4e
Nelson/Quick
Chapter 10
Decision
Making by
Individuals
and Groups
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Learning Outcomes
 Identify the steps in the decision-making process
 Describe various models of decision making
 Discuss the individual influences that affect decision
making
 Explain how groups make decisions
 Describe the role culture plays in decision making
 Explain how organizations can improve the quality
of decisions through participation
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 10.1 - Decision-Making
Process
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Effective Decision
Timely decision that meets a desired
objective and is acceptable to those
individuals affected by it
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Rational Model
 Rationality: Logical, step-by-step approach to
decision making, with a thorough analysis of
alternatives and their consequences
 Assumptions
 Outcome will be completely rational
 Decision maker uses a consistent system of
preferences to choose the best alternative
 Decision maker is aware of all alternatives
 Decision maker can calculate the probability of
success for each alternative
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Bounded Rationality
 Suggests that there are limits to how rational a
decision maker can actually be
 Assumptions
 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
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Bounded Rationality
 Managers make decisions by rules of thumb or
heuristics
 Heuristics: Shortcuts in decision making that save
mental activity
 Managers satisfice
 Satisfice: To select the first alternative that is good
enough, because the costs in time and effort are too
great to optimize
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 10.2 - The Z Problem-Solving
Model
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Factors that Influence Decision
Making
Comfort with risk
• Risk aversion: Choosing options with fewer risks and less
uncertainty
• Depends on individual tendencies and organizational factors
Cognitive style
• Individual’s preference for gathering information and
evaluating alternatives
Personality, attitudes and values
• Influence decision making
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Individual-Organization Fit
 Results in high creative performance is highest
 Types of creativity
 Responsive
 Expected
 Contributory
 Proactive
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Group Decision Making
 Synergy: Positive force that stimulates new
solutions to problems through mutual influence and
encouragement within the group
 Social decision schemes: Rules that determine final
group decisions
 Majority-wins rule
 Truth-wins rule
 Two-thirds-majority rule
 First-shift rule
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Limits of Group Decision Making
Groupthink: Deterioration of mental efficiency, reality
testing, and moral judgment resulting from pressures
within the group
• Conditions that encourage groupthink
• High cohesiveness
• Making highly consequential decision
• Time constraints
Group polarization: Tendency for group discussion to
produce shifts toward more extreme attitudes among
members
• Occurs as a result of the:
• Social comparison approach
• Persuasive arguments view
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Group Decision Techniques
Brainstorming
• Generating multiple ideas on a given subject while suspending
evaluation until all the ideas have been suggested
Nominal group technique (NGT)
• Structured approach to group decision making that focuses on
generating alternatives and choosing one
Devil’s advocacy
• A group or individual is given the role of critic during decision making,
helps prevent groupthink
Dialectical inquiry
• Debate between two opposing sets of recommendations
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Participative Decision Making
 Decision making in which individuals who are
affected by decisions influence the making of those
decisions
 Buffers employees from the negative experiences of
organizational politics
 Increases employee creativity, job satisfaction, and
productivity
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Foundations for Participation
and Empowerment
 Organizational perquisites
 Supportive organizational culture and a teamoriented work design
 Individual perquisites
 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
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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