Decision Making, Creativity, and Ethics Chapter 9 Decision Making, Creativity, and Ethics

Chapter Outline How Should Decisions Be Made? How Do Individuals Actually Make Decisions? Constraints Affecting the Decision Choice Group Decision Making The Influence of the Leader on Group Decision Making Creativity in Organizational Decision Making What About Ethics in Decision Making? This material is found in the beginning of the chapter.

Decision Making, Creativity, and Ethics Questions for Consideration Who should make decisions: individuals or groups? How does one increase creativity in organizations? How difficult is it to make ethical decisions? This material is found in the beginning of the chapter.

Exhibit 9-1 Steps in the Rational Decision-Making Model Define the Problem Identify the Decision Criteria Allocate Weights to the Criteria Develop the Alternatives Evaluate the Alternatives Select the Best Alternative This material is found on page 302.

Assumptions of the Rational Decision-Making Model Problem Clarity The problem is clear and unambiguous Known Options The decision-maker can identify all relevant criteria and viable alternatives Clear Preferences Rationality assumes that the criteria and alternatives can be ranked and weighted Constant Preferences Specific decision criteria are constant and the weights assigned to them are stable over time No Time or Cost Constraints Full information is available because there are no time or cost constraints Maximum Payoff The choice alternative will yield the highest perceived value This material is found on page 303.

Bounded Rationality Bounded Rationality Satisficing individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity Satisficing identifying a solution that is “good enough” This material is found on page 304-305.

Intuitive Decision Making An subconscious process created out of distilled experience When used: when a high level of uncertainty exists when there is little precedent to draw on when variables are less scientifically predictable when “facts” are limited when facts don’t clearly point the way to go when analytical data are of little use when there are several plausible alternative solutions to choose from, with good arguments for each when time is limited and there is pressure to come up with the right decision. This material is found on page 305-306.

Heuristics or Judgment Shortcuts Framing: The selective use of perspective Statistical Regression to the Mean: Failure to recognize that performances tend towards the average, rather than extremes Availability Heuristic: The tendency of people to base their judgments on information readily available to them Representative Heuristic: The tendency to assess the likelihood of an occurrence by trying to match it with a preexisting category Ignoring the Base Rate: Ignoring the statistical likelihood of an event when making a decision Escalation of Commitment: An increased commitment to a previous decision in spite of negative information This material is found on page 306-309.

Exhibit 9-2 Examples of Decision Biases: Scenario 1 Answer part A before reading part B. A: Threatened by a superior enemy force, the general faces a dilemma. His intelligence officers say his soldiers will be caught in an ambush in which 600 of them will die unless he leads them to safety by one of two available routes. If he takes the first route, 200 soldiers will be saved. If he takes the second, there’s a one-third chance that 600 soldiers will be saved and a two-thirds chance that none will be saved. Which route should he take? B: The general again has to choose between two escape routes. But this time his aides tell him that if he takes the first, 400 soldiers will die. If he takes the second, there’s a one-third chance that no soldiers will die, and a two-thirds chance that 600 soldiers will die. Which route should he take? This material is found on page 307.

Scenario 2 Linda is 31, single, outspoken, and very bright. She majored in philosophy in university. As a student, she was deeply concerned with discrimination and other social issues, and participated in anti-nuclear demonstrations. Which statement is more likely: a. Linda is a bank teller b. Linda is a bank teller and active in the feminist movement. This material is found on page 307.

Exhibit 9-3 Decision-Style Model High Analytical Conceptual This material is found on page 309-310. Research on decision styles has identified four different individual approaches to making decisions. Directive Style -- people using this style have a low tolerance for ambiguity and seek rationality Analytic Style -- people using this style have a much greater tolerance for ambiguity than do directive decision-makers Conceptual Style -- people using this style tend to be very broad in their outlook and consider many alternatives Behavioural Style -- people using this style tend to work well with others Tolerance for Ambiguity Directive Behavioural Low Rational Intuitive Way of Thinking

Group Decision Making Strengths of Group Decision Making Generates more complete information and knowledge Offers increased diversity of views Generates higher-quality decisions Leads to increased acceptance of a solution Weaknesses of Group Decision Making More time consuming Conformity pressures in groups Discussion can be dominated by one or a few members Decisions suffer from ambiguous responsibility This material is found on page 311-312.

Effectiveness and Efficiency Accuracy: Group Decisions Speed: Individual Decisions Creativity: Group Decisions Acceptance: Group Decisions Efficiency: Individual Decisions This material is found on page 312.

Groupthink and Groupshift Phenomenon in which the norm for consensus overrides the realistic appraisal of alternative courses of action Groupshift Phenomenon in which the initial positions of individual members of a group are exaggerated toward a more extreme position This material is found on page 313-315.

Symptoms of Groupthink Rationalized Resistance Peer Pressure Minimized Doubts Illusion of Unanimity This material is found on page 313. Rationalized Resistance. Group members rationalize any resistance to the assumptions they have made. No matter how strongly the evidence may contradict their basic assumptions, members behave so as to reinforce those assumptions continually. Peer Pressure. Members apply direct pressures on those who momentarily express doubts about any of the group’s shared views or who question the validity of arguments supporting the alternative favoured by the majority. Minimized Doubts. Those members who have doubts or hold differing points of view seek to avoid deviating from what appears to be group consensus by keeping silent about misgivings and even minimizing to themselves the importance of their doubts. Illusion of Unanimity. There appears to be an illusion of unanimity. If someone doesn’t speak, it’s assumed that he or she is in full accord. In other words, abstention becomes viewed as a “Yes” vote. Despite considerable anecdotal evidence indicating the negative implications of groupthink in organizational settings, there has not been much actual empirical work conducted in organizations on this matter. In fact, groupthink has been criticized for suggesting that its effect is uniformly negative and for overestimating the link between the decision-making process and its outcome. A 1999 study of groupthink using 30 teams from five large corporations suggests that elements of groupthink may affect decision making differently. For instance, the illusion of vulnerability, belief in inherent group morality and the illusion of unanimity were positively associated with team performance

What Causes Groupshift? Discussion creates familiarization among group members Group discussion motivates individuals to take risks Group diffuses responsibility This material is found on page 314-315.

Group Decision-Making Techniques Interacting Groups Brainstorming Nominal Group Technique Electronic Meeting This material is found on page 315-317. Interacting Groups: Members meet face-to-face and rely on both verbal and nonverbal interaction to communicate with each other. Brainstorming: An idea-generation process that specifically encourages any and all alternatives, while withholding any criticism of those alternatives. Nominal group technique: A group decision-making method in which individual members meet face-to-face to pool their judgments in a systematic but independent fashion. Electronic meeting: A meeting where members interact on computers, allowing for anonymity of comments and aggregating of votes.

Nominal Group Technique Members meet as a group but, before any discussion takes place, each member independently writes down his or her ideas on the problem. After this silent period, each member takes turns presenting one idea at a time to the group. No discussion takes place until all ideas have been recorded. The group then discusses the ideas for clarity and evaluates them. Each group member silently and independently rank-orders the ideas. The idea with the highest aggregate ranking determines the final decision. This material is found on page 316-317.

Exhibit 9-4 Evaluating Group Effectiveness This material is found on page 317.

Leader Behaviours with Groups AI. You solve the problem or make a decision yourself using whatever facts you have at hand. AII. You obtain the necessary information from subordinates and then decide on the solution to the problem yourself. CI. You share the problem with relevant subordinates one-on-one, getting their ideas and suggestions. However, the final decision is yours alone. CII. You share the problem with your subordinates as a group, collectively obtaining their ideas and suggestions. Then you make the decision that may or may not reflect your subordinates’ influence. GII. You share the problem with your subordinates as a group. Your goal is to help the group concur on a decision. Your ideas are not given any greater weight than those of others. This material is found on page 318-320.

Contingency Variables in the Leader-Participation Model QR: Quality Requirement: How important is the technical quality of this decision? CR: Commitment Requirement: How important is subordinate commitment to the decision? LI: Leader Information: Do you have sufficient information to make a high-quality decision? ST: Problem Structure: Is the problem well structured? CP: Commitment Probability: If you were to make the decision by yourself, is it reasonably certain that your subordinates would be committed to the decision? GC: Goal Congruence: Do subordinates share the organizational goals to be attained in solving this problem? CO: Subordinate Conflict: Is conflict among subordinates over preferred solutions likely? SI: Subordinate Information: Do subordinates have sufficient information to make a high-quality decision? TC: Time Constraint: Does a critically severe time constraint limit your ability to involve subordinates? GD: Geographical Dispersion: Are the costs involved in bringing together geographically dispersed subordinates prohibitive? MT: Motivation—Time: How important is it to you to minimize the time it takes to make the decision? MD: Motivation—Development: How important is it to you to maximize the opportunities for subordinate development? This material is found on page 319.

Exhibt 9-5 Contingency Variables in the Leader-Participation Model This material is found on page 319.

Exhibit 9-6 Revised Leadership-Participation Model This material is found on page 321.

Creativity The process of creating products, ideas, or procedures that are novel or original, and are potentially relevant or useful to an organization This material is found on page 321-324.

De Bono’s Six Thinking Hats White hat: impartial thinking, focussing strictly on the facts. Red hat: expression of feelings, passions, intuitions, emotions. Black hat: a critical, deliberate, evaluating outlook. Yellow hat: an optimistic, upbeat, positive outlook. Green hat: creativity, inspiration, imagination, and the free flow of new concepts. Blue hat: control, an overall “managerial” perspective of the process. This material is found on page 323.

Organizational Factors Affecting Creativity Challenge Freedom Resources Work-Group Features Supervisory Organizational Support This material is found on page 323. Challenge: When people are matched up with the right assignments, their expertise and skills can be brought to the task of creative thinking. Individuals should be stretched, but not overwhelmed. Freedom: To be creative, once a person is given a project, he or she needs the autonomy to determine the process. In other words, let the person decide how to tackle the problem. This heightens intrinsic motivation. Resources: Time and money are the two main resources that affect creativity. Thus, managers need to allot these resources carefully. Work-Group Features: Our discussion of group composition and diversity concluded that heterogeneous groups were likely to come up with more creative solutions. In addition to ensuring a diverse group of people, team members need to share excitement over the goal, must be willing to support each other through difficult periods, and must recognize each other’s unique knowledge and perspective. Supervisory Encouragement: To sustain passion, most people need to feel that what they are doing matters to others. Managers can reward, collaborate, and communicate to nurture the creativity of individuals and teams. Organizational Support: Creativity-supporting organizations reward creativity, and also make sure that there is information sharing and collaboration. They make sure that negative political problems do not get out of control..

Creativity Blocks Expected evaluation Surveillance External motivators Competition Constrained choice This material is found on page 324. Expected evaluation. Focusing on how your work will be evaluated rather than focusing on the purpose of your work. Surveillance. Being watched while you are working. External motivators. Emphasizing external, tangible rewards rather than intrinsic rewards. Competition. Facing a win-lose situation with other people rather than being able to simply do your best. Constrained choice. Being given limits on how you can do your work rather than being encouraged to do your very best work.

Ethics in Decision Making An individual can use three different criteria in framing or making ethical choices. Utilitarian criterion: Decisions are made solely on the basis of their outcomes or consequences. Rights criterion: Decisions consistent with fundamental liberties and privileges as set forth in documents like the Canadian Charter of Rights and Freedoms. Justice criterion: Decisions that impose and enforce rules fairly and impartially so there is an equitable distribution of benefits and costs. This material is found on page 324-325.

Exhibit 9-7 Factors Affecting Ethical Decision-Making Behaviour Stage of moral development This material is found on page 326. Ethical decision-making behaviour Organizational environment Locus of control

Summary and Implications Individual decision making Individuals think and reason before they act. Under some decision situations, people follow the rational decision making model. What can managers do to improve their decision making? Analyze the situation. Be aware of biases. Combine rational analysis with intuition. Don’t assume that your specific decision style is appropriate for every job. Use creativity-stimulation techniques. Group decision making Organizations that use teams face additional problems and synergies with respect to decision making Leader-participation model can be used to determine when to allow teams to make decisions This material is found on page 334-335.

Summary and Implications Creativity Organizations need to reward and encourage creativity Ethics Managers set the tone for ethics in the organization This material is found on page 334-335.