4e Nelson/Quick ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 10 Decision Making by Individuals and Groups

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Outcomes  Identify the steps in the decision-making process  Describe various models of decision making  Discuss the individual influences that affect decision making  Explain how groups make decisions  Describe the role culture plays in decision making  Explain how organizations can improve the quality of decisions through participation 2

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure Decision-Making Process 3

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Effective Decision Timely decision that meets a desired objective and is acceptable to those individuals affected by it 4

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Rational Model  Rationality: Logical, step-by-step approach to decision making, with a thorough analysis of alternatives and their consequences  Assumptions  Outcome will be completely rational  Decision maker uses a consistent system of preferences to choose the best alternative  Decision maker is aware of all alternatives  Decision maker can calculate the probability of success for each alternative 5

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Bounded Rationality  Suggests that there are limits to how rational a decision maker can actually be  Assumptions  Managers select the first alternative that is satisfactory  Managers recognize that their conception of the world is simple  Managers are comfortable making decisions without determining all the alternatives 6

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Bounded Rationality  Managers make decisions by rules of thumb or heuristics  Heuristics: Shortcuts in decision making that save mental activity  Managers satisfice  Satisfice: To select the first alternative that is good enough, because the costs in time and effort are too great to optimize 7

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure The Z Problem-Solving Model 8

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Factors that Influence Decision Making Comfort with risk Risk aversion: Choosing options with fewer risks and less uncertainty Depends on individual tendencies and organizational factors Cognitive style Individual’s preference for gathering information and evaluating alternatives Personality, attitudes and values Influence decision making 9

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Individual-Organization Fit  Results in high creative performance is highest  Types of creativity  Responsive  Expected  Contributory  Proactive 10

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Group Decision Making  Synergy: Positive force that stimulates new solutions to problems through mutual influence and encouragement within the group  Social decision schemes: Rules that determine final group decisions  Majority-wins rule  Truth-wins rule  Two-thirds-majority rule  First-shift rule 11

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Limits of Group Decision Making Conditions that encourage groupthink High cohesiveness Making highly consequential decision Time constraints Groupthink: Deterioration of mental efficiency, reality testing, and moral judgment resulting from pressures within the group Occurs as a result of the: Social comparison approach Persuasive arguments view Group polarization: Tendency for group discussion to produce shifts toward more extreme attitudes among members 12

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Group Decision Techniques Brainstorming Generating multiple ideas on a given subject while suspending evaluation until all the ideas have been suggested Nominal group technique (NGT) Structured approach to group decision making that focuses on generating alternatives and choosing one Devil’s advocacy A group or individual is given the role of critic during decision making, helps prevent groupthink Dialectical inquiry Debate between two opposing sets of recommendations 13

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Participative Decision Making  Decision making in which individuals who are affected by decisions influence the making of those decisions  Buffers employees from the negative experiences of organizational politics  Increases employee creativity, job satisfaction, and productivity 14

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Foundations for Participation and Empowerment  Organizational perquisites  Supportive organizational culture and a team- oriented work design  Individual perquisites  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 15