Decision Making
by Individuals
and Groups
Chapter 10
Organizational
Behavior
Nelson & Quick, 6th edition
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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
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
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The
DecisionMaking
Process
Select the best
course of action
Implement
the 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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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
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Bounded Rationality Model
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
Managers suggest
the first satisfactory
alternative
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Bounded Rationality Model
Managers recognize that their conception
of the world is simple
Managers are comfortable making
decisions without determining all the
alternatives
Heuristics – shortcuts
in decision making
that save mental
activity
Managers make
decisions by rules
of thumb or
heuristics
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Solutions
Garbage Can
Model
Problems
Choice
opportunities
Participants
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
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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
– Often lead the group discussions
Evidence: Successful Managers Take Risks
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Escalation of Commitment
Escalation of Commitment - The tendency
to continue to commit resources to a failing
course of action
Why 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
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Cognitive Style
Cognitive Style - an individual’s preference
for gathering information and evaluating
alternatives
Individual’s
Perceiving
Style
+
Individual’s
Sensing
Style
=
Cognitive
Style
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Cognitive Style
Jungian theory
offers a way of
understanding
and appreciating
differences
among
individuals.
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Jung’s 4 Cognitive Styles
Style
ST
Sensing/thinking
SF
Sensing/feeling
NT
Intuiting/thinking
NF
Intuiting/feeling
Ideal Organization
Facts
Impersonal analysis
Facts and organizational
relationships
Broad issues
Impersonal and ideal
Serve humankind
General values
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Z Problem-Solving Model
Look at
the facts
and details
Can it be
analyzed
objectively?
Sensing
Thinking
SOURCE: Excerpted from Type Talk at Work by Otto Kroeger and Janet M. Thuesen, 1992,
Delacorte Press. Reprinted by permission Otto Kroeger Associates.
Intuition
Feeling
What
alternatives
do the facts
suggest?
What impact
will it have
on those
involved?
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Two Brains, Two Cognitive Styles
Left Hemisphere
Right Hemisphere
Verbal
Sequential,
temporal, digital
Logical, analytic
Rational
Western thought
Nonverbal, visuospatial
Simultaneous, spatial,
analogical
Gestalt, synthetic
Intuitive
Eastern thought
Ideal = “brain-lateralized” making use of
either 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,
Creativity - a process
positive force in
decision making
utilized at a level
below consciousness
and involves learned
patterns of information
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
Preparation
experience/
opportunity
to build
knowledge
base
Incubation
reflective
thought,
often
unconscious
Illumination
insight into
solving
a problem
Verification
thinking,
sharing,
testing the
decision
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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
You respond to
Responsive
problems
You respond to
Contributory
problems
You discover
Expected
problems
You discover
Proactive
problems
Internal or External
Trigger
Because it is
expected of you
Because you want
to be creative
Because it is
expected of you
Because you want
to be creative
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Participation in Decision Making
Participative Decision Making Individuals who are affected by
decisions influence the making of
those decisions
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Foundations for Participation and
Empowerment
• 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
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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
Two-thirds Majority
Majority Wins
Truth Wins
First-shift
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Group Decision Making
Advantages
Disadvantages
1. More knowledge through pooling of
group member resources
2. Increased acceptance and commitment to decisions (had a voice)
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
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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.
Photos courtesy of Clips Online
©2008 Microsoft Corporation
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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
Brainstorming
Self-Managed
Teams
Quality Circles
and
Quality Teams
Group
Decision
G
Techniques
Nominal
Group
Technique (NGT)
Delphi
Technique
Dialectical
Inquiry
Devil’s
Advocacy
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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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$
$
$
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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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Decision Making
in the Virtual Workplace
Desktop video
conferencing systems
Tools for
Virtual
Teams
Group decision
support systems
Internet/Intranet
systems
Agent-based modeling
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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?
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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 decisionmaking process.
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