Learning Outcomes
Chapter 10
Decision Making by Individuals &
Groups
1.
Identify the steps in the decision-making process.
2.
Describe various models of decision making.
3.
Discuss the individual influences that affect decision making.
4.
Explain how groups make decisions.
5.
Describe the role culture plays in decision making.
6.
Explain how organizations can improve the quality of decisions
through participation.
© 2011 Cengage Learning. All rights reserved.
1
Learning Outcome
Identify the steps in the decisionmaking process.
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Types of Decisions
Programmed
Decision
Nonprogrammed
Decision
a simple, routine
matter for which a
manager has an
established decision
rule
a new, complex decision
that requires a creative
solution
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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
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Decision
Making
Process
Select the best
course of action
Implement
the decision
Gather feedback
Follow up
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2
Learning Outcome
Describe various models of
decision making.
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Rationality
a logical, step-by-step approach to
decision making, with a thorough
analysis of alternatives and their
consequences
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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
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
a theory that suggests that there are
constraints that force a decision
maker to be less than completely
rational
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Bounded Rationality
Model
1.
2.
3.
4.
Managers select the first alternative that
is satisfactory
Managers recognize that their conception
of the world is simple
Managers are comfortable making
decisions without determining all the
alternatives
Managers make decisions by rules of
thumb or heuristics
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Bounded Rationality
Model
• Assumes that managers satisfice – select
the first alternative that is “good enough”
• Assumes that managers develop heuristics,
short cuts, to make decisions in order to
make decisions to save mental activity.
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Beyond the Book:
Solutions
Garbage Can Model
a theory that contends
that decisions in
organizations are
random and
unsystematic
Problems
Participants
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Choice
opportunities
Z Problem-Solving Model
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Escalation of Commitment
the tendency to continue to commit
resources to a failing course of action
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Escalation of Commitment
• Why it occurs
–
–
–
–
people dislike inconsistency
overly optimistic
illusion of control
sunk costs
• How to deal with it
–
–
–
–
split responsibility for decisions
closely monitor decision makers
provide individuals with a graceful exit
have groups make the initial decision
© 2011 Cengage Learning. All rights reserved.
3
Learning Outcome
Discuss the individual influences
that affect decision making.
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Cognitive Style
an individual’s preference for
gathering information and evaluating
alternatives
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Risk Aversion
the tendency to choose options
that entail fewer risks and less
uncertainty
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Risk and the Manager
• Many decisions involve some element of
risk.
• Individuals differ in terms of risk aversion.
• Risk aversion is determined by individual
tendencies and organizational factors.
• To encourage risk taking, must view
failure as “enlightened trial and error.”
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Personality, Attitudes, and Values
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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
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Influences on Creativity
• Individual:
– Cognitive Processes
• Divergent Thinking
• Associational Abilities
• Unconscious Processes
– Personality Factors
• breadth of interests
• high energy
• self-confidence
Creative performance is
highest when there is a
match or fit between the
individual and
organizational influences.
• Organizational:
– Flexible organization structure
– Participative decision making
– Quality, supportive relationships with supervisors
© 2011 Cengage Learning. All rights reserved.
Beyond the Book:
Mapping Changes in the Industry
GPS devices and freely-available online maps are forcing the
mapping industry to change how it does business.
Map companies are incorporating digital services into their
business model, capitalizing on the benefits of paper maps,
expanding into related fields like astronomy and planetary
mapping, or simply scaling back their businesses.
Faced with a challenge, map industry professionals are
charting a variety of courses--which decisions will succeed?
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Four Types of Creativity
Responsive
Proactive
Expected
Contributory
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Beyond the Book:
Be Creative!
Can you think of new solutions to these common
organizational problems?
• Employees’ productivity declines sharply the day
after the Super Bowl.
• Your organization has been in deficit for three
consecutive quarters. Where do you make cuts in the
budget?
• You learn that the company can no longer afford to
provide lunch to employees. How would you maintain
morale?
© 2011 Cengage Learning. All rights reserved.
4
Learning Outcome
Explain how groups make
decisions.
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Group Decision Making
• Synergy – occurs when group members stimulate
new solutions to problems through the process of
mutual influence and encouragement within the
group.
• Social decision schemes – simple rules used to
determine final group decisions
Truth Wins
Majority Wins
Two-thirds Majority
First-shift
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Group Decision Making
Advantages
Disadvantages
1. more knowledge through pooling of
group resources
2. increased acceptance and
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
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Limits of Group Decision
Making
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
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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
From Janis, Irving L., Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright
© 1982 by Houghton Mifflin Company.
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Group Decision Techniques
Self-Managed
Teams
Dialectical
Inquiry
Brainstorming
Nominal
Group
Technique
Delphi
Technique
Quality Circles
and Quality Teams
Devil’s Advocacy
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Special Decision-Making
Groups
• Quality circles – small groups that meet voluntarily
to address work-related problems.
• Quality teams – a team that is part of an
organization, empowered to act on its decisions
regarding quality
• Self-managed teams – more broadly focused than
above two types
© 2011 Cengage Learning. All rights reserved.
5
Learning Outcome
Describe the role culture plays in
decision making.
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Hofstede’s Dimensions
• Styles of decision
making vary by
culture
• Many of
Hofstede’s
dimensions have
implication for
how people deploy
the decisionmaking process
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Beyond the Book:
Decisions in Japan
“Teamwork” and “Collaboration” look much
different in Japan than in the United States. In
Japanese firms, workers (especially lower
level) tend to remain silent during meetings,
avoid sitting next to upper management, and
rigorously avoid using their boss’ first name.
Upper management, meanwhile, steer clears
of direct feedback or delivering the “hard
truth.” At all levels, harmony and restraint,
rather than independence and risk-taking, are
prized values.
© 2011 Cengage Learning. All rights reserved.
Beyond the Book
Decision Making in the Virtual
Workplace
Group Decision
Support Systems
Tools
for
Virtual Teams
Desktop
Videoconferencing
Systems
Internet/Intranet
Systems
© 2011 Cengage Learning. All rights reserved.
6
Learning Outcome
Explain how organizations can
improve the quality of decisions
through participation.
© 2011 Cengage Learning. All rights reserved.
Participative Decision Making
Occurs when individuals who are affected
by decisions influence decision-making
Organizational
Foundation
Supportive organizational culture
Team-oriented work design
Individual
Foundation
People must be psychologically
equipped
Motivation to act autonomously
Employees must be able to see benefit
© 2011 Cengage Learning. All rights reserved.
Beyond the Book:
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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Beyond the Book:
Can I Use Another Computer?
Workers face a growing problem – the computers,
applications and phones they use at work are ancient
compared to what they use personally. For example, some
chafe at having to use email systems with limited storage
when free webmail options provide gigabytes of space.
Others are frustrated that their company still uses an
operating system released in 2001.
How would you resolve this issue? How would you
provide cutting-edge technology while maintaining
costs? How would you deal with employees who
are not tech savvy?
© 2011 Cengage Learning. All rights reserved.
1. Does “The Bird Problem” present
Kit and Ace with a programmed
or nonprogrammed decision? What
features of their decision problem
led to your choice?
Failure to
Launch
2. Review the earlier section
describing the decision-making
process. Which steps in that process
appear in “The Bird Problem?” Note
the examples of each step that you
see.
3. Assess the degree of certainty,
uncertainty, and risk that Kit and Ace
face in this decision problem. What
factors set the degree of certainty,
uncertainty, and risk?
© 2011 Cengage Learning. All rights reserved.