Chapter 9 Making Decisions K&K And more

Key concepts Models of decision making Rational, normative, optimizing, satisficing, heuristics Contingency model Individual Decision-making styles Escalation of commitment Selecting a decision making method Group decision-making How groups make decisions Consensus, brainstorming, NGT

Two models of decision making Rational Identify the problem Generate alternative solutions Select a solution Implement and evaluate Optimizing: the “Best” Normative Bounded rationality Limited information processing Heuristics Availability (info in memory) Representativeness (estimate probability based on similar past events) Satisficing: “Good enough”

Heuristics Shortcuts used to help make decisions Availability (info easy to recall from memory) Recency Contrast (saliency) Emotion evoking Representativeness probability estimation made on basis of similar experiences

Contingency model Analytic strategies when Problems is unfamiliar, ambiguous, complex, unstable Solution is irreversible and significant, decision maker is accountable, assuming no money or time constraints Probability of making a correct decision goes down Decision maker is experienced and educated

Contingency model Nonanalytic strategies typically used when Problem is familiar, straightforward or stable Decision can be reversed, not very significant and decision maker is not held accountable Probability of making a correct decision goes up Decision maker lacks knowledge, ability or motivation to make a good decision

Individual decision making styles Most managers use several decision making styles. Styles may vary across occupation, job level, cultures. Knowledge of styles helps you understand how you approach problems and how best to approach people with other styles so you can work together. There is no one best style for all situations

Individual decision making styles Task and technical concerns People and social concerns High tolerance for ambiguity Low tolerance For ambiguity AnalyticalConceptual Directive Behavioral

Escalation of commitment Sticking to a course of action even though it is not working

Selecting a decision making method Increasing participation AutocraticI AutocraticII ConsultiveI ConsultiveII Group You solve the problem or make the decision yourself, using available information. You get the necessary information from your employees, then solve the problem or make the decision. You share the problem with employees individually and get their Ideas. You make the decision, which may or may not include suggestions received. You share the problem with employees as a group, get their ideas and suggestions. You make the decision, which may or may not include your employees’ ideas. You share a problem with the group and together generate and evaluate alternatives and attempt to reach consensus on decision. Vroom & Jago, 1988

Decision Questions (Vroom & Jago) Quality requirement How important is the technical quality of this decision? Commitment requirement How important is employee commitment? Leader’s information Do I have sufficient information to make a high-quality decision? Problem structure Is the problem well structured? Commitment probability If I were to make the decision myself, would employees be committed to it? Goal congruence Do employees share the organizational goals to be attained in solving the problem Employee conflict Is conflict among employees over preferred solutions likely? Subordinate information Do employees have sufficient information to make a high-quality decision?

Group decision making Advantages Greater pool of knowledge Different perspectives Greater understanding Increased acceptance Training ground Disadvantages Social pressure to conform Minority domination Logrolling (politics) Goal displacement “Group think”

How groups make decisions Lack of response (Plop) One option is chosen without critical evaluation of alternatives Authority rule Person in authority makes decision - efficient Minority rule Two or three dominant people “persuade” others Majority rule Formal voting Unanimity All members agree Consensus All sides are heard and decision is favored by most members

Reaching consensus Do listen actively Do involve as many members as possible Do seek out reasons behind arguments Do allow disagreements to surface and be deliberated Don’t argue blindly; consider others’ reactions Don’t change your mind just to reach quick agreement Don’t vote, coin toss or bargain (horse trade)

Group problem solving techniques Brainstorming Freewheeling process to generate a large quantity of ideas Nominal Group technique Structured process to generate ideas and evaluate solutions