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??Chapter 10Chapter 10
Decision Making by Decision Making by Individuals & GroupsIndividuals & Groups
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 Decision-Making Process
Recognize the problem andthe need for a decision
Identify the objective ofthe decision
Gather and evaluate dataand diagnose the situation
List and evaluatealternatives
The Decision-Making Process
Select the bestcourse of action
Implementthe decision
Gatherfeedback
Follow up
Models of Decision-Making
Effective decisionEffective decision
a timely decision that meets a desired objective and is acceptable to those individuals affected by it
Garbage Can Model
Bounded Rationality Model
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
Rational ModelRationality - a logical,step-by-step approachto decision making, with athorough analysis ofalternatives and theirconsequences
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
Bounded Rationality Model
Bounded Rationality - a theory that suggests that there are limits upon how rational a decision maker can actually be
Garbage Can Model -
a theory that contends
that decisions in
organizations are
random and unsystematic
Garbage Can Model
Problems
Solutions
Choiceopportunities
Participants
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
The Quality, Timeliness, Acceptance, and Ethical Appropriateness of a Decision Influence its
Effectiveness
QualityEthicalAppropriateness
AcceptanceTimeliness+ ++
A Manager’s Decision-Making Styles Will Influence the Way She Attacks Problems
Left-brain thinkers tend to valuetechnical/task issues
Right-brain thinkers tend to value
people/social issues
ANALYTICA problem solver who analyzesalternatives and innovates
CONCEPTUALA socially oriented person
who sees the big picture
DIRECTIVEA rapid decision maker whoexpects results and relies on rules
BEHAVIORALA person who needs
affiliation and wants to helpothers
High CognitiveComplexity
Low CognitiveComplexity
Managers Take Six Steps in Making an Effective Decision Using the Rational Decision-Making Process
ANALYZE THE SITUATION•What are the key elements in the situation?•What constraints affect the decision?•What resources are available?
SET OBJECTIVES•Is the problem stated clearly?•Do people understand what they will work on?•By what criteria will decision making be judged?
SEARCH FOR ALTERNATIVES•Do people involved in the problem make the decision?•Have they sought complete information?•Do those with information make the decision?•Do they use diversity to generate ideas?•Are all ideas encouraged?
Six Steps (Cont.)EVALUATE THE ALTERNATIVES•Do participants know that they are evaluating?•Are criteria for assessment clear and understood?•Are differences of opinion included in evaluation?•Are some alternatives pilot tested?
MAKE THE DECISION•Do employees know that they are making the decision?•Are they aware if they are satisficing or optimizing?•Do action plans fit with the decision?•Are they committed to the decision?
EVALUATE THE DECISION•Are responsibilities for data collection, analysis, and reporting clear?•Is there a comprehensive evaluation plan?•Is there an evaluation schedule?
Managers Can Ask These Questions When Evaluating Objectives
Relevance
Practicality
Challenge
Measurability
Schedulability
Balance
Do the objectives relate to and support the basic purpose of the organization?
Do the objectives recognize obvious constraints?
Do the objectives provide a challenge for managers at all levels in the organization?
Can managers quantify the objectives?
Can managers monitor the objectives at interim points to ensure progress?
Do the objectives provide a proper balance on all activities, given organizational goals?
Criteria Questions to Ask
(cont.)
Flexibility
Timeliness
Technology
Growth
Cost effectiveness
Accountability
Are the objectives sufficiently flexible or is the organization likely to find itself locked into a particular course of action?
Given the organization’s environment , is this the proper time to adopt these objectives?
Do the objectives fall within the boundaries of currenttechnological development?
Do the objectives help the organization grow, not just survive?
Do the objectives’ expected costs clearly outweigh their benefit?
Can managers assess the performance of those responsible for attaining the objectives?
Criteria Questions to Ask
Problems Randomly Attach to Solutions in
the “Garbage Can”
Problem A
Problem C
Solution Y
Solution X
Problem B
Solution Z
Problem A
Solution X+
Solutions Problems
Gathering Ideas
•Brainstorming•The Nominal Group Technique•The Affinity Diagram•The Delphi Method•Electronic Meetings
Brainstorming
•Topic•Take turns sharing ideas•Record each idea•No comments/criticisms•Keep the tempo moving•One idea per turn•Members may pass•Keep going until ideas are exhausted
Mangers Should Follow This Advice for Successful Brainstorming
•List all ideas.
•Do not Evaluate any ideas during the initial stages.
•Encourage creativity.
•Offer ideas related to those already listed.
•Ask each participant to offer a specific number (e.g. five to ten) of new ideas.
•Set a time for brainstorming.
Managers Use an Affinity Diagram to Organize Brainstorming in a Group of Employees
THEMEWhy has the number ofdefects increased 10 timesin the past year?
The employeeslack the right training
Quality control procedures areinadequate
The productdesign is faultyMaterials received
from suppliers havebeen defective
Equipment has notbeen repaired in atimely fashion
Top management needsto reexamine workers’training needs and findways to give them theright training for their jobs.
The Nominal Group Technique (Delbecq, Van de Ven and Gustafson, 1975)
•Silent idea generations, •Round-robin sharing of ideas, •Feedback to the group, •Explanatory group discussion, •Individual re-assessment, and •Mathematical aggregation of revised judgements.
A generic name for face-to-face group techniques in which instructions are given to group members not to interact with each other except at specific steps in the process.
Affinity DiagramDefinition: A group decision-making technique designed to sort a large number of ideas, process variables, concepts, and opinions into naturally related groups. These groups are connected by a simple concept.
Purpose: To sort a list of ideas into groups.
Guidelines:
Insure ideas are described with phrases or sentences. Minimize the discussion while sorting -- discuss while developing the header cards.Aim for 5-10 groups. If one group is much larger than others, consider splitting it.
How to Conduct an Affinity Sort:
•Clarify the list of ideas. Record them on small cards. •Randomly lay out cards on table, flipchart, wall, etc. •Sort the cards into "similar" groups in silence -- based on your gut reaction. If you don't like the placement of a particular card -- move it. Continue until consensus is reached. •Create header cards consisting of a concise 3-5 word phrase description, the unifying concept for the group. Place header card at top of group. •Discuss the groupings and try to understand how the groups relate to each other.
•Inquire if ideas are clarified. •Use 3-5 words in the phrase on the header card to describe the group. •If possible, have groupings reviewed by non-team personnel. •To sort, physically get up and gather around the area the cards are placed. •Team members will ultimately reach agreement on placement -- if for no other reason that exhaustion. •Sorting begins when all team members are ready. •If an idea fits in more that one category or group, after discussion, make a second card and place in both groups.
Tips
Delphi Technique
•Problem stated•Questionnaires•Anonymous & Independent•Compile results•Distribute copies of results•New round begins•Does not require physical presence•Time consuming
Electronic Meetings•Horseshoe-shaped table•Up to 50 participants•Issues are presented•Responses typed•Projection screen display•Anonymity, honesty, & speed•55% faster than traditional•Lacks credit•Fastest typist gets there first•No face-to-face interchange
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
• 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
The tendency to continue tocommit resources to a losingcourse of action
Cognitive Style
Cognitive Style - an individual’s preference for gathering
information and evaluating alternatives
Jungian theory offers a way of understanding andappreciating differences among individuals.
Jung’s Cognitive Style
Style
Sensing/thinking
Sensing/feeling
Intuiting/thinking
Intuiting/feeling
Ideal Organization
Facts/ Impersonal Control
Facts & Org. relationships
Broad issues/ Impersonal & ideal
Serve humankind/General values
ST
SF
NT
NF
Z Problem-Solving Model
Look at the facts
and details
Can it beanalyzed
objectively?
What alternativesdo the facts
suggest?
What impactwill it have on
those involved?
Sensing Intuition
Thinking Feeling
Figure from Type Talk at Work by Otto Kroeger and Janet M. Thuesen. Copyright © 1992 by Otto Kroegerand 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
• 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
Individuals who are affectedby decisions influence themaking of those decisions
Two Brains, Two Cognitive Styles
Left Hemisphere Right Hemisphere
VerbalSequential, temporal,
digitalLogical, analytic
RationalWestern thought
Nonverbal, visuospatialSimultaneous, spatial,
analogicalGestalt, synthetic
IntuitiveEastern thought
Ideal = “brain-lateralized” making use ofeither 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
final group decisions
(prediction 80% correct)
Majority Wins
Truth Wins
Two-thirds Majority Wins
First-shift rule
Group Decision-Making
1) more knowledgethrough pooling of group resources2) increasedacceptance & commitment dueto voice in decisions3) greater under-standing due toinvolvement indecision stages
1) pressure ingroups to conform2) domination byone forceful memberor dominant clique3) amount of timerequired, becausegroup is slowerthan individualto make a decision
Advantages
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
GroupDecision
Techniques
Self-Managed Teams
Dialectical Inquiry
Brainstorming
Devil’s Advocacy
Delphi Technique
Nominal Group Technique
Quality Circles & Quality Teams
Technological Aids to Decision-Making
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