Decision Making Defined Conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs

Rational Decision Making Model 1. Identify problem 6. Evaluate decision 2. Choose decision style 5. Implement solution 3. Develop alternatives 4. Choose best solution

Problem Identification Process Problems and opportunities are not announced or pre-defined need to interpret ambiguous information Involves both rational and emotional brain centres probably need to pay attention to both in problem identification

Problem Identification Challenges Perceptual bias: Imperfect perceptions Selective attention mechanisms Influence from others Mental models Diagnostic skills: Defining problems in terms of solutions © Photofest

Identifying Problems Effectively Be aware of perceptual and diagnostic limitations Understand mental models Consider other perspectives Discuss the situation with colleagues © Photofest

Making Choices: Rational vs OB Views Goals Rational: Clear, compatible, agreed upon OB: Ambiguous, conflicting, lack agreement Processing Information Rational: People can process all information OB: People process only limited information Evaluation Timing Rational: All choices evaluated simultaneously OB: Choices evaluated sequentially more

Making Choices: Rational vs OB (con’t) Standards Rational: Evaluate against absolute standards OB: Evaluate against implicit favourite Info Quality Rational: People rely on factual information OB: Rely on perceptually distorted information Decision Objective Rational: Maximization -- the optimal choice OB: Satisficing -- a “good enough” choice

Intuitive Decision Making Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning Conduit for tacit knowledge Use intuition to complete rational process

Choosing Solutions Effectively Systematically evaluate alternatives Balance emotions and rational influences Scenario planning

Escalation of Commitment Causes Self-justification Gambler’s fallacy Perceptual blinders Closing costs © Corel Corp. With permission

Employee Involvement Defined The degree that employees share information, knowledge, rewards and power throughout the organization active in decisions employees influence how their work is organized and carried out

Levels of Employee Involvement High involvement Employees have complete decision making power (e.g.. SDWTs) Full consultation Employees offer recommendations (e.g.. gain sharing) Selective consultation Employees give information, but don’t know the problem High Medium Low

Employee Involvement Model Potential Involvement Outcomes Employee Involvement Better problem identification More/better solutions generated Best choice more likely Higher decision commitment Contingencies of Involvement

Contingencies of Involvement Employee involvement is better when: Decision Structure Problem is new & complex (i.e nonprogrammed decision) Knowledge Source Employees have relevant knowledge beyond leader Decision Commitment Employees would lack commitment unless involved Risk of Conflict Norms support firm’s goals Employee agreement likely

Creative Process Model Verification Insight Incubation Preparation

Characteristics of Creative People Above average intelligence Persistence Relevant knowledge and experience Inventive thinking R. Koza, CP/K-W Record

Supporting Creativity Learning orientation Encourage experimentation Tolerate mistakes Intrinsically motivating work Task significance, autonomy, feedback Open communication and sufficient resources

Creative Activities Review abandoned projects • Ask other people Redefine the Problem • Storytelling • Artistic activities • Morphological analysis Associative Play • Diverse teams • Information sessions Internal tradeshows Cross- Pollination

Team Decision Making Constraints Time constraints Time to organize/coordinate Production blocking Evaluation apprehension Belief that other team members are silently evaluating you Conformity to peer pressure Suppressing opinions that oppose team norms

Team Constraints: Groupthink Tendency in highly cohesive teams to value consensus at the price of decision quality More common when the team: Is highly cohesive Is isolated from outsiders Team leader is opinionated Faces external threat Has recent failures Team lacks clear guidance

Team Constraints: Group Polarization Tendency for teams to make more extreme decisions than individuals alone Riskier options usually taken because of gambler’s fallacy -- believe they can beat the odds

General Guidelines for Team Decisions Ensure neither leader nor any member dominates Maintain optimal team size Team norms encourage critical thinking Introduce effective team structures

Generating Constructive Conflict Form heterogeneous decision making team Ensure team meets often to face contentious issues Members should take on different discussion roles

Rules of Brainstorming 1. Speak freely 2. No criticism 3. Provide many ideas 4. Build on others’ ideas

Evaluating Electronic Brainstorming Benefits Less production blocking Less evaluation apprehension More creative synergy More satisfaction with process Problems Too structured Technology-bound Candid feedback is threatening Not applicable to all decisions

Nominal Group Technique Individual Activity Team Activity Individual Activity Describe problem Write down possible solutions Possible solutions described to others Vote on solutions presented