Decision Making by Individuals and Groups Decision Making by Individuals and Groups Chapter 10 Organizational Behavior Nelson & Quick, 6th edition

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

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

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

Models of Decision-Making Effective Decision - a timely decision that meets a desired objective and is acceptable to those individuals affected by it Photos courtesy of Clips Online ©2008 Microsoft Corporation 5

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 6

Bounded Rationality Model Bounded Rationality - a theory that suggests that there are limits upon how rational a decision maker can actually be Satisfice – to select the first alternative that is “good enough,” because the costs in time and effort are too great to optimize Managers suggest the first satisfactory alternative 7

Bounded Rationality Model Managers recognize that their conception of the world is simple Managers are comfortable making decisions without determining all the alternatives Heuristics – shortcuts in decision making that save mental activity Managers make decisions by rules of thumb or heuristics 7

Garbage Can Model Garbage Can Model - Problems Participants Solutions Choice opportunities Garbage Can Model Garbage Can Model - a theory that contends that decisions in organizations are random and unsystematic SOURCE: 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

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 Often lead the group discussions Evidence: Successful Managers Take Risks 9

Escalation of Commitment Escalation of Commitment Escalation of Commitment - The tendency to continue to commit resources to a failing course of action Why it occurs humans dislike inconsistency optimism control sunk costs How to deal with it split responsibility for decisions provide individuals with a graceful exit have groups make the initial decision 10

Cognitive Style Cognitive Style - an individual’s preference for gathering information and evaluating alternatives Cognitive Style Individual’s Perceiving Style Individual’s Sensing Style + =

Cognitive Style Jungian theory offers a way of understanding and appreciating differences among individuals. Photos courtesy of Clips Online ©2008 Microsoft Corporation

Jung’s 4 Cognitive Styles Style Ideal Organization ST Sensing/thinking Facts Impersonal analysis SF Sensing/feeling Facts and organizational relationships NT Intuiting/thinking Broad issues Impersonal and ideal NF Intuiting/feeling Serve humankind General values

Z Problem-Solving Model Look at the facts and details What alternatives do the facts suggest? Sensing Intuition What impact will it have on those involved? Can it be analyzed objectively? Thinking Feeling SOURCE: Excerpted from Type Talk at Work by Otto Kroeger and Janet M. Thuesen, 1992, Delacorte Press. Reprinted by permission Otto Kroeger Associates.

Two Brains, Two Cognitive Styles 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 SOURCE: Created based on ideas from Left Brain, Right Brain by Springer and Deutsch, p.272. © 1993 by Sally Springer and Georg Deutsch. (New York: W.H. Freeman and Company, 1993).

Influences on Decision-Making Intuition - fast, positive force in decision making utilized at a level below consciousness and 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 the Creative Process Four Stages of the Creative Process Preparation experience/ opportunity to build knowledge base Incubation reflective thought, often unconscious Illumination insight into solving a problem Verification thinking, sharing, testing the decision

Influences on Creativity Individual examples Cognitive Processes Divergent thinking Associational abilities Unconscious processes Personality Factors Intellectual, artistic values Breadth of interests High energy Self-confidence Organizational examples Autonomous feelings Diverse team skills Quality, supportive relationships with supervisors Flexible organization structure Participative decision making

Four Types of Creativity Creativity Type Presented or Discovered Internal or External Trigger Responsive You respond to problems Because it is expected of you Contributory Because you want to be creative Expected You discover problems Proactive

Participation in Decision Making Participative Decision Making - Individuals who are affected by decisions influence the making of those decisions Photos courtesy of Clips Online ©2008 Microsoft Corporation

Foundations for Participation and Empowerment Foundations for Participation and Empowerment 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

Group Decision-Making Role of synergy - a positive force that occurs in groups 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 Two-thirds Majority Majority Wins First-shift Truth Wins

Group Decision Making Advantages Disadvantages Advantages 1. More knowledge through pooling of group member resources 2. Increased acceptance and commit- ment to decisions (had a voice) 3. Greater understanding due to involvement in decision stages Disadvantages 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

Group Phenomenon Groupthink - a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressures Photos courtesy of Clips Online ©2008 Microsoft Corporation

Conditions Favoring Groupthink High cohesiveness Group homogeneity Decision with high consequences Time constraints Photos courtesy of Clips Online ©2008 Microsoft Corporation

Symptoms of Groupthink Illusions of invulnerability Illusions of group morality Illusions of unanimity Rationalization Stereotyping the enemy Self-censorship Peer pressure Mindguards SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission. Photos courtesy of Clips Online ©2008 Microsoft Corporation

Preventing Groupthink Ask each group member to act as critical evaluator Have the leader avoid stating his opinion prior to the group decision Create several groups to work simultaneously Appoint a devil’s advocate Evaluate the competition carefully After consensus, encourage rethinking the position SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission.

Group Polarization Group Polarization - the tendency for group discussion to produce shifts toward more extreme attitudes among members Photos courtesy of Clips Online ©2008 Microsoft Corporation

Group Decision Making Techniques Brainstorming Self-Managed Teams Nominal Group Technique (NGT) Group Decision Techniques G Quality Circles and Quality Teams Delphi Technique Devil’s Advocacy Dialectical Inquiry 24

Diversity and Culture in Decision Making Racially dissimilar groups More open information sharing Dissenting perspectives encouraged Better decision making Functionally dissimilar groups Engage in greater debate Better financial performance $ $ $ Photos courtesy of Clips Online ©2008 Microsoft Corporation

Technological Aids to Decision-Making 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 Group Decision Support Systems - systems that use computer software and communication facilities to support group decision-making processes (face-to-face meetings or dispersed)

Decision Making in the Virtual Workplace Decision Making in the Virtual Workplace Desktop video conferencing systems Tools for Virtual Teams Group decision support systems Internet/Intranet systems Agent-based modeling

Ethics Check    Is it legal? Does it violate law  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 relationships How will it make me feel about myself?  

Chapter 10: Reflect & Discuss Dr. Seuss’ How the Grinch Stole Christmas Video Clip What to Watch for and Ask Yourself What are the Grinch’s decision alternatives or options? What decision criteria does the Grinch use to choose from the alternatives? Describe the steps in the Grinch’s decision-making process. Dr. Seuss’ How the Grinch Stole Christmas Readers and lovers of the Dr. Seuss original tale may feel put off by Ron Howard’s loose adaptation of the story. Who-ville, a magical, mythical land, features the Whos who love Christmas and the Grinch (Jim Carrey) who hates it. Cindy Lou Who (Taylor Momsen) tries to bring the Grinch back to the Yuletide celebrations, an effort that backfires on all involved. Sparkling special effects will dazzle most viewers and likely distract them from the film’s departures from the original story. The selected scene is an edited version of the “Second Thoughts” sequence early in the film. Just before this scene, fearless Cindy Lou entered the Grinch’s lair to invite him to be the Holiday Cheermeister at the Whobilation One-thousand celebration. In typical Grinch fashion, he pulls the trap door on Cindy Lou, who unceremoniously slides out of his lair to land on a snowy Who-ville street. The Grinch now must decide whether to accept the invitation. The film continues with the Cheer­meister award ceremony. What to Watch for and Ask Yourself What are the Grinch’s decision alternatives or options? What decision criteria does the Grinch use to choose from the alternatives? Describe the steps in the Grinch’s decision-making process.