10 Decision Making by Individuals and Groups Copyright
10 Decision Making by Individuals and Groups Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Types of Decisions Programmed Decision Nonprogrammed Decision a simple, routine matter for which a manager has an established decision rule a new, complex decision that requires a creative solution
Decision-Making 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, select the best course of action, and implement the decision Gather feedback and follow up Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 3
Models of Decision Making • Outcome will be completely rational • Decision makers are consistent when choosing the best alternative • Decision makers are aware of all alternatives • Decision makers can calculate the probability of success for each Rational Model alternative Bounded Rationality • Managers select the first alternative that is satisfactory • Managers recognize that their conception of the world is simple • Managers are comfortable making decisions without determining all the alternatives • Managers make decisions by rules of thumb or heuristics • Managers satisfice Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 4
Beyond the Book: Garbage Can Model • Garbage Can Model • A theory that contends that decisions in organizations are random and unsystematic Solutions Problems Participants Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Choice opportunities ORBG 5 | CH 10 5
Figure 10. 2 The Z Problem-Solving Model Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 6
Factors Influencing Decision Making Comfort with risk • Risk aversion: Choosing options with fewer risks and less uncertainty • Depends on individual tendencies and organizational factors Cognitive style • Individual’s preference for gathering information and evaluating alternatives Personality, attitudes, and values • Influence decision making Intuition • Enables development of new perspectives Creativity • Results in novel and useful ideas, products, or both • Influenced by individual and organizational factors Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 7
Escalation of Commitment the tendency to continue to commit resources to a failing course of action Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 8
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 Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 9
Group Decision Making Synergy • Positive force that stimulates new solutions to problems through mutual influence and encouragement within the group Social decision schemes • Rules that determine final group decisions Advantages • More knowledge and information through the pooling of group member resources • Increased acceptance of and commitment to the decision • Greater understanding of the decision Disadvantages • Pressure within the group to conform and fit in • Domination of the group by one forceful member • Amount of time required to make a decision Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 10
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 Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 11
Antecedents of Groupthink n High cohesiveness n Directive leadership n High stress n Insulation of the group n Lack of methodological procedures for developing and evaluating alternatives n Consequential decisions n Time constraints 9 -12
Symptoms of Groupthink n Illusions of invulnerability: members feel above n n criticism Illusions of unanimity: members believe there is unanimous agreement. Silence is misconstrued as consent Rationalization: viable alternatives not considered, unwillingness to reconsider assumptions Self-censorship: members do not express doubts or concerns for fear of effect of dissent on cohesion Illusions of group morality: members believe they are above reproach
Symptoms of Groupthink (cont. ) n Stereotyping the enemy: Competitors are stereotyped as evil or stupid. This leads the group to underestimate its opposition. n Peer pressure: Any members who express doubts or concerns are pressured by other group members to question their loyalty. n Mindguards: some members of the group take it upon themselves to protect the group from negative feedback. Group members are thus shielded from information that might lead them to question their actions
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. Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 15
• Refer to the article about pre-war intelligence and look at conclusions #3 and #5. What is the significance that formalized IC mechanisms established to challenge assumptions and group think were not utilized? Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 16
Group Decision Techniques Brainstorming • Generating multiple ideas on a given subject while suspending evaluation until all the ideas have been suggested Nominal group technique (NGT) • Structured approach to group decision making that focuses on generating alternatives and choosing one Devil’s advocacy • A group or individual is given the role of critic during decision making, helps prevent groupthink Dialectical inquiry • Debate between two opposing sets of recommendations Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 17
Special Decision Making Groups Quality circle • Small group of employees who work voluntarily on company time, to address work-related problems Quality team • Part of an organization’s structure • Empowered to act on its decisions Self-managed teams • Make decisions that were once reserved for managers • Lead to higher productivity, lower turnover among employees, and flatter organization structure Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 18
Participative Decision Making Individuals affected by decisions influence the decision making-process Buffers employees from the negative experiences of organizational politics Increases employee creativity, job satisfaction, and productivity Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 19
Foundations for Participation and Empowerment Organizational prerequisites • Supportive organizational culture and a 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 Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 20
Evidence-Based Management n What is evidence-based management? n What are six substitutes that managers often use for the best evidence? n According to the evidence, should companies adopt forced ranking? Why or why not? n What are the four things leaders can do to create a new-mindset of evidence-based management? n What is the nasty side effect for leaders that practice evidence-based management?
Good to Great or Just Good • What did Collins do wrong? • Business managers are lead to believe that applying the 5 principles will move them toward greatness. What are the two alternative explanations? • Hedgehog problem • What are the odds that 11 selected firms share five attributes given that they have outstanding stock returns? 9 -22
Copyright © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ORBG 5 | CH 10 23
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