Decision Making
Learning Goals
• Managers constantly engaged with issues
that have no optimal answers. How do you
make these decisions.
• Help to prepare with Cases.
• Group decision making issues (Groupthink).
Warm Up
• Think of a problem that your are currently
having. Describe the problem. Need to be
willing to share it with others.
• Share with you my problem.
• Apply what we are talking about today to
that problem (3 participation points).
Definitions
• Decisions—choices made from among two
or more alternatives. Simple where to eat to
whom to hire.
• Problem solving—resolving a discrepancy
between current state of affairs and desired
state—only with negative situations.
• Managers involved with both, mostly
problem solving.
More (not in the book)
• Routine decisions. Repeated types of
choices situations that fall into clear
categproies and responses.
• Non-routine decisions—unique choice
situations that have never been experienced
before.
Rational decision model
Recommended for Cases
• Defining the problem. What is the
problem? How is the problem framed?
• Issues: presenting problem and deeper
problems. Which ones do you address?
• Which are most critical; which one is
easiest to change.
• Is it a problem or an opportunity?
Defining the problem
• Ask “Why” does this occur. Dragonfly
airlines.
• Other examples.
• Step is commonly skipped.
• How do you pick the most relevant
problem? Common sense and intuition.
• How you define the problem frames your
solutions you consider.
Develop criteria
• Selection--• Important to do this before getting
alternatives.
Susan Felix Sharon Paul
Principle of Supervision
Written communication
oral communication
Red Cross Knowledge
OSHA Knowledge
Knowledge of labor pools
Knowledge of company policies
total
Develop alternatives.
• Do not stop at first acceptable alternative.
• Generate a big list.
Evaluate
• All alternatives have negative consequences
in non-routine decisions. Important to
consider negative consequences!
Sometimes skip step 2 and just consider the
pros and cons of each alternative.
Susan Felix Sharon Paul
Principle of Supervision
9 8 10 8
Written communication
8 8 10 8
oral communication
9 8 10 8
Red Cross Knowledge
10 9
6 8
OSHA Knowledge
6 8
6 8
Knowledge of labor pools
9 8
4 8
Knowledge of company policies
9 9
4 8
total
60 58 50 56
Select
• Perhaps modify to address negative
qualities. Implement more than one
alternative.
Ethics double check (not in
book).
Enron and audit.
Environmental issues.
Would you make efforts to gain favor of
governmental officials in China?
Back to your problems in the
beginning.
Intuitive decision making is
commonly used too.
• Spontaneous, creative way to make
decisions. Actions out of desperation.
Action is better than inaction.
• Unable to teach it per se. Learn by
experience and get better with more
experience.
• Selection decisions.
Intuitive Decision Making

High uncertainty levels

Little precedent

Hard to predictable variables

Limited facts

Unclear sense of direction

Analytical data is of little use

Several plausible alternatives

Time constraints
Cricket Farm
• Intuitive or Rational Decisions.
Group decision making
• Exercise
• What are the advantages and disadvantages
of group decision making.
Groupthink
• Occurs when the norm for consensus in
groups overrides the realistic appraisal of
alternative courses of action
Examples
•
•
•
•
Unethical choices—Auditor and Enron.
Enron itself and accounting practices
American car industry and Japan 1970’s.
President at Iowa State University and Catt
Hall Committee.
Groupthink Decision by minority
or by one person in some cases
• Often the designated group leader. Leader
is simply looking for confirmation of
preferred alternative. More defensible
justification if “committee approved it”.
The process
• Leader or informal leader—beliefs about preferred
options. Communicated directly, or in some cases
indirectly—critical of alternative.
• Members avoid rocking the boat—lets get done
with this task.
• So rationalizations occur. Justification for predetermined course of action—never consider the
negative consequences.
• If people outside the organization are
complaining—you stereotype the enemy as
being archevil or constant complainers.
• Land developers and environmentalists.
Thus, no need to address those concerns.
• Direct pressure on those who challenge
assumptions of preferred alternative.
• Cast aspersions—self interest of party.
• Gang up and heated arguments. 2 or more
against 1, the one eventually gives up.
• Leader indicates disapproval. (NASA and
space shuttle).
• Those who have doubts remain silent—
want to remain a member of the group.
Important to look for social approval. Do
not want to lose face. May actually know
the purpose is to tell the leader what they
want to hear.
• Negative consequence of preferred choice
are never considered.
Framing the question
• Only one alternative considered: all others
have been dismissed or not expressed.
• Those who have doubt do not express them.
• No real vote. Just seems like there is lack
of movement in any other direction.
Illusions of unanimity.
Avoiding groupthink
•
•
•
•
Follow decision making process.
Define the problem
Generate more than one alternative
Evaluate the pros and cons of every
alternative.
Generating Alternatives
• Brainstorming
• Break into subunits.
• Give everyone a chance to generate at least
one idea.
• Separate evaluation from generation of
alternatives.
Evaluation
•
•
•
•
•
Pick criteria before alternatives.
Devil’s advocate
Ask non-group members to evaluate.
Listen.
Seek negatives of every alternative.
• Committee Chair Role is to facilitate group
discussion. Committee chair should avoid
generating alternatives or evaluating
alternatives.
summary