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Chapter 10

Decision Making by
Individuals & Groups
Nelson & Quick

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

The
DecisionMaking
Process

Recognize the problem and


the need for a decision
Identify the objective of
the decision

Gather and evaluate data


and diagnose the situation

List and evaluate


alternatives

The
DecisionMaking
Process

Select the best


course of action
Implement
the decision

Gather
feedback

Follow up

Models of Decision-Making
Effective decision
a timely decision
that meets a desired
objective and is
acceptable to those
individuals affected
by it

Rational Model
Bounded Rationality
Model
Garbage Can Model

Rational Model

Rationality - a logical,
step-by-step approach
to decision making, with a
thorough analysis of
alternatives and their
consequences

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

Bounded Rationality
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


2. Managers recognize that their conception of the world is
simple
3. Managers are comforable making decisions without
determining all the alternatives
4. Managers make decisions by rules of thumb or heuristics

Garbage Can Model


Solutions
Problems
Garbage Can Model a theory that contends Participants
that decisions in
organizations are
random and unsystematic

Choice
opportunities

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

Risk and the Manager


Risk 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
Evidence: Successful Managers Take Risks

Escalation of
Commitment

The tendency to continue to


commit resources to a losing
course of action

Why it occurs
humans dislike inconsistency
optimism
control

How to deal with it


split responsibility for decisions
provide individuals with a graceful exit
have groups make the initial decision

Cognitive Style
Cognitive Style - an individuals
preference for gathering
information and evaluating
alternatives
Jungian theory offers a way of understanding and
appreciating differences among individuals.

Jungs Cognitive Style


Style

Ideal Organization

ST

Sensing/thinking

Facts/ Impersonal Control

SF

Sensing/feeling

Facts & Org. relationships

NT

Intuiting/thinking

Broad issues/ Impersonal & ideal

NF

Intuiting/feeling

Serve humankind/General values

Z Problem-Solving Model
Look at
the facts
and details

Can it be
analyzed
objectively?

Sensing

Thinking

What alternatives
Intuition
do the facts
suggest?

Feeling

What impact
will it have on
those involved?

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

Influences on Decision-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

Four Stages of Creative Process


Preparation - experience/ opportunity
to build knowledge base
Incubation - reflective, often
unconscious thought
Illumination - insight into problem
Verification - thinking, sharing, testing
the decision

Influences on Creativity
Individual examples
Cognitive Processes
Divergent Thinking
Associational Abilities

Personality Factors
breadth of interests
high energy
self confidence

Organizational ex.
Flexible organization
structure
Participative
decision-making
Quality, supportive
relationships with
supervisors

Organizations Can Facilitate


Creative Decision-Making

Reward creativity
Allow employees to fail
Make work more fun
Provide creativity training
Vary work groups (internal/external)
Encourage creative stimuli (music, art,
etc.)

Participative
Decision Making

Individuals who are affected


by decisions influence the
making of those decisions

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 ones
own well-being

Two Brains, Two Cognitive Styles


Left Hemisphere
Verbal
Sequential, temporal,
digital
Logical, analytic
Rational
Western thought

Right Hemisphere
Nonverbal, visuospatial
Simultaneous, spatial,
analogical
Gestalt, synthetic
Intuitive
Eastern thought

Ideal = brain-lateralized making use of


either 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

Group Decision-Making
Role of synergy - a positive force in groups that
occurs 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
Majority Wins
final group decisions
Truth Wins
(prediction 80% correct)

Two-thirds Majority Wins


First-shift rule

Group Decision-Making
Advantages
1) more knowledge
through pooling of
group resources
2) increased
acceptance &
commitment due
to voice in decisions
3) greater understanding due to
involvement in
decision stages

1) pressure in
groups to conform
2) domination by
one forceful member
or dominant clique
3) 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

Brainstorming
Nominal Group Technique
Self-Managed Teams
Group
Decision
Techniques

Delphi Technique

Quality Circles & Quality Teams


Dialectical Inquiry

Devils Advocacy

Technological Aids to DecisionMaking


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

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

How will it make me feel about myself

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