Chapter 14 Decision Making – A Book Review John M. Ivancevich Michael T. Matteson Slides Prepared by Bruce R. Barringer University of Central Florida © McGraw-Hill Companies, Inc., 1999

Learning Objectives Slide 1 of 2 Contrast programmed with nonprogrammed decisions. Identify the steps in the decision-making process. Discuss priority setting. Describe the conditions governing alternative-outcome relationships. © McGraw-Hill Companies, Inc., 1999

Learning Objectives Slide 2 of 2 Explain the role of behavioral influences on decision making. Compare individual and group decision making. Identify specific techniques for stimulating creativity. © McGraw-Hill Companies, Inc., 1999

© McGraw-Hill Companies, Inc., 1999 Types of Decisions Programmed Decisions Nonprogrammed Decisions Situation in which specific procedures have been developed for repetitive and routine problems. Decisions required for unique and complex management problems. © McGraw-Hill Companies, Inc., 1999

Programmed Decisions Slide 1 of 2 Type of Problem Frequent, repetitive, routine, much certainty regarding cause-and-effect relationships. Procedure Depending on policies, rules, and definite procedures. © McGraw-Hill Companies, Inc., 1999

Programmed Decisions Slide 2 of 2 Examples Business firm Periodic reorders of inventory. University Necessary grade-point average for good academic standing. Health care Procedures for admitting patients. © McGraw-Hill Companies, Inc., 1999

Nonprogrammed Decisions Slide 1 of 2 Type of Problem Novel, unstructured, much uncertainty regarding cause-and-effect relationships Procedure Necessity for creativity, intuition, tolerance for ambiguity, creative problem solving. © McGraw-Hill Companies, Inc., 1999

Nonprogrammed Decisions Slide 2 of 2 Examples Business firm Diversification into new products and markets. University Construction of new classroom facilities. Health care Purchase of experimental equipment. © McGraw-Hill Companies, Inc., 1999

The Decision-Making Process Attributes of Decisions Decisions should be thought of as a means rather than ends. Decisions are the organizational mechanism through which an attempt is made to achieve a desired state. Decisions are, in effect, an organizational response to a problem. © McGraw-Hill Companies, Inc., 1999

Exhibit 14.2: The Decision-Making Process Establishing specific goals & objectives and measuring results Problem identification and definition Establishing priorities Revise Revise Consideration of causes Development of alternative solutions Evaluation of alternative solutions Revise Revise Solution selection Implementation Follow-up Revise Revise © McGraw-Hill Companies, Inc., 1999

Behavioral Influence on Decision Making Slide 1 of 2 Values In the context of decision making, values can be thought of as the guidelines a person uses when confronted with a situation in which a choice must be made. Propensity for Risk An individuals propensity for taking risks influences the decision making process. © McGraw-Hill Companies, Inc., 1999

Behavioral Influence on Decision Making Slide 2 of 2 Potential for Dissonance Decision makers often experience cognitive dissonance, which is a lack of harmony among the decision maker’s various cognitions after a decision has been made. Escalation of Commitment Refers to an increasing commitment to a previous decision when a “rational” decision maker would withdraw. © McGraw-Hill Companies, Inc., 1999

© McGraw-Hill Companies, Inc., 1999 Exhibit 14.3: Probable Relationship Between Quality of Group Decision and Method Utilized Probable quality of decision More Less Average individual Minority control Majority control Individual Consensus © McGraw-Hill Companies, Inc., 1999

Brainstorming Slide 1 of 2 Brainstorming Defined The generation of ideas in a group through noncritical discussion. Potential Results Brainstorming often has been found to enhance the creative output of groups. © McGraw-Hill Companies, Inc., 1999

Brainstorming Slide 2 of 2 Basic Rules of Brainstorming 1. No idea is too ridiculous. Group members are encouraged to state any extreme or outlandish idea. Each idea presented belongs to the group, not to the person stating it. In this way, it is hoped that group members will utilize and build on the ideas of others. 2. 3. No idea can be criticized. The purpose of the session is to generate, not evaluate, ideas. © McGraw-Hill Companies, Inc., 1999

The Delphi Technique Slide 1 of 2 Delphi Technique Defined A technique used to improve group decision making that involves the solicitation and comparison of anonymous judgments on the topic of interest though a set of sequential questionnaires interspersed with summarized information and feedback of opinions from earlier responses. © McGraw-Hill Companies, Inc., 1999

The Delphi Technique Slide 2 of 2 Advantages of the Delphi Process The Delphi process retains the advantage of having several judges while removing the biasing effects that might occur in face-to-face interaction. The basic approach has been to collect anonymous judgments by mail questionnaires. © McGraw-Hill Companies, Inc., 1999

The Nominal Group Technique Nominal Group Techniques Defined A technique to improve group decision making that brings people together in a very structured meeting that does not allow of much verbal communication. The group decision is a mathematically pooled outcome of individual votes © McGraw-Hill Companies, Inc., 1999

Differences Between the Delphi Technique and the Nominal Group Technique (NGT) Basic Differences Between the Two Techniques 1. Delphi participants typically are anonymous to one another, while NGT participants become acquainted. NGT participants meet fact-to-face around the table, while Delphi participants are physically distant and never meet face-to-face. 2. 3. In the Delphi process, all communication between participants is by way of written questionnaires and feedback from the monitoring staff. In NGT, communication is direct between participants © McGraw-Hill Companies, Inc., 1999