1. Organizational Behavior, 9/E Schermerhorn, Hunt, and Osborn Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc.

2. Organizational Behavior: Chapter 142 Chapter 14 Study Questions  What is the decision-making process in organizations?  What are the useful decision-making models?  How do intuition, judgment, and creativity affect decision making?

3. Organizational Behavior: Chapter 143 Chapter 14 Study Questions (cont.)  How do you manage the decision-making process?  What are some of the current issues in decision making?  How do you infuse ethics into the decision- making process?

4. Organizational Behavior: Chapter 144 Study Question 1: What is the decision- making process in organizations?  Decision making is the process of choosing a course of action for dealing with a problem or opportunity.  Steps in systematic decision making. – Recognize and define the problem or opportunity. – Identify and analyze alternative courses of action, and estimate their effects on the problem or opportunity. – Choose a preferred course of action. – Implement the preferred course of action. – Evaluate the results and follow up as necessary.

5. Organizational Behavior: Chapter 145 Study Question 1: What is the decision- making process in organizations?  Certain decision environments. – Exist when information is sufficient to predict the results of each alternative in advance of implementation.  Risk decision environments. – Exist when decision makers lack complete certainty regarding the outcomes of various courses of action, but they are aware of the probabilities associated with their occurrence.

6. Organizational Behavior: Chapter 146 Study Question 1: What is the decision- making process in organizations?  Uncertain decision environments. – Exist when managers have so little information on hand that they cannot even assign probabilities to various alternatives and their possible outcomes. – Described as a rapidly changing setting in terms of: External conditions. The information technology requirements needed for analyzing and making decisions. The people who influence problem and choice definitions.

7. Organizational Behavior: Chapter 147 Study Question 1: What is the decision- making process in organizations?  Uncertain decision environments (cont.). – Can be described in terms of types of risks encountered by the organization. Strategic risks are threats to overall business success. Operational risks are threats inherent in the technologies used to reach business success. Reputation risks are threats to a brand or to the firm’s reputation

8. Organizational Behavior: Chapter 148 Study Question 1: What is the decision- making process in organizations?  Types of decisions. – Programmed decisions. Involve routine problems that arise regularly and can be addressed through standard responses. – Nonprogrammed decisions. Involve nonroutine problems that require solutions specifically tailored to the situation at hand.

9. Organizational Behavior: Chapter 149 Study Question 2:What are the useful decision-making models?

10. Organizational Behavior: Chapter 1410 Study Question 2:What are the useful decision-making models?  Classical decision theory assumes the manager faces a clearly defined problem, knows all possible action alternatives and their consequences, and then chooses the optimum solution.  Widespread application of classical decision theory is restricted by bounded rationality.

11. Organizational Behavior: Chapter 1411 Study Question 2:What are the useful decision-making models?  Classical decision theory does not appear to fit well in the modern business world, though it can be used toward the bottom of many firms.  Behavioral decision theory accepts the notion of bounded rationality. It assumes the manager acts only in terms of what is perceived about a given situation, and then chooses a satisficing solution.

12. Organizational Behavior: Chapter 1412 Study Question 2:What are the useful decision-making models?  The garbage can model. – A model of decision making that views problems, solutions, participants, and choice situations as mixed together in the “garbage can” of the organization. – The garbage can model highlights two important organizational facts of life. Different individuals may do choice making and implementation. Many problems go unsolved.

13. Organizational Behavior: Chapter 1413 Study Question 2:What are the useful decision-making models?  Decision making realities. – Decision making information may not be available. – Bounded rationality and cognitive limitations affect the way people define problems, identify alternatives, and choose preferred solutions.

14. Organizational Behavior: Chapter 1414 Study Question 2:What are the useful decision-making models?  Decision making realities (cont.). – Most decision making in organizations goes beyond step-by-step rational choice. – Decisions must be made under risk and uncertainty. – Decisions should be ethical.

15. Organizational Behavior: Chapter 1415 Study Question 3: How do intuition, judgment, and creativity affect decision making?  Intuition. – The ability to know or recognize quickly and readily the possibilities of a given situation. – A key element of decision making under risk and uncertainty.

16. Organizational Behavior: Chapter 1416 Study Question 3: How do intuition, judgment, and creativity affect decision making?  Judgmental heuristics. – Simplifying strategies or “rules of thumb” used to make decisions. – Make it easier to to deal with uncertainty and limited information.

17. Organizational Behavior: Chapter 1417 Study Question 3: How do intuition, judgment, and creativity affect decision making?  Types of heuristics. – Availability heuristic. Bases a decision on similarity to past occurrences that are easily remembered. – Representativeness heuristic. Bases a decision on similarities between an event and stereotypes of similar occurrences. – Anchoring and adjustment heuristic. Bases a decision on incremental adjustments to an initial value determined by historical precedent or some reference point.

18. Organizational Behavior: Chapter 1418 Study Question 3: How do intuition, judgment, and creativity affect decision making?  General judgmental biases in decision making. – Confirmation trap. The tendency to seek confirmation for what is already thought to be true and to not search for disconfirming information. – Hindsight trap. The tendency to overestimate the degree to which an event that has already taken place could have been predicted.

19. Organizational Behavior: Chapter 1419 Study Question 3: How do intuition, judgment, and creativity affect decision making?  Stages in the creative thinking process. – Preparation. – Concentration. – Incubation. – Illumination – Verification.

20. Organizational Behavior: Chapter 1420 Study Question 3: How do intuition, judgment, and creativity affect decision making?  Ways of fostering creativity. – Diversifying teams to include members with different backgrounds, training, and perspectives. – Encouraging analogical reasoning. – Stressing periods of silent reflection. – Recording all ideas so that the same ones are not rediscovered. – Establishing high expectations for creativity. – Developing a physical space that encourages fun, divergent ideas.

21. Organizational Behavior: Chapter 1421 Study Question 3: How do intuition, judgment, and creativity affect decision making?  Creativity is higher when: – Linguistic ability, willingness to engage in divergent thinking, and intelligence are present. – Individuals are motivated by and derive satisfaction from task accomplishment. – There are opportunities for creativity, as many constraints as possible are eliminated, and rewards are provided for creative efforts.

22. Organizational Behavior: Chapter 1422 Study Question 3: How do intuition, judgment, and creativity affect decision making?  Creativity is higher when (cont.): – The decision maker emphasizes engagement in the creative process and counsels individuals to share their ideas with others. – The decision maker encourages subordinates to recognize ambiguity, contact others with different views, and be prepared to make considerable changes.

23. Organizational Behavior: Chapter 1423 Study Question 4: How do you manage the decision-making process?  In choosing problems to address, ask and answer the following questions: – Is the problem easy to deal with? – Might the problem resolve itself? – Is this my decision to make? – Is this a solvable problem within the context of the organization?

24. Organizational Behavior: Chapter 1424 Study Question 4: How do you manage the decision-making process?  Reasons for decision making failure. – Managers too often copy others’ choices and try to sell them to subordinates. – Subordinates may believe the manager is imposing his or her will rather than working for everyone’s interests. – Managers may focus on the problems they see rather than the outcomes they want. – Managers use participation too infrequently.

25. Organizational Behavior: Chapter 1425 Study Question 4: How do you manage the decision-making process?

26. Organizational Behavior: Chapter 1426 Study Question 4: How do you manage the decision-making process?  Key problem attributes in the Vroom, Yetton, and Jago decision making framework. – The required quality of the decision. – The commitment needed from subordinates. – The amount of information the leader has. – Commitment probability. – Goal congruence. – Subordinate conflict. – Subordinate information.

27. Organizational Behavior: Chapter 1427 Study Question 4: How do you manage the decision-making process?  Authority decisions in the Vroom, Yetton, and Jago decision making framework. – Manager or team leader uses information that he or she possesses and decides what to do without involving others. – Variant 1  manager solves the problem or makes the decision alone. – Variant 2  manager obtains the necessary information from others and then decides.

28. Organizational Behavior: Chapter 1428 Study Question 4: How do you manage the decision-making process?  Consultative decisions in the Vroom, Yetton, and Jago decision making framework. – Manager or team leader solicits input from other people and then, based on this information and its interpretation, makes a final choice. – Variant 1  manager seeks input from others individually and then makes a decision. – Variant 2  manager seeks input from others collectively and then makes a decision.

29. Organizational Behavior: Chapter 1429 Study Question 4: How do you manage the decision-making process?  Group decisions in the Vroom, Yetton, and Jago decision making framework. – Manager or team leader consults with others and allows them to help make the final choice.

30. Organizational Behavior: Chapter 1430 Study Question 4: How do you manage the decision-making process?  Knowing when to quit. – The natural desire to continue on a selected course of action reinforces escalating commitment. – Escalating commitment is the tendency to continue and renew effort on a previously chosen course of action, even though it is not working. – Tendency to escalate commitments often outweighs the willingness to disengage from them. – Good decision makers are willing to reverse previous decisions.

31. Organizational Behavior: Chapter 1431 Study Question 5: What are some of the current issues in decision making?  Workplace trends affecting organizational decision makers. – Business units are becoming smaller in size. – New, more flexible, and adaptable organizational forms. – Multifunctional understanding is increasingly important. – Workers with both technical knowledge and team skills are increasingly desirable. – The nature of “work” is in a state of flux.

32. Organizational Behavior: Chapter 1432 Study Question 5: What are some of the current issues in decision making?  Information technology and decision making. – Artificial intelligence is the study of how computers can be programmed to think like human beings. – Expert systems support decision making by following “either-or” rules to make deductions.

33. Organizational Behavior: Chapter 1433 Study Question 5: What are some of the current issues in decision making?  Information technology and decision making (cont.). – Fuzzy logic and neural networks reason inductively. – Computer support for decision making. – Information technology does not deal with issues raised by the garbage can model.

34. Organizational Behavior: Chapter 1434 Study Question 5: What are some of the current issues in decision making?  Cultural factors and decision making. – Culture is “the way in which a group of people solves problems.” – North American culture stresses decisiveness, speed, and the individual selection of alternatives. – Other cultures place less emphasis on individual choice than on developing implementations that work. – The most important impact of culture on decision making concerns which issues are elevated to the status of problems solvable within the firm.

35. Organizational Behavior: Chapter 1435 Study Question 6: How do you infuse ethics into the decision-making process?  Ways to infuse ethics into decision making. – Develop a code of ethics and follow it. – Establish procedures for reporting violations. – Involve employees in identifying ethical issues. – Monitor ethical performance. – Reward ethical behavior. – Publicize ethical efforts.

36. Organizational Behavior: Chapter 1436 Study Question 6: How do you infuse ethics into the decision-making process?  Morality is involved in: – Choosing problems. – Deciding who should be involved in making decisions. – Estimating the impacts of decision alternatives. – Selecting an alternative for implementation.  An effective decision needs to solve a problem as well as match moral values and help others.

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