Class Notes for Chapter 11: Decision Making, Creativity and Ethics
Part 1: The Rational Decision-Making Process
Rational Decision-Making Model: (6 steps)
1. Defining the Problem- one has a problem when a discrepancy occurs between an existing and
a desired state of affairs.
2. Identify the decision criteria- one determines what is relevant.
-Brings the decision makers interests, values and similar personal preferences into
process.
3. Weigh the previously identified criteria
4. Generate possible alternatives
5. Evaluate the alternative- Good/bad, strengths/weaknesses
6. Select the best alternative
Bounded Rationality: Limitations on a persons ability to interpret, process, and act on
information
Satisfice: A decision model that relies on solutions that are both satisfactory and sufficient
Intuition
Intuitive decision making: a subconscious process created out of distilled experience.
Judgment Shortcuts Affecting the Decision Choice
Framing: Error in judgment arising from the selective use of perspective that alters the way we
view a situation in forming a decision.
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Heuristics: Judgment shortcuts in decision making
Availability heuristic: the tendency for people to base their judgments on information that is
readily available to them.
Representative heuristic: Assessing the likelihood of an occurrence by drawing analogies and
seeing identical situations where they don’t exist
Escalation of commitment- an increased commitment to a previous decision despite negative
information
Part 2: Group Decision Making
Strengths:
1. More complete information and knowledge
2. Increased diversity
3. High-quality decisions
4. Increased acceptance of solution
Weaknesses:
1. Time consuming
2. Conformity pressures
3. Domination of one or greater members
4. Ambiguous responsibility
Groupthink: phenomenon in which the norm for consensus overrides the realistic appraisal of
alternative courses of action.
Symptoms of:
1. Illusion of invulnerability
2. Assumption of morality
3. Rationalized resistance
4. Peer pressure
5. Minimized doubts
6. Illusion of unanimity
A special case of groupthink is groupshift.
Groupshift: phenomenon in which the initial positions of individual members of a group are
exaggerated towards a more extreme position due to interactions in group.
Group Decision Techniques
1. Interacting groups
2. Brainstorming – can be done electronically
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3. Nominal group technique: restricts discussion or interpersonal communication, members
operate independently.
4. Electronic Meeting
Influence of Leader on Decision Making
In making decisions for an organization, it needs to be decided whether its best for the leader to
make the final decision, or to have everyone involved in making the decision.
Leader- participation model: A leadership theory that provides a set of rules to determine the
form and amount of participative decision making in different situations.
Part 3: Creativity
Creativity: The process of creating products, ideas, or procedures is novel or original, and is
potentially relevant or useful to an organization.
Factors that affect individual creativity:
1. Personality and cognitive skills are linked to creativity.
2. Task itself plays an important role.
Intrinsic factors
Extrinsic factors
Organizational factors that affect creativity:
Challenge: When people are matched up with the right assignment, their expertise and skills can
be brought to the task of creative thinking. Individuals should be stretched, but not overwhelmed.
Freedom: To be creative, once a person is given a project, he or she needs the autonomy to
determine the process.
Resources: Time and money are the two main resources that affect creativity. Thus, managers
need to allot these resources carefully.
Work-group features: Our discussion of group composition and diversity concluded that
heterogeneous groups were likely to come up with more creative solutions.
Supervisory encouragement: To sustain passion, most people need to feel that what they are
doing matters to others. Managers can reward, collaborate, and communicate to nurture the
creativity of individuals and teams
Organizational support: Creativity-supporting organizations reward creativity, and also make
sure that there is information sharing and collaboration. They make sure that negative political
problems do not get out of control.
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Five organizational factors that block your creativity at work:
1)
2)
3)
4)
5)
Expected evaluation
Surveillance
External motivators
Competition
Constrained choice
Part 4: Ethics
Ethics plays a large role in decision-making.
To what extent does ethical decision making blur the lines between work and personal life?
Individuals can use 3 different criteria in ethical decision-making.
1) Utilitarianism: Decisions are made to prove the greatest good for the greatest number.
2) Rights: Making decisions that are consistent with fundamental liberties and privileges.
3) Justice: This requires individuals to impose and enforce rules fairly and impartially.
Question: Can profits really drive unethical decisions?
Factors influencing Ethics: Are they an individual or part of a group, stage of moral development,
organization environment.
Stages of moral Development:
Preconventional:
1) Sticking to rules to avoid physical punishment.
2) Following rules only when doing so is in your immediate interest.
Conventional:
3) Living up to what is expected by people close to you.
4) Maintaining conventional order by fulfilling obligations to which you have agreed.
Principled:
5) Valuing right of others and upholding absolute values and rights regardless of the
majority’s opinion.
6) Following self-chosen ethical principles even if they violate the law.
Cross culture ethics:
Many people are finding ethics difficult to follow in different cultures because each culture has
their own ethics. There is no global ethical standard.
Question: Should the government establish standards for corporate responsibility?
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