1. Decision-Making Challenges

2. Overview The contingency approach to decision making
Decision-making styles
Making decisions in groups
Culture and decision making
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3. Quick Write
Do you like to make big decisions on your own? Or do you prefer to work with a group?
Explain.
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4. The Contingency Approach to Decision Making
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5. How Problems Differ
A well-structured problem is a problem that is straightforward, familiar, and easily defined
An ill-structured problem is a new problem, information about which is ambiguous or incomplete
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6. Programmed Decisions
A programmed decision is a decision that can be handled by a routine approach
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7. Procedure, Rule, & Policy
A procedure is a series of related sequential steps taken to respond to a well-structured problem
A rule is an explicit statement that tells managers what they ought or ought not to do
A policy is a general guide that establishes parameters for making decisions
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8. Nonprogrammed Decisions
A nonprogrammed decision is a decision that a manager tailors to a specific one-time event
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9. Nonprogrammed Decisions
Examples
Should we buy another company?
What global markets will be profitable?
Should we sell our unprofitable division?
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10. Problems, Decisions, and Organizational Levels
Lower-level managers, who generally take on familiar problems, tend to make programmed decisions based on procedures, rules, and policies
Higher-level managers take on more complex problems and make many nonprogrammed decisions
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11. Problems, Decisions, and Organizational Levels
Ill-Structured
Type of
problem
Well-Structured
Top
Level in
Organization
Lower
Programmed
decisions
Nonprogrammed
Adapted from Fundamentals of Management, 5th Ed. By Robbins/DeCenzo, p. 132 Pearson Prentice Hall, 2005
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12. Technology and Decision Making
Expert systems are software that acts like an expert in analyzing and solving ill-structured problems
Neural networks are software that is designed to imitate the structure of brain cells and connections among them
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13. Decision-Making Styles
High
Low
Rational
Intuitive
Way of Thinking
Adapted from Fundamentals of Management, 5th Ed. By Robbins/DeCenzo, p. 134 Pearson Prentice Hall, 2005
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14. Four Decision-Making Styles
Directive
Analytic
Conceptual
Behavioral
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15. Making Decisions in Groups
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16. Advantages of Group Decisions
Provide more-complete information
Bring a diversity of experiences and perspectives to a problem
Generate more alternatives
Increase acceptance of the solution the group reaches
Tend to have more legitimacy
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17. Disadvantages of Group Decisions
Time-consuming
Difficult to stay on topic
Members are unequal – some are better spoken, more forceful, more knowledgeable, or higher in rank within the organization
Some views receive more respect than others
A minority view may look to people outside like the opinion of the whole group
Pressure to conform
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18. Pressure to Conform
If you’ve ever failed to speak up in a group because you felt that your opinion was out of sync with what you sensed the group’s view was, you know the pressure to conform
Psychologist Irving Janis called this phenomenon groupthink
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19. Groupthink
Groupthink is the withholding by group members of different views in order to appear to agree
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20. Signs of Groupthink
Group members rationalize (explain away) any resistance to the assumptions they have made
Members pressure those who express doubt about the group’s shared views
Those who doubt or hold differing views bite their tongues to avoid spoiling a consensus
Those who say nothing are assumed to agree, but this leads to an illusion of unanimity
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21. Avoiding Groupthink Cohesive Open discussion encouraged
Group leader is impartial
Input from all members sought
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22. When Groups Are Most Effective
Larger groups can include a richer mix of participants, but can be difficult to manage
Research suggests that five to 15 members is the right range for groups
Five to seven is the most effective number for a group—or rather, five or seven as an even-numbered group can deadlock
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23. Group Decision Making Break into groups of 5 to 10 members.
Each person in the group contributes $1 to a common pot
Form a circle and place the money in the middle of the group
The whole sum of money is to be awarded to one group member on the basis of a consensus decision of the group
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24. Improving Group Decision Making
Brainstorming an idea-generating process that encourages alternatives while withholding criticism
Group leader gives a clear statement of the problem
Group comes up with as many solution ideas as possible
Ideas are captured somehow—on easel pads, or on a whiteboard—for review later
Criticism of ideas is withheld
No idea is too far out to be left out
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25. Nominal Group Technique
The nominal group technique is a decision-making technique in which group members are all physically present in the same place but operate independently
Discussion is restricted
Participants write down their analysis of the problem and their proposed solutions
This prevents groupthink because it does not restrict independent thinking
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26. Brainstorming Exercise
Work together in teams of 5 to 10.
Following the rules of brainstorming just covered, come up with as many alternative solutions as possible for the following problem:
Recent shootings at major universities and in some high schools across the country have created the need for increased safety measures on high school and university campuses across the country. What steps should high school systems take to protect students and guard against these acts of violence?
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27. Culture and Decision Making
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28. Two Cultural Factors Power-Distance Uncertainty Avoidance
If most people accept that power is unequally distributed within an organization, power-distance is considered high
Uncertainty Avoidance
If people do not like to venture out into the unknown, they have a high uncertainty avoidance
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29. India
Power distance is high – that means most people accept that power is unequally distributed within an organization
Uncertainty avoidance is also high – people don’t like to venture out into the unknown
Only very senior-level managers make decisions, and they tend to make safe ones
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30. Sweden Power distance is low Uncertainty avoidance is low
Swedish managers are unafraid to make risky decisions
Senior managers also push decisions down the ranks, including lower-level managers and employees in making the decisions that will affect them
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31. Egypt
Egyptian managers are under less time pressure than their American counterparts and tend to consider all possibilities before making a decision
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Taken from Wikipedia.com

32. Italy
Managers in Italy, where history and tradition are valued, tend to rely on tried-and-true solutions to problems
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33. Japan
Decision making in Japan is more group oriented than in the United States
Conformity and cooperation are important ideals for the Japanese
Japanese managers trying to make decisions gather a large amount of information, which is then used in ringisei—Japanese consensus-forming group decisions
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34. France French managers tend to be autocratic and to avoid risks
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35. Germany
German culture values structure and order, so German managers follow extensive rules and regulations and have clearly defined responsibilities and accept that decisions must go through channels
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36. Review
A well-structured problem is a problem that is straightforward, familiar, and easily defined
An ill-structured problem, on the other hand, is a new problem, information about which is ambiguous or incomplete
A programmed decision is a decision that can be handled by a routine approach
Chapter 5 Lesson 2

37. Review
A procedure is a series of related sequential steps taken to respond to a well-structured problem
A rule is an explicit statement that tells managers what they ought or ought not to do
A policy is a general guide that establishes parameters for making decisions
Chapter 5 Lesson 2

38. Review
A nonprogrammed decision is a decision that a manager tailors to a specific one-time event
Lower-level managers, who generally take on familiar problems, tend to make programmed decisions based on procedures, rules, and policies
Higher-level managers take on more-complex problems and make many nonprogrammed decisions
Chapter 5 Lesson 2

39. Review
Expert systems are software that acts like an expert in analyzing and solving ill-structured problems
Neural networks are software that is designed to imitate the structure of brain cells and connections among them
The two dimensions of decision-making style are the way we think, rationally or intuitively, and our tolerance for ambiguity, high or low
The four decision-making styles are directive, analytic, conceptual, and behavioral
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40. Review
Groupthink is the withholding by group members of different views in order to appear to agree
Five to seven is the most effective number for a group—or rather, five or seven as an even-numbered group can deadlock
Brainstorming is an idea-generating process that encourages alternatives while withholding criticism
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41. Review
The nominal group technique is a decision-making technique in which group members are all physically present in the same place but operate independently
Decision-making practices differ somewhat from country to country – some countries favor group decisions while others prefer to have top leaders make all the decisions
Countries also differ in their feelings about risk – in some places executives are comfortable taking risks in their decision making and in other places, executives follow the safe route
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42. Summary The contingency approach to decision making
Decision-making styles
Making decisions in groups
Culture and decision making
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43. What’s Next…
Organizing
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