Organizational Behaviour
Individual and Social
Behaviour
Decision making
Decision Making
• The process of developing commitment to
some course of action
Rational Decision Making Model
• Maximizing decision making
– Identify the problem
– Search for relevant information
– Develop alternative solutions
– Evaluate solutions
– Choose the best solution
– Implement the chosen solution
– Monitor and evaluate the chosen solution
Bounded Rationality
• using less than perfect decision making
processes
– Reasons
• time and energy
• limited capability to process information
• organization politics
– We satisfice rather than maximize
• select an acceptable solution rather than
an optimal solution
Escalating Commitment
• Continuing on a losing course of action or
throwing good resources after bad
Reasons
1) not recognizing sunk costs
2) self-justification (image management)
3) to be consistent (image management)
4) framing
Escalating Commitment
• To help overcome
– set up specific goals
– put more emphasis on the decision making
process rather than the results
– try to see the outcomes from a different
perspective
– separate initial decision makers from those
evaluating the continuance of the program
Prospect Theory
• Framing options as losses or gains
– >>>>> risk taking or risk avoidance
• A gain of a given amount is much less attractive than
the loss of the same amount is averse (feel losses
more than gains)
• Adapt more quickly to gains than losses
– the reference point adjusts more quickly to gains
• We perceive equal size gains (or losses) differently
depending on the relative amounts that we are
dealing with
Heuristics and Biases
• Processing information
– Availability heuristic
– Confirmation bias
– Law of small numbers
Group Decision Making
• Can improve decision making
– more people to spot the potential problem
– bring in a wider variety of ideas and solutions
– better at analyzing for strengths and
weaknesses
• Can increase commitment to decisions
Group Decision Making
• Disadvantages
– Speed; takes more time
– Conflict
– Domination
– Diffusion of responsibility
Groupthink
• Conformity among members that does not allow
alternative perspectives to be heard; results in poor
decision making
• Includes
– the leader or majority expressed opinion dominates
– strong social pressures to maintain harmony
– the group becomes closed to alternative ideas
– pressures are put on dissenting members
Groupthink
• Illusion of invulnerability - members are overconfident; comfortable with
risky decisions
• Rationalization - problems or inconsistent information are explained
away
• Illusion of morality - an unquestioned belief in the morality of the
group’s decision
• Stereotyping of outsiders - unfavorable stereotypes are created about
outsiders or the other side
• Pressure for conformity - members pressure each other to conform to
the dominant view
• Self-censorship - member suppress doubts to maintain harmony
• Illusion of unanimity - because dissent is suppressed members
perceive that unanimous support exists for the chosen course of action
• Mindguards - some members appoint themselves to prevent
inconsistent information from reaching the team
Groupthink
• To overcome
– leaders should not express or support early
preferences
– establish norms that allow for alternative perspectives
to be heard e.g. devil’s advocate
– draw out quiet members and make sure everyone
contributes
Group Polarization
• Tendency for teams to make more
extreme decisions than individuals
– Risky shift and conservative shift
• Polarization occurs because of
– Persuasive arguments
– Increased confidence
– Social comparison
Group Decision Making
• Methods:
– Ordinary
– Brainstorming
– Nominal Group Technique
– Delphi Technique
Organizational Decision Making
The Garbage Can Model
• Characteristics of the decision
1. The problem, alternatives, and solutions can be ill
defined
2. The relationship among the key variables is hard to
define
3. There is turnover of participants
Garbage Can Model
• Consequences
– Problems may lead to a proposed solution or not.
Problems may not be solved through the solution
– Potential Solutions may be proposed. People may
be attracted to solutions whether or not they solve
the problem. Solutions can be independent of the
problem
– Participation can determine what and when
problems and solutions are proposed
– Choice opportunities or decision opportunities will
determine which problems are proposed, what
solutions are suggested, and which decision is
made (a matter of timing)
Garbage Can Model
• Consequences
– solutions may be proposed even when problems
don’t exist
– Choices are made without solving problems
– Problems may persist without being solved
– A few problems are solved