Chapter 10 Decision Making by Individuals Groups Nelson

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 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

The Decision. Making 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 - an individual’s preference for gathering information and evaluating alternatives Jungian theory offers a way of understanding and appreciating differences among individuals.

Jung’s Cognitive 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 one’s 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 Devil’s Advocacy

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 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