Decision-Making Challenges

Overview The contingency approach to decision making Decision-making styles Making decisions in groups Culture and decision making Chapter 5 Lesson 2

Quick Write Do you like to make big decisions on your own? Or do you prefer to work with a group? Explain. Chapter 5 Lesson 2 Courtesy of Clipart.com

The Contingency Approach to Decision Making Chapter 5 Lesson 2 Courtesy of Clipart.com

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 Chapter 5 Lesson 2

Programmed Decisions A programmed decision is a decision that can be handled by a routine approach Chapter 5 Lesson 2 Courtesy of Comstock Images

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 Chapter 5 Lesson 2

Nonprogrammed Decisions A nonprogrammed decision is a decision that a manager tailors to a specific one-time event Chapter 5 Lesson 2 Courtesy of Comstock Images

Nonprogrammed Decisions Examples Should we buy another company? What global markets will be profitable? Should we sell our unprofitable division? Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

Four Decision-Making Styles Directive Analytic Conceptual Behavioral Chapter 5 Lesson 2 Courtesy of Goodshoot Images

Making Decisions in Groups Chapter 5 Lesson 2 Courtesy of Goodshoot Images

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

Groupthink Groupthink is the withholding by group members of different views in order to appear to agree Chapter 5 Lesson 2 Courtesy of Clipart.com

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 Chapter 5 Lesson 2

Avoiding Groupthink Cohesive Open discussion encouraged Group leader is impartial Input from all members sought Chapter 5 Lesson 2 Courtesy of Clipart.com

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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? Chapter 5 Lesson 2

Culture and Decision Making Chapter 5 Lesson 2 Courtesy of Clipart.com

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2 Courtesy of Clipart.com

Egypt Egyptian managers are under less time pressure than their American counterparts and tend to consider all possibilities before making a decision Chapter 5 Lesson 2 Taken from Wikipedia.com

Italy Managers in Italy, where history and tradition are valued, tend to rely on tried-and-true solutions to problems Chapter 5 Lesson 2 Courtesy of Clipart.com

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 Chapter 5 Lesson 2

France French managers tend to be autocratic and to avoid risks Chapter 5 Lesson 2 Courtesy of Clipart.com

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 Chapter 5 Lesson 2

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

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

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

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

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 Chapter 5 Lesson 2

Summary The contingency approach to decision making Decision-making styles Making decisions in groups Culture and decision making Chapter 5 Lesson 2

What’s Next… Organizing Chapter 5 Lesson 2 Courtesy of Clipart.com