Chapter 10
Decision Making by
Individuals & Groups
Nelson & Quick
?
The Decision-Making Process
Programmed Decision - a simple,
routine matter for which a manager
has an established decision rule
Nonprogrammed Decision - a new,
complex decision that requires a
creative solution
The
DecisionMaking
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
The
DecisionMaking
Process
Select the best
course of action
Implement
the decision
Gather
feedback
Follow up
Models of Decision-Making
Effective decision
a timely decision
that meets a desired
objective and is
acceptable to those
individuals affected
by it
Rational Model
Bounded Rationality
Model
Garbage Can Model
Rational Model
Rationality - a logical,
step-by-step approach
to decision making, with a
thorough analysis of
alternatives and their
consequences
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
Bounded Rationality
Model
Bounded Rationality - a
theory that suggests that
there are limits upon how
rational a decision maker
can actually be
1. Managers suggest the first satisfactory alternative
2. Managers recognize that their conception of the
world is simple
3. Managers are comforable making decisions
without determining all the alternatives
4. Managers make decisions by rules of thumb or
heuristics
Garbage Can Model
Solutions
Problems
Garbage Can Model a theory that contends Participants
that decisions in
organizations are
random and unsystematic
Choice
opportunities
From M.D. Cohen, J.G. March, and J.P. Olsen in Administrative Science Quarterly 17 (March 1972) 1.25.
Reprinted by permission of the Administrative Science Quarterly
Risk and the Manager
Risk aversion - the tendency to
choose options that entail fewer
risks and less uncertainty
Risk takers
– accept greater potential for loss
– tolerate greater uncertainty
– more likely to make risky decisions
Evidence: Successful Managers Take Risks
Escalation of
Commitment
The tendency to continue to
commit resources to a losing
course of action
• Why it occurs
– humans dislike inconsistency
– optimism
– control
• How to deal with it
– split responsibility for decisions
– provide individuals with a graceful exit
– have groups make the initial decision
Cognitive Style
Cognitive Style - an individual’s
preference for gathering
information and evaluating
alternatives
Jungian theory offers a way of understanding and
appreciating differences among individuals.
Jung’s Cognitive Style
Style
Ideal Organization
ST
Sensing/thinking
Facts/ Impersonal Control
SF
Sensing/feeling
Facts & Org. relationships
NT
Intuiting/thinking
Broad issues/ Impersonal & ideal
NF
Intuiting/feeling
Serve humankind/General values
Z Problem-Solving Model
Look at
the facts
and details
Can it be
analyzed
objectively?
Sensing
Thinking
What alternatives
Intuition
do the facts
suggest?
Feeling
What impact
will it have on
those involved?
Figure from Type Talk at Work by Otto Kroeger and Janet M. Thuesen. Copyright © 1992 by Otto Kroeger
and Janet M. Thuesen. Used by permission of Dell Publishing, a division of Random House. Inc.
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
Four Stages of Creative Process
• Preparation - experience/ opportunity
to build knowledge base
• Incubation - reflective, often
unconscious thought
• Illumination - insight into problem
• Verification - thinking, sharing,
testing the decision
Influences on Creativity
• Individual examples
– Cognitive Processes
• Divergent Thinking
• Associational Abilities
– Personality Factors
• breadth of interests
• high energy
• self confidence
• Organizational ex.
– Flexible organization
structure
– Participative
decision-making
– Quality, supportive
relationships with
supervisors
Organizations Can Facilitate
Creative Decision-Making
•
•
•
•
•
•
Reward creativity
Allow employees to fail
Make work more fun
Provide creativity training
Vary work groups (internal/external)
Encourage creative stimuli (music,
art, etc.)
Participative
Decision Making
Individuals who are affected
by decisions influence the
making of those decisions
• Organizational Foundations
– Participative, supportive organizational culture
– Team-oriented work design
• Individual Prerequisites
– Capability to become psychologically involved in
participative activities
– Motivation to act autonomously
– Capacity to see the relevance of participation
for one’s own well-being
Two Brains, Two Cognitive Styles
Left Hemisphere
Verbal
Sequential, temporal,
digital
Logical, analytic
Rational
Western thought
Right Hemisphere
Nonverbal, visuospatial
Simultaneous, spatial,
analogical
Gestalt, synthetic
Intuitive
Eastern thought
Ideal = “brain-lateralized” making use of
either or both sides, depending on situation
From Left Brain, Right Brain by Springer and Deutsch © 1989, 1985, 1981 by Sally Springer and Georg Deutsch.
Used with permission by W.H. Freeman and Company
Group Decision-Making
• Role of synergy - a positive force in groups
that occurs when group members stimulate
new solutions to problems through the
process of mutual influence and
encouragement in the group
• Role of social decision schemes - simple
rules used to determine
Majority Wins
final group decisions
Truth Wins
(prediction 80% correct) Two-thirds Majority Wins
First-shift rule
Group Decision-Making
Advantages
1) more knowledge
through pooling of
group resources
2) increased
acceptance &
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
Disadvantages
Group Phenomenon
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
Brainstorming
Nominal Group Technique
Self-Managed Teams
Group
Decision
Techniques
Delphi Technique
Quality Circles & Quality Teams
Dialectical Inquiry
Devil’s Advocacy
Technological Aids to DecisionMaking
Expert Systems - a programmed decision tool
set up using decision rules
Decision Support Systems - computer and
communication systems that process
incoming data and synthesize pertinent
information for managers to use
Group Decision Support Systems - systems that
use computer software and communication
facilities to support group decision-making
processes
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
• How will it make me feel about myself