Essentials of Organizational Behavior, 8/e
Stephen P. Robbins
Chapter 6
Individual Decision
Making
6-1
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• Decision making making choices
from among two or
more alternatives
6-2
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The Six-Step Rational
Decision-Making Model
1)
2)
3)
4)
5)
6)
Define the problem
Identify decision criteria
Weight the criteria
Generate alternatives
Rate each alternative on each criterion
Compute the optimal decision
6-3
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Assumptions of the Model
1)
2)
3)
4)
5)
Problem clarity
Known options
Clear preferences
Constant preferences
No time or cost
constraints
6) Maximum payoff
6-4
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• Creativity - ability
to produce novel
and useful ideas
• Helps decision
maker identify all
viable alternatives
6-5
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The Three Components of
Creativity
Creativity
Skills
Expertise
Creativity
Task
Motivation
6-6
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Five Organizational Factors
Impeding Creativity
1)
2)
3)
4)
5)
Expected evaluation
Surveillance
External motivators
Competition
Constrained choice
6-7
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Bounded Rationality
Due to the limited capacity of the
mind to be fully rational; decision
makers construct simplified models
to extract the essential features
from complex problems
6-8
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Typical Use of Bounded Rationality
• Limited list of criteria based on most
conspicuous choices
• Final solution represents a satisficing
choice, not an optimum one
• Satisficing - first acceptable choice
6-9
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Common Biases and Errors
•
•
•
•
Overconfidence bias
Anchoring bias
Confirmation bias
Availability bias
6-10
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Common Biases and Errors
•
•
•
•
Representative bias
Escalation of commitment
Randomness error
Hindsight bias
6-11
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Intuition
• Unconscious process
created out of distilled
experience; resulting in a
rapid decision with what
appears to be very limited
information
6-12
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When is Intuition Used?
1) When a high level of uncertainty exists
2) When there is little precedent to draw on
3) When variables are less scientifically
predictable
4) When “facts” are limited
5) When facts don’t clearly point the way
6-13
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When is Intuition Used?
6) When analytical data are of little use
7) When there are several plausible
alternative solutions from which to
choose
8) When time is limited and there is
pressure to come up with the right
decision
6-14
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Decision-Style Model
Tolerance for Ambiguity
High
Analytical
Conceptual
Directive
Behavioral
Low
Rational
Intuitive
Way of Thinking
6-15
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Gender Differences
• Evidence
indicates that
women analyze
decisions more
than men
• Reason is not
clear
6-16
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Stages of Moral Development
Level
Principled
Stage Description
6. Following self-chosen ethical
principles, even if they
violate the law
5. Valuing rights of others;
upholding non-relative
values and rights regardless
of the majority’s opinion
Conventional
Pre-conventional
4. Maintaining conventional order by
fulfilling obligations to which
you have agreed
3. Living up to what is expected by
people close to you
2. Following rules only when it’s in your
immediate interest
1. Sticking to rules to avoid physical
punishment
6-17
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Organizational Constraints
•
•
•
•
Performance Evaluation
Reward Systems
Formal Regulations
System-Imposed Time
Constraints
• Historical Precedents
6-18
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Cultural Differences
• Cultural background can significantly
influence
– Selection of problems
– Depth of analysis
– Importance placed on logic and
rationality
– Whether decisions should be made
• Autocratically by individual manager
• Collectively in groups
6-19
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Criteria in Making Ethical Choices
• Utilitarianism
• Rights
• Justice
6-20
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Implications for Managers
Five suggestions to improve decision
making:
1) Analyze the situation and adjust to the
national culture and criteria of
organization
2) Be aware of biases
3) Combine rational analysis with intuition
4) Do not assume your specific decision
style is appropriate for every job
5) Use creativity-stimulation techniques
6-21
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