Presentation on theme: "Chapter 10 Decision Making by Individuals & Groups"— Presentation transcript:
1Chapter 10 Decision Making by Individuals & Groups ?Chapter 10 Decision Making by Individuals & Groups1
2The Decision-Making Process Programmed Decision - a simple, routine matter for which a manager has an established decision ruleNonprogrammed Decision - a new, complex decision that requires a creative solution2
3The Decision- Making Process Recognize the problem andthe need for a decisionThe Decision- Making ProcessIdentify the objective ofthe decisionGather and evaluate dataand diagnose the situationList and evaluatealternatives3
4The Decision- Making Process Select the bestcourse of actionThe Decision- Making ProcessImplementthe decisionGatherfeedbackFollow up4
5Models of Decision-Making Effective decisiona timely decisionthat meets a desired objective and is acceptable to those individuals affectedby itRational ModelBounded Rationality ModelGarbage Can Model5
6Rational Model 1. The outcome will be completely rational Rationality - a logical,step-by-step approachto decision making, with athorough analysis ofalternatives and theirconsequencesRational Model1. The outcome will be completely rational2. The decision maker uses a consistent system of preferences to choose the best alternative3. The decision maker is aware of all alternatives4. The decision maker can calculate the probability of success for each alternative6
7Bounded Rationality Model Bounded Rationality - atheory that suggests thatthere are limits upon howrational a decision makercan actually be1. Managers suggest the first satisfactory alternative2. Managers recognize that their conception of the world is simple3. Managers are comforable making decisions without determining all the alternatives4. Managers make decisions by rules of thumb or heuristics7
8random and unsystematic Garbage Can ModelSolutionsChoiceopportunitiesGarbage Can Model -a theory that contendsthat decisions inorganizations arerandom and unsystematicProblemsParticipantsFrom 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 Quarterly8
9The Quality, Timeliness, Acceptance, and Ethical Appropriateness of a Decision Influence its EffectivenessEthicalAppropriatenessQuality+Timeliness+Acceptance+
10A Manager’s Decision-Making Styles Will Influence the Way She Attacks Problems Right-brain thinkers tendto valuepeople/social issuesLeft-brain thinkers tend to valuetechnical/task issuesANALYTICA problem solver who analyzesalternatives and innovatesCONCEPTUALA socially oriented personwho sees the big pictureHigh CognitiveComplexityDIRECTIVEA rapid decision maker whoexpects results and relies on rulesBEHAVIORALA person who needsaffiliation and wants to helpothersLow CognitiveComplexity
11Managers Take Six Steps in Making an Effective Decision Using the Rational Decision-Making Process ANALYZE THE SITUATIONWhat are the key elements in the situation?What constraints affect the decision?What resources are available?SET OBJECTIVESIs the problem stated clearly?Do people understand what they will work on?By what criteria will decision making be judged?SEARCH FOR ALTERNATIVESDo 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?
12Six 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 DECISIONDo 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 DECISIONAre responsibilities for data collection, analysis, and reporting clear?Is there a comprehensive evaluation plan?Is there an evaluation schedule?
13Managers Can Ask These Questions When Evaluating Objectives CriteriaQuestions to AskRelevancePracticalityChallengeMeasurabilitySchedulabilityBalanceDo 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?
14(cont.) Criteria Questions to Ask Flexibility Timeliness Technology GrowthCosteffectivenessAccountabilityAre 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?
15Problems Randomly Attach to Solutions in the “Garbage Can” Problem A+Solution XProblem AProblem BProblem CSolution XSolution ZSolution Y
16Gathering Ideas Brainstorming The Nominal Group Technique The Affinity DiagramThe Delphi MethodElectronic Meetings
17Brainstorming Topic Take turns sharing ideas Record each idea No comments/criticismsKeep the tempo movingOne idea per turnMembers may passKeep going until ideas are exhausted
18Mangers 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.
19Managers 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 righttrainingEquipment has notbeen repaired in atimely fashionQuality controlprocedures areinadequateThe productdesign isfaultyTop management needsto reexamine workers’training needs and findways to give them theright training for their jobs.Materials receivedfrom suppliers havebeen defective
20The Nominal Group Technique (Delbecq, Van de Ven and Gustafson, 1975) 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.Silent idea generations,Round-robin sharing of ideas,Feedback to the group,Explanatory group discussion,Individual re-assessment, andMathematical aggregation of revised judgements.
21Affinity 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.
22How 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.
24Tips 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.
25Delphi Technique Problem stated Questionnaires Anonymous & Independent Compile resultsDistribute copies of resultsNew round beginsDoes not require physical presenceTime consuming
26Electronic Meetings Horseshoe-shaped table Up to 50 participants Issues are presentedResponses typedProjection screen displayAnonymity, honesty, & speed55% faster than traditionalLacks creditFastest typist gets there firstNo face-to-face interchange
27Risk and the ManagerRisk aversion - the tendency to choose options that entail fewer risks and less uncertaintyRisk takersaccept greater potential for losstolerate greater uncertaintymore likely to make risky decisionsEvidence: Successful Managers Take Risks9
28Escalation of Commitment The tendency to continue tocommit resources to a losingcourse of actionWhy it occurshumans dislike inconsistencyoptimismcontrolHow to deal with itsplit responsibility for decisionsprovide individuals with a graceful exithave groups make the initial decision10
29Jungian theory offers a way of understanding and Cognitive StyleCognitive Style - an individual’s preference for gathering information and evaluating alternativesJungian theory offers a way of understanding andappreciating differences among individuals.
32Influences on Decision-Making Intuition - fast, positive force in decision making utilized at a level below consciousness, involves learned patterns of informationCreativity - a process influenced by individual and organizational factors that results in the production of novel and useful ideas, products, or both
33Four Stages of Creative Process Preparation - experience/ opportunity to build knowledge baseIncubation - reflective, often unconscious thoughtIllumination - insight into problemVerification - thinking, sharing, testing the decision
34Influences on Creativity Individual examplesCognitive ProcessesDivergent ThinkingAssociational AbilitiesPersonality Factorsbreadth of interestshigh energyself confidenceOrganizational ex.Flexible organization structureParticipative decision-makingQuality, supportive relationships with supervisors
35Organizations Can Facilitate Creative Decision-Making Reward creativityAllow employees to failMake work more funProvide creativity trainingVary work groups (internal/external)Encourage creative stimuli (music, art, etc.)
36Participative Decision Making Individuals who are affectedby decisions influence themaking of those decisionsParticipative Decision MakingOrganizational FoundationsParticipative, supportive organizational cultureTeam-oriented work designIndividual PrerequisitesCapability to become psychologically involved in participative activitiesMotivation to act autonomouslyCapacity to see the relevance of participation for one’s own well-being
38Group 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 groupRole of social decision schemes - simple rules used to determinefinal group decisions(prediction 80% correct)Majority WinsTruth WinsTwo-thirds Majority WinsFirst-shift rule
39Group Decision-Making Advantages1) pressure ingroups to conform2) domination byone forceful memberor dominant clique3) amount of timerequired, becausegroup is slowerthan individualto make adecision1) more knowledgethrough pooling ofgroup resources2) increasedacceptance &commitment dueto voice in decisions3) greater under-standing due toinvolvement indecision stagesDisadvantages
40Group PhenomenonGroupthink - a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressuresGroup polarization - the tendency for group discussion to produce shifts toward more extreme attitudes among members
42Technological Aids to Decision-Making Expert Systems - a programmed decision tool set up using decision rulesDecision Support Systems - computer and communication systems that process incoming data and synthesize pertinent information for managers to useGroup Decision Support Systems - systems that use computer software and communication facilities to support group decision-making processes
43Ethics Check Is it legal? Is it balanced? Does it violate lawDoes it violatecompany policyIs it balanced?Is it fair to allDoes it promote win-winHow will it make me feel about myself