1. More knowledge through pooling of group member resources
2. Increased acceptance and commit- ment to decisions (had a voice)3. Greater understanding due to involvement in decision stages
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
Advantages
Disadvantages
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Group Phenomenon
Groupthink - a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressures
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Conditions Favoring Groupthink
• High cohesiveness• Group homogeneity• Decision with high
consequences• Time constraints
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Symptoms of Groupthink
• Illusions of invulnerability• Illusions of group morality• Illusions of unanimity• Rationalization• Stereotyping the enemy• Self-censorship• Peer pressure• Mindguards
SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission.
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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
SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission.
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Group Polarization
Group Polarization - the tendency for group discussion to produce shifts toward more extreme attitudes among members
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Group Decision Making Techniques
G
Nominal Group
Technique (NGT)
Devil’s Advocacy
Dialectical Inquiry
Quality Circlesand
Quality Teams
GroupDecision
Techniques
Brainstorming
Delphi Technique
Self-Managed Teams
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Diversity and Culture in Decision Making
• Racially dissimilar groups– More open information sharing– Dissenting perspectives encouraged– Better decision making
• Functionally dissimilar groups– Engage in greater debate– Better financial performance
$
$
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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
Group Decision Support Systems - systems that use computer software and communication facilities to support group decision-making processes (face-to-face meetings or dispersed)
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Group decision support systems
Internet/Intranet systems
Desktop video conferencing systems
Decision Making in the Virtual Workplace
Tools forVirtualTeams
Agent-based modeling
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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?
Ethics Check
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Chapter 10: Reflect & Discuss
Dr. Seuss’ How the Grinch Stole Christmas Video Clip
What to Watch for and Ask Yourself• What are the Grinch’s decision alternatives or
options?• What decision criteria does the Grinch use to
choose from the alternatives?• Describe the steps in the Grinch’s decision-
making process.