1. Chapter 10 Decision Making by Individuals & Groups?
Chapter 10 Decision Making by Individuals & Groups 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. The Quality, Timeliness, Acceptance, and Ethical Appropriateness of a Decision Influence its Effectiveness
Ethical
Appropriateness
Quality +
Timeliness +
Acceptance +

10. A Manager’s Decision-Making Styles Will Influence the Way She Attacks Problems
Right-brain thinkers tend
to value
people/social issues
Left-brain thinkers tend to value
technical/task issues
ANALYTIC
A problem solver who analyzes
alternatives and innovates
CONCEPTUAL
A socially oriented person
who sees the big picture
High Cognitive
Complexity
DIRECTIVE
A rapid decision maker who
expects results and relies on rules
BEHAVIORAL
A person who needs
affiliation and wants to help
others
Low Cognitive
Complexity

11. Managers Take Six Steps in Making an Effective Decision Using the Rational Decision-Making Process
ANALYZE THE SITUATION
What are the key elements in the situation?
What constraints affect the decision?
What resources are available?
SET OBJECTIVES
Is the problem stated clearly?
Do people understand what they will work on?
By what criteria will decision making be judged?
SEARCH FOR ALTERNATIVES
Do 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?

12. Six 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 DECISION
Do 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 DECISION
Are responsibilities for data collection, analysis, and reporting clear?
Is there a comprehensive evaluation plan?
Is there an evaluation schedule?

13. Managers Can Ask These Questions When Evaluating Objectives
Criteria
Questions to Ask
Relevance
Practicality
Challenge
Measurability
Schedulability
Balance
Do 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
Growth
Cost
effectiveness
Accountability
Are 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 current
technological 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?

15. Problems Randomly Attach to Solutions in the “Garbage Can”
Problem A +
Solution X
Problem A
Problem B
Problem C
Solution X
Solution Z
Solution Y

16. Gathering Ideas Brainstorming The Nominal Group Technique
The Affinity Diagram
The Delphi Method
Electronic Meetings

17. Brainstorming Topic Take turns sharing ideas Record each idea
No comments/criticisms
Keep the tempo moving
One idea per turn
Members may pass
Keep going until ideas are exhausted

18. Mangers 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.

19. Managers Use an Affinity Diagram to Organize Brainstorming in a Group of Employees
THEME
Why has the number of
defects increased 10 times
in the past year?
The employees
lack the right
training
Equipment has not
been repaired in a
timely fashion
Quality control
procedures are
inadequate
The product
design is
faulty
Top management needs
to reexamine workers’
training needs and find
ways to give them the
right training for their jobs.
Materials received
from suppliers have
been defective

20. The 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, and
Mathematical aggregation of revised judgements.

21. Affinity Diagram
Definition: 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.

22. How 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.

24. Tips 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.

25. Delphi Technique Problem stated Questionnaires Anonymous & Independent
Compile results
Distribute copies of results
New round begins
Does not require physical presence
Time consuming

26. Electronic Meetings Horseshoe-shaped table Up to 50 participants
Issues are presented
Responses typed
Projection screen display
Anonymity, honesty, & speed
55% faster than traditional
Lacks credit
Fastest typist gets there first
No face-to-face interchange

27. 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

28. 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

29. 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.

30. 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

31. 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.

32. 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

33. 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

34. 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

35. 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.)

36. 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

37. 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

38. 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

39. 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

40. 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

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

42. 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

43. 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