1. Chapter 10 Decision Making by Individuals & Groups Nelson & Quick?
Chapter 10 Decision Making by Individuals & Groups Nelson & Quick 1

2. 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 2

3. The Decision- Making Process
Recognize the problem and
the need for a decision
The Decision- Making Process
Identify the objective of
the decision
Gather and evaluate data
and diagnose the situation
List and evaluate
alternatives 3

4. The Decision- Making Process
Select the best
course of action
The Decision- Making Process
Implement
the decision
Gather
feedback
Follow up 4

5. 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 5

6. Rational Model 1. The outcome will be completely rational
Rationality - a logical,
step-by-step approach
to decision making, with a
thorough analysis of
alternatives and their
consequences
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 6

7. 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 7

8. random and unsystematic
Garbage Can Model
Solutions
Choice
opportunities
Garbage Can Model -
a theory that contends
that decisions in
organizations are
random and unsystematic
Problems
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 8

9. 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 9

10. 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 10

11. Jungian theory offers a way of understanding and
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.

12. Jung’s Cognitive 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

13. Z Problem-Solving Model
Look at
the facts
and details
What alternatives
do the facts
suggest?
Sensing Intuition
Can it be
analyzed
objectively?
What impact
will it have on
those involved?
Thinking Feeling
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.

14. 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

15. 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

16. 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

17. 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.)

18. Participative Decision Making
Individuals who are affected
by decisions influence the
making of those decisions
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

19. Two Brains, Two Cognitive Styles
Left Hemisphere
Right Hemisphere
Verbal
Sequential, temporal, digital
Logical, analytic
Rational
Western thought
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

20. 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

21. Group Decision-Making
Advantages
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
1) more knowledge
through pooling of
group resources
2) increased
acceptance &
commitment due
to voice in decisions
3) greater under-
standing due to
involvement in
decision stages
Disadvantages

22. 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

23. Brainstorming
Nominal Group Technique
Self-Managed Teams
Group
Decision
Techniques
Delphi Technique
Quality Circles & Quality Teams
Devil’s Advocacy
Dialectical Inquiry

24. 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

25. Ethics Check Is it legal? Is it balanced?
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